Users of Financial Information

Users of Financial Information

INTERNAL USERS

Internal users of accounting information are those individuals inside a company who plan, organize, and run the business. These users are directly involved in managing and operating the business. These include marketing managers, production supervisors, finance directors,company officers and owners.

MANAGEMENT

• Information need: income/earnings for the period, sales, available cash, production cost

• Decisions supported: analyze the organization's performance and position and take appropriate measures to improve the company results; sufficiency of cash to pay dividends to stockholders; pricing decisions

EMPLOYEES

• Information need: profit for the period, salaries paid to employees

• Decisions supported: job security, consider staying in the employment of the company or look for other employment opportunities

OWNERS

• Information need: profit or income for the period, resources or assets of the business, liabilities of the business

• Decisions supported : considerations regarding additional investment, expanding the business, borrowing funds to support any expansion plans.

EXTERNAL USERS

External users are individuals and organizations outside a company who want financial information about the company. These users are not directly involved in managing and operating the business.

CREDITORS

For determining the credit worthiness of an organization. Terms of credit are set by creditors according to the assessment of their customers' financial health. Creditors include suppliers as well as lenders of finance such as banks.

TAX AUTHORITIES

for determining the credibility of the tax returns filed on behalf of a company.

INVESTORS

for analyzing the feasibility of investing in a company. Investors want to make sure they can earn a reasonable return on their investment before they commit any financial resources to a company.

CUSTOMERS

for assessing the financial position of its suppliers which is necessary for them to maintain a stable source of supply in the long term.

REGULATORY AUTHORITIES

for ensuring that a company's disclosure of accounting information is in accordance with the rules and regulations set in order to protect the interests of the stakeholders who rely on such information in forming their decisions.

Multiple Choice

• Internal user

• External user

Multiple Choice

• Internal users

• External users

Multiple Choice

Creditor

• Internal users

• External users

Multiple Choice

• Internal users

• External users

Multiple Choice

• Internal users

• External users

Multiple Choice

• Internal users

• External users

Multiple Choice

Financial Institution

• Internal Users

• External Users

Multiple Choice

Government

• Internal users

• External users

BRANCHES OF ACCOUNTING

BRANCHES OF ACCOUNTING

• Financial Accounting - recognition, measurement and communication of economic activities.

• Management (Managerial) Accounting - emphasizes the preparation and analysis of accounting information within the organization.

• Government Accounting - the process of recording, analyzing, classifying, summarizing, communicating and interpreting financial information about the government

• External Auditing - examination of financial statements by an

  independent CPA with the purpose of expressing an opinion as to the fairness of presentation and compliance with the GAAP.

BRANCHES OF ACCOUNTING

• Internal Auditing - determining the operational efficiency of the company regarding the protection of the company’s assets, accuracy and reliability of the accounting data, and adherence to certain management policies.

• Tax Accounting - helps clients follow rules set by tax authorities.

• Cost Accounting - recording, presentation, and analysis of manufacturing costs.

• Accounting Education - deals with developing future accountants by creating relevant accounting curriculum.

• Accounting Research - focuses on the search for new knowledge on the effects of economic events and on the effects of reported information on economic events.