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accountingIntroduction - Financial Managerial Accounting...

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Financial & Managerial Accounting Module Introduction to Accounting Two users of accounting info: 1. Internal 2. External Two types of accounting info: 1. Financial 2. Managerial Financial accounting focuses on external users, providing quarterly and annual reports. This module provides a basic overview of accounting along with some key accounting terminology. Accounting is sometimes referred to as the language of business. Everything done in a business has accounting implications. This is because an organization’s accounting system collects, measures, and organizes all of its financial transactions. This information is then communicated to interested users so that the best business decisions can be made. Accounting Information Users Users of accounting information can be classified into two categories – those external to the organization and those internal to the organization. External users include investors, creditors, customers, suppliers, unions, and governmental organizations like the Internal Revenue Service. Internal users include an organization’s board members and its management. Let’s look at the types of accounting information each user group is most interested in. There are two basic types of accounting information – financial accounting and managerial accounting. Financial Accounting Financial accounting primarily focuses on the needs of external users by providing summarized information about the organization in the form of quarterly and annual reports. An important component of these reports is the organization’s financial statements. The primary financial statements are the income statement, the statement of changes in equity, the balance sheet, and the cash flow statement. Each of these statements is discussed in detail in upcoming modules. Introduction to Accounting Version 1.0 1 of 8
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