Chapter 29 .docx

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University of Calgary
Management Information Systems
MGIS 317
Ronald Schlenker

Chapter 29 : Accounting fundamentals Introduction All businesses have to keep detailed records of purchases, sales and other financial transactions. If financial records are not kept, then some rhetorical questions affecting certain group of people, for example:  HOW MUCH DID WE BUY FROM OUR SUPPLIERS AND HAVE THEY BEEN PAID YET?- Group affected: Managers and Suppliers  DID WE PAY TO THE WORKERS Group affected: Managers and Workers. Internal and external users of accounting information It is common to divide the users of accounting information into internal and external users. The managers of a business are termed internal suers and they will have access to much more detailed and up-to-date data than other groups. External groups include the banks, government, employees and shareholders and other stakeholders of the business. Here are why they need accounting data: Business Managers  To measure the performance of the business to compare against targets, previous time periods and competitors  To help them take decision, such as new investments.  To control and monitor the operation of each department and division of the business  To set targets or budgets for the future and review these against actual performance. Banks  To decide whether to lend money to the business  To assess whether to allow an increase in overdraft facilities  To decide whether to continue an overdraft facility or a loan. Creditors, such as suppliers  To see if the business is secure and liquid enough to pay off its debts  To assess whether the business is a good credit ricks  To decide whether to press for early repayment of outst
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