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Identify the internal and External Users of financial information ( Should include At least 5-7 References ) - Essay Example

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Accounting is the art of collecting, recording, summarizing and reporting accounting information in form of financial statements to various stakeholders both internal and external (Schneier, 2013). These financial statements include the statement of financial position which…
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Identify the internal and External Users of financial information ( Should include At least 5-7 References )
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Download file to see previous pages There are also retained earnings, which tell the user the portion of the net income reinvested in the company. The Generally Accepted Principles should be followed in provision of reports to be used by external persons.
Accounting has some divisions i.e. cost accounting, managerial accounting, and financial accounting. Management accounting aims at providing information to the company management for the purpose of management decision. Cost accounting is the formation of financial plans, average costs, and actual costs of operation for production or processes and determining the variances on the desired results.Variuos users of accounting information have different interests in the information (Schneier, 2013). These users are internal and external.
Firstly, the owners and investors of the business have a keen interest in the accounts kept by the business. Business owners are interested in knowing whether their funds are being misappropriated and not used in the desired manner (Leitner, 2012). The accounting information aids them in knowing the profitability and the financial status of the business in which they have invested their capital. Investors are concerned about risk and return in relation to their investment (Leitner, 2012). This helps them in making a decision on whether to continue investing in the business. It is also helps assess whether the business will be able to pay off dividends.
Managers are also users interested in the accounting information. In small businesses, the management may comprise owners also. However, in large businesses, the management is made of employed experts who are delegated with responsibility of carrying out the business or a portion of it. The accounting information helps the managers in the performance measurement. The outcomes of the appraisal are then used to correct any discrepancies (Leitner, 2012). Managers are encountered with economic decisions that should be made regarding the business which require ...Download file to see next pagesRead More
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