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    Lesson 2 - Users of Accounting Information - Notes

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    Joan
    This document defines and provides examples of internal and external users of accounting information. Internal users are those belonging to the management of a business, including management, employees, and owners. External users are secondary users that include creditors, tax authorities, investors, customers, and regulatory authorities. The document explains the information needs and decisions supported for each type of user.

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    Lesson 2 - Users of Accounting Information - Notes

    Uploaded by

    Joan
    18 views24 pages
    This document defines and provides examples of internal and external users of accounting information. Internal users are those belonging to the management of a business, including management, employees, and owners. External users are secondary users that include creditors, tax authorities, investors, customers, and regulatory authorities. The document explains the information needs and decisions supported for each type of user.

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    Lesson 2- Users of Accounting Information_Notes

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    This document defines and provides examples of internal and external users of accounting information. Internal users are those belonging to the management of a business, including management, employees, and owners. External users are secondary users that include creditors, tax authorities, investors, customers, and regulatory authorities. The document explains the information needs and decisions supported for each type of user.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    18 views24 pages

    Lesson 2 - Users of Accounting Information - Notes

    Uploaded by

    Joan
    This document defines and provides examples of internal and external users of accounting information. Internal users are those belonging to the management of a business, including management, employees, and owners. External users are secondary users that include creditors, tax authorities, investors, customers, and regulatory authorities. The document explains the information needs and decisions supported for each type of user.

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    You are on page 1of 24

    USERS OF

    LESSON 2 ACCOUNTING
    INFORMATION
    LEARNING COMPETENCIES

    • define external users and gives examples ABM_FABM11-IIIa-7


    • define internal users and give examples ABM_FABM11-IIIa-8
    WHAT IS
    ACCOUNTING?
    COMMUNICATING
    “IF YOU ARE THE OWNER,
    WHAT DO YOU WANT TO
    KNOW ABOUT THE BUSINESS?
    WHAT POSSIBLE DECISIONS
    CAN ACCOUNTING SUPPORT?”
    “What if you are from a Local Government Unit
    (City/Municipality)? Do you think the Local Government
    ( City/Municipality) will be interested with your accounting
    reports/records?”
    • Investors/Owners/Stockholders
    • Government
    • Creditors (Financial Institutions)
    USERS OF
    • Management
    ACCOUNTING
    INFORMATION • Employees
    • Supplier
    • Customers
    I am presented a financial statement of a company
    and this will help me decide whether to invest in a
    business or not.

    Who am I?
    I look at the financial statements to help me
    decide on future goals of the company.

    Who am I?
    A company who wants to acquire a loan presented a
    financial statement to me and this will help me decide
    whether I will extend credit to them or not.

    Who am I?
    I want to look at the financial statements of a company so
    that I know if it they are selling goods or services at the
    right price.

    Who am I?
    I am presented a financial statement of a company
    and this will help me determine whether the company
    is paying the right amount of taxes.

    Who am I?
    I want to look at the financial statement of a company to
    know whether they will be able to pay for the supplies
    (merchandise) they bought from me.

    Who am I?
    I want to look at the financial statement of the company so
    that I know whether the company I am working for is stable
    or not, and whether I have a future in the company I am
    working for.

    Who am I?
    WHO ARE THE USERS OF
    ACCOUNTING INFORMATION?
    Users of
    Accounting
    Information

    Internal External
    INTERNAL USERS

    • Are users belonging to the management of a business


    enterprise.
    INTERNAL USERS (PRIMARY USERS) OF
    ACCOUNTING INFORMATION

    • 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.
    INTERNAL USERS (PRIMARY USERS) OF
    ACCOUNTING INFORMATION

    • Employees
    Information need: profit for the period, salaries paid to employees
    Decisions supported: job security, consider staying in the employ of the
    company or look for other employment opportunities
    INTERNAL USERS (PRIMARY USERS) OF
    ACCOUNTING INFORMATION

    • 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

    • Are users of accounting information directed towards


    their common need.
    EXTERNAL USERS (SECONDARY USERS) OF
    ACCOUNTING INFORMATION
    • Creditors: for determining the credit worthiness of an
    organization.
    • Tax Authorities (BIR): for determining the credibility of the tax
    returns filed on behalf of a company.
    • Investors: for analyzing the feasibility of investing in a
    company.
    EXTERNAL USERS (SECONDARY USERS) OF
    ACCOUNTING INFORMATION
    • 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 (SEC, DOLE): 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.
    Users of
    Accounting
    Information

    Internal External

    Owner Manager Government Creditor Supplier

    Employee

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