FINANCIAL

INFORMATION
AND ACCOUNTING
What is Financial Information and Accounting?
 
Accounting is an information system that identifies and records organizations’ transaction and
then communicates them to a wide variety of users.
 
Knowledge of accounting is relevant and useful in whatever career you are about to pursue.
Every position requires some knowledge of accounting or an understanding of how your
actions in your position will affect the business overall both their profitability and their
progress as they move forward.
 
You must be able to analyzed the information from the past so that you can adjust what you do
in the future to ensure the company you own or work for is profitable. You need accounting
information to make and form decisions about how to move forward.
Who are the Users of Financial Information?
 
Users of Financial Information are those individuals who have questions about the
organization and they needed the information to find answers and make smart decisions. They
analyze what happened in the past in order to predict what may happen in the future. To do
that, they need to tail the accounting information on a timely basis.

2 Types of Users of Accounting Information

Internal
External
a. Internal Users
- Plan, organize, and run businesses.
- They have access to the large amount of information.
- They ask questions on:
Price to be charged for their products and services
Market extensions
Products profitability

b. External Users
- Outside of organization and they depend on financial statements in order to make and
form decisions
- Key external users of financial information that make resources allocation decisions,
they also ask the following questions:
Investors: Return of Investment
Lenders: Ability of the company to pay
Other Creditors: Ability of the company to pay
- Other external users: Employees and Labor Unions, Customers, Tax Agencies,
Regulatory Agencies, Financial Analysts.
Ethics and Accounting Information
 

A useful Accounting Information

represents the actual economic activity of
an organization.
Accountants follow the conceptual
framework which guides:
• What they report
• When they report it
• How the present it
Following incorrect information may result to:

• Financial crisis
• Reduced confidence in the information provided by
accounting systems
Two (2) Types of Accountants
 
a. Private Accountant - If the work is being performed strictly for the benefit
of a specific company. Private accountants work for the specific company
or business entity for which they offer accounting services.
  
Activities of a Private Accountant

a. Preparing financial statements

b. Auditing company records
c. Developing accounting systems,
d. preparing tax returns, and
e. Providing financial information for management decision-
making
b. Public Accountant - the work being performed is done to satisfy regulatory
requirements for transparency. Public accountants, on the other hand, and public
accounting firms are not employed solely by any one client, and as such they are
not part of the client’s business or corporate structure.
Services of the Public Accountants
a. preparation of financial statements and tax returns,
b. independent auditing of financial records and accounting methods, and
c. management consulting. 
d. Auditing
Auditing, the process of reviewing the records used to prepare financial
statements, is an important responsibility of public accountants. They issue a
formal auditor’s opinion indicating whether the statements have been
prepared in accordance with accepted accounting rules. This written opinion
is an important part of a company’s annual report.