ACCT 1220 Study Guide - Midterm Guide: Financial Statement, Toner, Limited Liability

• School: University of Guelph
• Department: Accounting
• Course: ACCT 1220
• Professor: Adeel Mahmood

Document Summary

Chapter 1: the purpose & use of financial statements. Accounting: is the information system that identifies and records the economic events of an organization, and then communicates them to a wide variety of interested users: users & uses of accounting: Users of accounting information can be divided broadly into 2 types: internal users & external users. (a) internal users: These users plan, organize, and run companies. For these users, accounting provides a variety of internal reports including, for example, financial comparisons of operating alternatives, projections of profit from new sales campaigns, analyses of sales cost, and forecasts of cash needs. (b) external users: Investors use accounting information to make decisions to buy, hold, or sell their ownership interest. Lenders, such as bankers, use accounting information to evaluate the risks of lending money. Other creditors, such as suppliers, use accounting information to decide whether or not to grant credit (sell on account) to a customer.