COMMERCE 1BA3 Study Guide - International Financial Reporting Standards, Accounts Payable, Deferral

47 views18 pages

Document Summary

Accounting is about providing useful information for decision making. Objective is to identify and measure the activities of a business entity in order to evaluate its performance and to assess its financial health. Then communicate results to stakeholders through set of accounting reports. Reports help stakeholders make rational economic decisions. Have to know the stakeholders and what they need. Two groups of primary users of financial statements: managers: interpret information in financial statements to make business decisions, investors/creditors: analyze financial statements to determine resource allocation of funds (if they want to invest in company) Financial accounting: periodic financial statements and related disclosures (for external users) Managerial accounting: detailed plans and continuous performance reports (for internal users) External users and internal users need different information. External users do not need to know about employee records but internal users do. There is a legal separation between the entity and the owners.