Chapter 29 : Accounting fundamentals
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
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:
To measure the performance of the business to compare against targets, previous time periods
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.
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