MGAB01H3 Chapter 1: Chapter 1 Textbook Notes
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MGAB01H3 Full Course Notes
Verified Note
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Document Summary
Chapter 1: purpose and 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. Internal users are people who work for the company (e. g. finance directors, marketing managers, human resources personnel, production supervisor, an company officers) They use accounting information in order to plan, organize and run companies. Internal users use accounting information to make reports such as: financial comparisons of operating alternatives, projections of earnings from new sales campaigns, forecasts of cash needs for the next year, analyses of sales costs, budgeted financial statements. Creditors and investors are the main external users of accounting information. Investors use accounting information to make decisions to buy, hold, or sell their ownership interest: is the company earning enough to give me a return on my investment.
