WEEK 3 – USERS OF ACCOUNTING INFORMATION Flashcards
Classification of Users of Accounting involves 2 (TWO) classifications namely:
External Users
Internal Users
Individuals and organizations outside
a company who give financial
information about the company.
These users are not directly involved
in managing and operating the
business
EXTERNAL USERS
Individuals inside a company
who plan, organize, and run
the business. These users are
directly involved in managing
and operating the business
INTERNAL USERS
user of accounting that can determine taxation policies and as basis for national income statistics. They are the users that needs information on risk and return for their investments
Accounting information aids in whether they buy, hold or sell investment
Investors and Stockholdersis most likely to be concerned with a company’s ability to repay its
debts; They provide MONEY as a loan that needs to be repaid
is most likely to be concerned with a company’s ability to repay its
debts. They provide MONEY as a loan that needs to be repaid
Creditors/Lenders
they are the group of users relies most
heavily on Generally Accepted Accounting Principles (GAAP) when analyzing financial information
Investors and Stockholders
Creditors/Lenders
entity that provides goods and services
_ assess the business ability to
repay its obligation upon
maturity. It is an entity that
provides goods and services to
another organization
Similar with creditors
Suppliers
These users require financial information to regulate the activities of the enterprise, determine taxation policies and as basis for national income statistics. Examples of it are
Bureau of Internal Revenue (BIR), Securities and Exchange Commission (SEC), and Department of Trade and Industry (DTI)
Government and its Agencies
users that provides the community with the trends and recent developments. This is important especially when the company makes substantial contribution to a local economy by providing employment and patronizing products and raw materials from local suppliers.
Public
assess whether the business will
continue inexistence. This is especially
needed where customers have a longterm involvement with, or dependent on, the business
are the ones who purchases a commodity or a service
Customers
A person or group of people who
provide capital to a business. They
assess if the capital investment are
profitable or not, and whether to
grant or not additional compensation to their employees
Owners
their primary role is to plan, organize, and control business operations. Also, a
user of accounting that provide, plan and control somehow the operation of the business
Managers
is an individual who works for
someone else in exchange for compensation
Employees
The exact nature of an
_ is important, since the applicability of payroll taxes and the responsibility for their remittance depends on whether someone is an employee
employee arrangement
