2. Identify and discuss 2 external users of accounting information and their information needs.
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- What is the accounting equation? List two examples of business transactions, and explain how the accounting equation would be impacted by these transactions.Does every transaction affect both sides of the accounting equation? Explain your answer.Define each of these users of accounting information as an internal user of external user Management Employees Investors Creditors Customers Tax authorities
- PURPOSE OF ACCOUNTING Describe the kind of information needed by the users listed. Owners (present and future) Managers Creditors (present and future) Government agenciesWhich of the following is the principle that a business must report any business activities that could affect what is reported on the financial statements? A. revenue recognition principle B. expense recognition (matching) principle C. cost principle D. full disclosure principleExternal users of financial accounting information include all of the following except ________. A. lenders such as bankers B. governmental agencies such as the IRS C. employees of a business D. potential investors
- ACCOUNTING PROCESS Match the following steps of the accounting process with their definitions. Analyzinga. Telling the results Recordingb. Looking at events that have taken place and thinking about how they affect the business Classifying Summarizingc. Deciding the importance of the various reports Reportingd. Aggregating many similar events to provide information that is easy to understand Interpretinge. Sorting and grouping like items together f. Entering financial information into the accounting systemDiscuss what information would be most useful for these users of accounting information: Management Employees Investors Creditors Customers Tax authoritiesPURPOSE OF ACCOUNTING Match the following users with the information needed. 1. Ownersa. Whether the firm can pay its bills on time 2. Managersb. Detailed, up-to-date information to measure business performance (and plan for future operations) 3. Creditorsc. To determine taxes to be paid and whether other regulations are met 4. Government agenciesd. The firms current financial condition