Week 4 paper 07012008 Essay Example | Topics and Well Written Essays - 500 words

Week 4 paper 07012008 - Essay Example he users of financial and managerial information like balance sheets, income and expenditure accounts, cash flows and other accounting information can therefore be divided into two groups, internal users of accounting information and external users of accounting information. Managerial accounting information is historical or forecasted information that is collected to help in managing and planning business strategies. (Warren, C., Reeve, J. & Fess, P., 2004) This information is used by a company’s managers and employees etc. Accounting information is used by every member within an organization for many reasons. These users can be from higher or the lower levels of management. Internal users of accounting information could use accounting information for a variety of reasons. Firstly, this information can be used to analyze previous year’s performance. This performance would help them in business decisions in future. A company could also use this information to calculate various ratios that will help it determine is profitability and liquidity. Employees could use this information before demanding for wage increase. Largely, all business decision making is based upon such information. Owners of the company can use this information to see whe ther their retained profits are enough to cover up for a planned investment in future. Financial accounting information is information that is collected for groups who are not a part of the organization. These groups include shareholders, investors, government agencies, creditors, customers, suppliers and of course, the general public. (Warren, C., Reeve, J. & Fess, P., 2004) Shareholders will use a firm’s accounting information to determine their current or future share values. Investors would use accounting information to help decide whether or not they want to invest in particular company. They would use accounting information to calculate different ratios that will help them in deciding where to invest. Government