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Users of Accounting Information

The document discusses the users of accounting information, dividing them into internal users like management and employees who are directly involved in running the business, and external users like creditors, customers, investors, and government agencies who are not directly involved but need financial information. It provides examples of the type of information different users need and the decisions it supports, such as management using earnings information to analyze performance and creditors using credit worthiness data to set lending terms.

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cristin l. viloria
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104 views

Users of Accounting Information

The document discusses the users of accounting information, dividing them into internal users like management and employees who are directly involved in running the business, and external users like creditors, customers, investors, and government agencies who are not directly involved but need financial information. It provides examples of the type of information different users need and the decisions it supports, such as management using earnings information to analyze performance and creditors using credit worthiness data to set lending terms.

Uploaded by

cristin l. viloria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Fundamentals of Accountancy,

Business and Management


III. Users of Accounting Information
Users of Accounting Information
 “Accounting information helps users to make
better financial decisions”.
Users of Accounting Information
 Who uses accounting data or information?

◦ Internal Users ◦ External Users


 Such as:  Such as:
 Management  Creditors
 Employees  Customers
 Owners  Investors
 Tax Authorities
 Regulatory Authorities
Users of Accounting Information
 Internal Users (Primary)
◦ are those individuals inside a company who plan,
organize, and run the business. These users are
directly involved in managing and operating the
business.
Users of Accounting Information
 Internal Users (Primary)
User Information Needed Decision Supported
Management - income/earnings for - analyze the organization's
the period performance
- sales - take appropriate measures
- available cash to improve the company
- production cost, etc., results
- pricing decisions
Employees - profit for the period - job security
- salaries paid to - stay in employment
employees - look for a new job
Owners - profit or income for - considerations regarding
the period additional investment
- resources or assets of - expanding the business
the business - borrowing funds to support
Users of Accounting Information
 External Users (Secondary)
◦ 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.
Users of Accounting Information
 External Users (Secondary)
User To be use for
Creditors - determining the credit worthiness of an organization. Terms
- Banks of credit are set by creditors according to the assessment of
- Lenders their customers' financial health.
- Suppliers
Customers/ - assessing the financial position of its suppliers which is
Clients necessary for them to maintain a stable source of supply in
the long term.
Investors - 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.
Government - determining the credibility of the tax returns filed on behalf
Agency of a company
Users of Accounting Information
 Activity
QUIZ
 Evaluation:

 1. Differentiate internal users from external


users of accounting information.
 2. Complete the table below:

User Category Useful in?


Production
Manager
Utility Worker
BIR
Supplier

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