INTRODUCTION TO ACCOUNTING – PART 1
Accounting is the systematic process of recording, summarizing,
analyzing, and reporting financial transactions. Primary goal of
accounting is to provide stakeholders with clear accurate picture of
organization financial health.
USERS OF ACCOUNTING INFORMATION
There are two types of users of accounting information, these are
internal users and external users. Internal users are users of accounting
information, from within organization. Generally, these users require
detailed accounting information e.g. managers. Another type is
external users- these are users from outside organization, basically they
are not involved in direct running of an organization and they use
published financial statements.
INTERNAL USERS-
• Manager and executives- These require accounting information,
for planning operations, setting budgets, evaluates, perform and
decide pricing and expansion of an organization
• Employees and unions- assess job security, negotiate wages, and
evaluate bonus potential.
• Owner- monitor profitability and cash flow directly, mainly for
small businesses.
EXTERNAL USERS-
• Investors/ Shareholders- Decide whether to buy, hold, or sell
shares, evaluate future dividends and growth of an organization.
• Creditors / Lenders- (Bank, stockbrokers)- These require
accounting information in order to determine creditworthiness
and ability to pay loans.
Accounting is the systematic process of recording, summarizing,
analyzing, and reporting financial transactions. Primary goal of
accounting is to provide stakeholders with clear accurate picture of
organization financial health.
USERS OF ACCOUNTING INFORMATION
There are two types of users of accounting information, these are
internal users and external users. Internal users are users of accounting
information, from within organization. Generally, these users require
detailed accounting information e.g. managers. Another type is
external users- these are users from outside organization, basically they
are not involved in direct running of an organization and they use
published financial statements.
INTERNAL USERS-
• Manager and executives- These require accounting information,
for planning operations, setting budgets, evaluates, perform and
decide pricing and expansion of an organization
• Employees and unions- assess job security, negotiate wages, and
evaluate bonus potential.
• Owner- monitor profitability and cash flow directly, mainly for
small businesses.
EXTERNAL USERS-
• Investors/ Shareholders- Decide whether to buy, hold, or sell
shares, evaluate future dividends and growth of an organization.
• Creditors / Lenders- (Bank, stockbrokers)- These require
accounting information in order to determine creditworthiness
and ability to pay loans.
