FABM1: Users of Accounting Information INTERNAL & EXTERNAL. BAKIT BA NILA KAILANGAN ANG FS??

Summary

This script discusses the importance of accounting information for both internal and external users of a business. Internal users, such as managers and supervisors, rely on this data to manage and operate the business effectively. External users, including investors, creditors, and regulatory authorities, use financial statements to assess the company's performance, creditworthiness, and compliance with legal standards. The script highlights the crucial role of accounting in decision-making and strategic planning for all stakeholders involved.

Takeaways

• 😀 Internal users of accounting information are individuals within the organization who are directly involved in managing and operating the business.
• 🔍 Internal users, also known as primary users, include marketing managers, supervisors, finance directors, company officers, and owners.
• 🏢 The term 'internal users' refers to those who are directly affected by the results of the financial statements within the organization.
• 📈 External users are individuals or organizations outside the company who use financial information for various purposes, such as evaluating the business's profitability and assets.
• 💼 External users include owners, investors, creditors, tax authorities, customers, suppliers, and regulatory authorities.
• 💼 Creditors and suppliers need accounting information to assess the creditworthiness and integrity of the organization.
• 📊 Investors use financial statements to evaluate the feasibility of investing in a company and to examine its performance and financial position.
• 🏦 Tax authorities, such as the Bureau of Internal Revenue, verify the accuracy of financial data to ensure the credibility of tax returns filed by businesses.
• 🛠️ Suppliers evaluate the financial information of their business partners to ensure a stable supply chain and justify pricing decisions.
• 🏛️ Regulatory bodies, such as the Securities and Exchange Commission and the Department of Trade and Industry, supervise businesses to ensure compliance with legal requirements.

Q & A

Who are considered internal users of accounting information?

Internal users are individuals within the organization such as marketing managers, supervisors, finance directors, company officers, and owners who are directly involved in managing and operating the business.

What is the primary role of internal users in relation to accounting information?

Internal users, also known as primary users, are responsible for planning, organizing, and running the business, utilizing accounting information to make informed decisions about the operation and management of the company.

What are the main reasons external users need financial information?

External users require financial information to assess the profit or income, resources or assets, and liabilities of the business for various purposes such as making investment decisions, evaluating the creditworthiness of the organization, and ensuring compliance with tax regulations.

How do owners use financial information for their business?

Owners use financial information to consider additional investments, expand the business, borrow funds for expansion plans, and to understand the income or earnings for a given period.

Why is accounting information important for management to analyze the organization's performance?

Accounting information helps management to analyze the organization's performance and financial position, allowing them to take appropriate measures to improve company results and ensure the sufficiency of cash for operations and dividend payments to stockholders.

What are some examples of external users of a company's financial statements?

Examples of external users include creditors, tax authorities, investors, customers, suppliers, regulatory authorities such as the Securities and Exchange Commission, and government agencies like the Bureau of Internal Revenue.

How do creditors use a company's financial statements?

Creditors use financial statements to determine the credit integrity and creditworthiness of the organization, which helps them decide on credit terms and the extension of loans.

What is the role of the Bureau of Internal Revenue in relation to a company's financial data?

The Bureau of Internal Revenue verifies the accuracy of financial data to ensure the credibility of tax returns filed by the business and to ensure compliance with tax regulations.

Why is the financial information of suppliers important for a company?

A company evaluates the financial information of its suppliers to maintain a stable source of supply in the long term and to justify pricing decisions based on the supplier's financial stability.

What are some of the regulatory bodies that may require access to a company's financial statements?

Regulatory bodies such as the Securities and Exchange Commission, the Department of Trade and Industry, and the Department of Labor and Employment may require access to a company's financial statements to supervise businesses and ensure compliance with legal requirements.

What is the significance of financial statements for different types of business entities such as corporations, partnerships, and proprietorships?

Financial statements are significant for all types of business entities as they provide a comprehensive view of the financial health and performance of the business, which is crucial for decision-making, compliance, and external evaluations.

Outlines

00:00

📊 Internal Users of Accounting Information

The first paragraph introduces the concept of accounting information and its primary users within an organization. It defines internal users as individuals who are directly involved in the management and operation of the business, such as marketing managers, supervisors, finance directors, company officers, and owners. These users are crucial as they rely on accounting information to make decisions that impact the business's performance and financial health. The paragraph also highlights the importance of financial statements for internal users to analyze the organization's performance, assess the sufficiency of cash for dividends, and make informed pricing decisions.

05:10

🌐 External Users and Their Dependence on Accounting Information

The second paragraph discusses the role of external users of accounting information, which includes individuals or organizations outside the company. It lists various types of external users such as creditors, tax authorities, investors, customers, and regulatory authorities. These users utilize financial information to assess the creditworthiness of the organization, verify the accuracy of tax returns, evaluate investment opportunities, and ensure the stability of supply chains. The paragraph also mentions the importance of financial statements for regulatory bodies like the Securities and Exchange Commission and the Department of Trade and Industry, which supervise businesses to ensure compliance with legal requirements.

Keywords

💡Accountants

Accountants are professionals who manage the financial records and transactions of a business or individual. In the context of the video, they play a crucial role in preparing and interpreting accounting information, which is vital for both internal and external users to make informed decisions about the business.

💡Internal Users

Internal users refer to individuals within an organization who directly use accounting information for planning, organizing, and running the business. The video mentions marketing managers, supervisors, finance directors, company officers, and owners as examples of internal users who rely on this information to manage and operate the business effectively.

💡Primary Users

Primary users, also known as internal users in the script, are those who are directly involved in the management and operation of the business. They are the main consumers of accounting information, using it to make strategic decisions that impact the company's performance.

💡External Users

External users are individuals or organizations outside the company who use financial information for various purposes. The video highlights that they are not involved in the day-to-day operations of the business but rely on financial statements to assess the company's profitability, assets, liabilities, and overall financial health.

💡Financial Information

Financial information encompasses data related to a company's financial performance, including profit, income, assets, liabilities, and cash flow. The script emphasizes its importance for both internal and external users to make decisions regarding investment, expansion, and creditworthiness.

💡Financial Statements

Financial statements are formal records that provide a structured overview of a company's financial activities. The video mentions that both internal and external users analyze these statements to understand the company's performance, financial position, and to make informed decisions.

💡Creditworthiness

Creditworthiness refers to the ability of a company to repay its debts. In the script, external users like creditors and suppliers use accounting information to assess a company's creditworthiness and determine the terms of credit they are willing to offer.

💡Investors

Investors are external users who evaluate a company's financial statements to decide whether to invest in it. The video indicates that they use this information to assess the potential return on investment and the financial stability of the company.

💡Regulatory Authorities

Regulatory authorities, such as the Bureau of Internal Revenue and the Securities and Exchange Commission mentioned in the script, are government agencies that use financial information to ensure compliance with tax laws and other regulations. They verify the accuracy of financial data to maintain the integrity of the financial reporting system.

💡Supervisors

Supervisors are internal users who oversee specific departments or operations within a company. The script implies that they use accounting information to manage their areas of responsibility effectively and contribute to the overall success of the business.

💡Management

Management in the context of the video refers to the process of overseeing and making decisions about a company's operations. It includes planning, organizing, directing, and controlling the use of the company's resources. The script suggests that management uses accounting information to improve company results and ensure operational efficiency.

Highlights

Accounting information is crucial for individuals within an organization who are involved in planning, organizing, and running the business.

Internal users, also known as primary users, are directly involved in managing and operating the business.

Examples of internal users include marketing managers, supervisors, finance directors, company officers, and owners.

External users are individuals or organizations outside the company who use financial information for various purposes.

Financial information helps external users to understand the profit, income, resources, assets, and liabilities of a business.

Owners and investors use financial information for considerations regarding additional investments and expansion plans.

Management uses accounting information to analyze the organization's performance and take measures to improve company results.

The sufficiency of cash for paying dividends to stockholders and pricing decisions is a key reason for needing accounting information.

Creditors, tax authorities, investors, customers, and regulatory authorities are examples of external users who need accounting information.

Creditors use accounting information to determine the creditworthiness and credit terms of an organization.

The Bureau of Internal Revenue is a government agency that verifies the accuracy of financial data for tax return credibility.

Investors evaluate financial statements to assess the feasibility of investing in a company.

Suppliers use financial information to evaluate the financial stability of their customers for long-term business relationships.

Regulatory bodies such as the Securities and Exchange Commission and the Department of Trade and Industry supervise businesses for legal compliance.

The Department of Labor and Employment is involved in ensuring businesses meet labor laws and regulations.

Accounting information is essential for businesses of all types, including corporations, partnerships, proprietorships, and joint ventures.

Transcripts

so good morning accountants and managers

accounting information

definition individuals inside the

organization who plan

organize and run the business so they

are directly involved in managing and

operating the business

internal users are also called primary

users of accounting information

and some of these users are the

marketing managers supervisors finance

directors

company officers and owners so from the

term itself

internal users so young and associated

business or parties organization

so directly affected when it comes to

the result of

the financial statement okay

so you my example yeah enumerate

so your external users naman so

individuals or organizations outside

the company who are not involved in the

operation of

the business so in this apartment

organization

business

management and employees

so they use financial information to

know the profit or income

for the period resources or assets of

the business

so liabilities of the business are

needed by the owners

they also use financial information in

considerations regarding

additional investment expanding the

business and borrowing funds to support

any expansion plans so

to know the income or earnings for the

period

sales available cash and production

costs

are the reasons why the management needs

the accounting information

so union highlight number letter they

also analyze the organization's

performance and position

and take appropriate measures to improve

the company results

sufficiency of cash to pay dividends of

stockholders as well as the

pricing decisions okay so young mean

concern and management

pan obama papa baba young

bargaining agreement or

financial statements

external users outside

the business premises or organization a

young

ma creditors tax authorities investors

customers assam and regulatory

authorities

creditors suppliers nothing

so they are users who need accounting

information to determine the credit

integrity

worthiness of the organization and

credit terms

suppliers

bureau of internal revenue so a new

government agency that verifies the

accuracy of financial data

to ensure the credibility of the tax

returns filed by the business

okay so

okay

to evaluate and examine the feasibility

of investing in a

company

statement performance and financial

position

invest

okay so users will evaluate the

financial information of its supplier

to keep stable source of supply in the

long term and ethiopia

and justify pricing

those financial statements

regulatory bodies or yamaha government

agencies

securities and exchange commission

corporation

so dti or department of trade and

industry in a man capacitor

proprietorship and partnership

tapos department of labor and employment

so an establishment to supervise

businesses in a complex among legal

requirements

okay

and managers

see you next time