In all financial accounting textbooks, the authors describe in detail the "Financial Accounting User and Uses" document. Information such as cash flow statements, income statements, and scales are important documents that ensure that the company records everything correctly. Accounting information users can be divided into two categories: internal and external users.
The internal users of accounting information are those who organize, operate, and plan daily business routines. They are directly related to the company and use administrative accounting, which includes detailed reports for determining financial strengths and weaknesses. For example, internal users include management, finance, marketing, and human resources. An example of a human resource manager would be to secure the rights of your employees using wage information and other data. Important questions arise with internal users. Question for a Marketing Manager: "What is the price for Apple I Pad to maximize your company's net revenue?"
External users are groups of individuals outside the organization, and accounting is used to make financial decisions. An example of an external user would include a creditor who uses accounting to assess the risk of lending. Tax authorities, investors and customers are also external users. External users would receive limited financial information from a company such as financial statements. These statements are the backbone of financial settlement and provide sufficient information to external users to inform them of the company's economic situation. Assets, liabilities, revenues and expenses are of great importance to users of accounting information. For business purposes, this information is ordinarily arranged in four different financial statements; balance sheet, profit and loss account, profit reserve and cash flow statement.
The purpose of the revenue statement is to indicate the success or failure of a company's operations for some time. The income statement lists the income of the company and then the expenditures. When preparing the profit statement, the most important thing is that the amounts received from the issuing stock are not revenue and the amounts paid as dividends are not spent. Therefore they are not recognized in the income statement. The retained earnings statement shows the amount and the reasons for changes in retained earnings over the period. The period corresponds to the time period shown in the profit and loss statement. In the financial statements, the dividend payment practices are valued by the users by monitoring the retained earnings statements. Some investors are looking for companies that previously pay high dividends while others are looking for companies that recycle earnings to boost the company's growth.
The balance is based on the following equation: Assets = Sources + Investment Units. This equation is called a basic equation equation. The balance sheet presents the assets, liabilities and ownership of the company. This is a financial window at a particular time for the company. Receivables are divided into two categories: creditors 'claims, which are called debtors' and owners 'claims, and are referred to as shareholders' equity. In the balance sheet, the company's financial position is determined in the following order: assets and liabilities and equity of shareholders. The shareholder's capital note is that it consists of shares and retained earnings. Finally, there is a cash flow statement. The purpose of the cash flow statement is to provide financial information about the funds and cash payment of the enterprise for a specified period of time. Users are interested in reporting cash flow because they want to know what's going on with the company's most important asset. Cash flow statements respond to the following questions: 1) Where did cash flow during the period? 2) How was cash used during the period? 3) What was the change in cash during the period? Detection of cash flow also organizes cash used in the following activities: financing, investment and operation. All businesses are involved in these three activities.
Financing activities are described as earning money to earn money. Two sources of company external resources raise money and sell cash stocks in cash. Investment activities include the acquisition of the need for resource companies, such as the sale of long-term investments, property, plant and equipment. Finally it works. If an enterprise needs the necessary tools, it can start operating. Operating activities convert the items in the profit and loss account into cash.
To sum up, users of financial statements are people who use financial documents for many business purposes and are able to make decisions through these statements, helping them succeed in the business world. Students will have the chance to succeed in business if they are knowledgeable by professionals who use the analytical techniques and tools of financial statements on a daily basis.
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