Company Accounts (1)

Company Accounts

Accounts are statements that contain financial information about the business.
Employees
The two main types of financial accounts:
Internal
 Income Statement: Summarises income/expenses and Managers
details the profits/losses made by the Owners
business in the accounting period.
Users of financial
 Statement of Financial Position: Information Government
Details in summary format, the Local community

financial positions of the business.
Bank Suppliers
External Competitors
Customers


Media
Future Investors

Users of Financial Data:

Shareholders - I.S.  Profit their investment has earned.
 Earnings per share + dividends per share.
 Level of remuneration.
 Growth on previous years.
Employees - I.S.  Level of profit - gain a higher wage.
 Examine directors pay + accounts.
 LT company future.
Managers - I.S.  Profit + performance.
 Break even analysis - aid decision making.
 Compare growth turnover of their own department.
Suppliers - S.F.P  Level of liquidity.
 Business - plenty of cash - paid on time + in full.
Lenders: S.F.P  Business accounts - business liquidity position.
 Gearing position - assess risk in lending more money +
repayment likelihood.
 Interested in collateral -> fixed assets in the balance sheet.
Customers  View business accounts - assess continuity of supply and
stability - paying in advance.
Competitors  Accounts - compare and reinforce superiority or benchmark.
Pressure Groups  Trade Unions - members treatment.
 Annual increase in wages.
 Career opportunities.
The Media  Expose scandalous behaviour.
 Media latch on to profit increase + the pay awards of senior
directors.
The Government  Review business accounting information.
 Economic Output - complete statistics.
 Inland revenue - calculate income tax, corporation tax,
capital gains.
 Customer + excise - VAT purpose.