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About 'discuss the users of accounting information'|...caregiving prior to this grow, which was one of the reasons why this court case should have allowed this information to come in — which it didn’t.” The Future...








At               first               glance,               accounting               can               appear               extremely               complicated               and               confusing.

The               untrained               eye               may               struggle               to               grasp               the               entire               nature               of               accounting               and               see               it               merely               as               an               incomprehensible               mass               of               numbers.

However,               accounting               is               actually               much               more               for               a               company.

Ultimately,               accounting               "is               an               information               system               that               measures,               processes,               and               communicates               financial               information               about               an               identifiable               economic               entity"               (Kanter               &               Pressley,               n.d.,               Slide               1-7).

Furthermore,               this               information               is               designed               to               make               it               easier               for               individuals               with               an               interest               in               an               organization               to               make               better               decisions               about               that               particular               entity               (Wild,               Larson               &               Chiapetta,               2007,               p.

5).

As               a               result,               I               strongly               believe               that               the               true               significance               of               accounting               cannot               be               fully               appreciated               without               first               examining               all               the               different               individuals               who               actually               use               this               information.

To               help               you               further               appreciate               the               importance               of               accounting,               I               have               composed               the               following               paragraphs               to               outline               the               different               users               of               accounting               information,               as               well               as               the               accountant's               responsibilities               to               each.

First,               we               will               discuss               who               exactly               uses               accounting               information.

Overall,               these               individuals               can               be               separated               into               two               distinct               groups:               (1)               internal               users               of               accounting               information               and               (2)               external               users               of               accounting               information               (Sweatt,               2002;               Wild,               Larson               &               Chiapetta,               2007,               p.

5).

External               users               can               further               be               divided               into               two               subgroups:               (1)               "those               with               direct               financial               interest"               in               a               firm               and               (2)               "those               with               indirect               financial               interest"               (Kanter               &               Pressley,               n.d.,               Slide               1-27).

In               the               end,               accounting               information               is               invaluable               to               all               of               these               users.
               Probably               the               first               type               of               users               of               accounting               information               that               comes               to               mind               is               external               users.

This               group               is               made               up               anyone               outside               an               organization               that               uses               accounting               information               to               make               financial               decisions               (Wild,               Larson               &               Chiapetta,               2007,               p.

5).

As               I               previously               mentioned,               this               group               is               made               up               of               two               subdivisions.

Examples               of               outside               individuals/entities               that               are               directly               affected               by               a               company's               finances               include               investors,               stockholders,               and               creditors               since               they               put               their               money               at               risk               with               investments               into               a               business.

On               the               other               hand,               other               external               users               have               a               much               more               general               interest               in               an               organization               and               include               customers,               suppliers,               the               press,               and               regulators               (Kanter               &               Pressley,               n.d.,               Slide               1-27;               Wild,               Larson               &               Chiapetta,               2007,               p.

5).

Consequently,               accounting               information               is               crucial               to               external               users               because               it               can               show               those               outside               a               company               such               things               as               if               that               company               is               healthy,               stable,               and               expanding               (and               thus               a               sound               investment)               and               if               it               is               observing               ethical               business               practices               and               accurate               accounting               procedures               (Department               of               Accounting               &               Finance,               n.d.;               Wild,               Larson               &               Chiapetta,               2007,               p.

5-6).
               Then,               we               have               internal               users               of               accounting               information,               such               as               employees               and               the               various               types               of               managers               (i.e.,               purchasing               managers               and               marketing               managers).

Accurate               accounting               is               extremely               crucial               to               these               individuals               who               make               important               financial               and               business               decisions               within               an               organization               that               directly               affect               the               business               itself               (Wild,               Larson               &               Chiapetta,               2007,               p.

6).

Fundamentally,               a               company               "aims               to               sell               goods               and               services               to               customers               at               prices               that               will               provide               an               adequate               return               to               its               owners"               (Kanter               &               Pressley,               n.d.,               Slide               1-13).

A               business               must               maintain               an               adequate               level               of               profitability               and               liquidity               to               continue               operating               (Kanter               &               Pressley,               n.d.,               Slide               1-14).

However,               without               accounting               information,               this               is               not               possible.

A               firm's               management               needs               this               information               to               properly               conduct               daily               activities               within               the               business,               such               as               finance               the               company,               invest               its               resources,               produce               its               goods               and/or               services,               market               those               goods               and/or               services,               and               manage               the               employees               (Kanter               &               Pressley,               n.d.,               Slide               1-29).

However,               accounting               information               is               just               as               critical               for               internal               users               when               they               make               decisions               that               will               affect               the               future               of               the               company,               such               as               the               profitability               of               a               proposed               product               or               expansion               into               a               new               location               (Department               of               Accounting               &               Finance,               n.d.;               Wild,               Larson               &               Chiapetta,               2007,               p.

6).
               In               the               end,               despite               the               differences               between               internal               and               external               users,               the               accountant               has               similar               responsibilities               to               both               of               these               groups.

First,               all               accountants               have               the               responsibility               to               always               be               ethical.

The               AICPA               and               state               authorities               recommends               that               every               accountant               should               follow               a               code               of               ethics               that               emphasizes               "responsibility               to               the               public,               integrity,               objectivity,               independence,               and               due               care"               (Kanter               &               Pressley,               n.d.,               Slide               1-85).

Furthermore,               the               accountant               has               the               responsibility               to               both               types               of               users               to               ensure               that               all               financial               information               is               in               accordance               to               Generally               Accepted               Accounting               Principles               (GAP).

Financial               documents               that               are               created               according               to               GAP               help               ensure               that               accounting               information               is               as               accurate,               unbiased,               uniform,               and               understandable               as               possible               (Department               of               Accounting               &               Finance,               n.d.;               Kanter               &               Pressley,               n.d.,               Slides               1-79               &               1-80).

Furthermore,               the               accountant               should               always               strive               to               present               accounting               information               that               is               objective               and               relevant               to               give               both               internal               and               external               users               the               best               possible               picture               of               the               company.

And               finally,               accounting               information               is               not               worth               that               much               to               users               if               it               is               not               presented               in               a               timely               manner.

Thus,               accountants               should               always               strive               for               timeliness,               as               well               (Department               of               Accounting               &               Finance,               n.d.).
               References:
               Department               of               Accounting               &               Finance.

(n.d.).

Unit               1:               Financial               statements.

Retrieved               May               26,               2008,               from               University               of               Strathclyde               Web               site:               http://accfinweb.account.strath.ac.uk/ammsc/p101.html
               Kanter,               H.

A.,               &               Pressley,               M.

M.

(n.d.).

Multimedia               slides               of               chapter               1:               Uses               of               accounting               information               and               the               financial               statements               (In               Financial               accounting               by               Belverd               E.

Needles,               Jr.

&               Marian               Powers).

Retrieved               May               25,               2008,               from               Houghton               Mifflin               College               Web               site:               http://www.college.hmco.com/accounting/needles/fa/instr/ppt/ch01/sld001.htm
               Wild,               J.

J.,               Larson,               K.

D.,               &               Chiapetta,               B.

(2007).

Fundamental               accounting               principles               (18th               edition).

Boston:               McGraw-Hill/Irwin.






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