Accounting Applications: Unit 1
Users of Financial Data
● Managers: Managers use financial data to monitor the growth of the company and make
operational and financial decisions.
● Creditors: Lenders and suppliers use financial data to determine a company's ability to
repay a loan.
● Government: Government agencies use financial data to know how much money a
company made in order to determine how much the company owes in taxes.
● Owners: Owners use financial data to evaluate the performance, profitability, and
stability of the company.
● Employees: Employees may receive financial information to help them perform their job
duties or better understand the financial health of the company and how it may impact
them.
● Investors: Investors, both current and potential, use financial data to decide if their
investments will be profitable and secure.
Types of Accounting
Financial Accounting
● Time focus: The focus on what a business has done
● Legal requirements: Heavily regulated, strict set of standard
● Primary users: Provide financial statements to external parties
Managerial Accounting
● Time focus: Uses data to make future decisions
● Legal requirements: Internal use only, companies create their own guidelines
● Primary users: To use data internally to allow managers and employees to make
informed decisions
Comparison: Financial vs. Managerial Accounting
Financial Accounting Both Managerial Accounting
• Historical perspective • Financial focused • Future emphasis
Users of Financial Data
● Managers: Managers use financial data to monitor the growth of the company and make
operational and financial decisions.
● Creditors: Lenders and suppliers use financial data to determine a company's ability to
repay a loan.
● Government: Government agencies use financial data to know how much money a
company made in order to determine how much the company owes in taxes.
● Owners: Owners use financial data to evaluate the performance, profitability, and
stability of the company.
● Employees: Employees may receive financial information to help them perform their job
duties or better understand the financial health of the company and how it may impact
them.
● Investors: Investors, both current and potential, use financial data to decide if their
investments will be profitable and secure.
Types of Accounting
Financial Accounting
● Time focus: The focus on what a business has done
● Legal requirements: Heavily regulated, strict set of standard
● Primary users: Provide financial statements to external parties
Managerial Accounting
● Time focus: Uses data to make future decisions
● Legal requirements: Internal use only, companies create their own guidelines
● Primary users: To use data internally to allow managers and employees to make
informed decisions
Comparison: Financial vs. Managerial Accounting
Financial Accounting Both Managerial Accounting
• Historical perspective • Financial focused • Future emphasis
