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Overview of Accounting
This presentation is to give information to a group of small business owners with no
accounting or financial knowledge. The presentation is designed to help the small business
owner understand and fulfill their accounting and finance responsibilities. I will identify
the audiences, purposes, and natures of financial statements and managerial reports. I will
also explain the use of financial accounting information in making informed and ethical
business decisions.
Identifying the Audience
Financial and managerial reports are useful to different users for different reasons;
depending on who is in your audience. The users of financial statements include present
and potential investor, lenders, suppliers and other trade creditors, governments and their
agencies and the public. They use financial statements in order to satisfy some of their
different needs for information.
Financial statements and managerial reports provide for investors the risk inherent and the
return provided by their investments. They require information to help them determine
whether they should buy, hold or sell. Shareholders are also interested in information
which enables them to assess the ability of the enterprise to pay dividends. (Block, Hirt
2005)
Lenders are interested in information that enables them to determine whether their loans,
and the interest attaching to them, will be paid when due.
Suppliers and other trade creditors are interested in information that enables them to
determine whether amounts owing to them will be paid when due. Trade creditors are
likely to be interested in an enterprise over a shorter period than lenders unless they are
dependent upon the continuation of the enterprise as a major customer.
