Types of accounting information accounting

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Types of Accounting Information Accounting information refers to the financial statements generated through the process of book keeping, use of which helps the users to arrive decisions. The information made available by these statements can be categorized into the following : 1. Information Relating to Profit or surplus; 2. Information Relation to Financial Position; and 3. Information about Cash Flow. Let us now discuss these in detail. 1. Information Relating to Profit or Surplus : The Income Statement makes available the accounting information about the profit earned and loss incurred as a result of business operations or otherwise during an accounting period. 2. Information Relating to Financial Position : The Position Statement, i.e., the Balance Sheet makes available the information about the financial position of the entity 3. Information about Cash Flow : Cash Flow Statement is a statement that shows flow, both inflow and outflow, of cash during a specific period. It is of immense use as many decisions such as
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8 Address: Plot No 420, Behind Shopprix Mall, Vaishali Sector 5, Ghaziabad 201010 M: 9999907099, 9818932244 O: 0120-4130999 Website: , payment of liabilities, payment of dividend and expansion of business, etc., are based on availability of cash. Q.23. Explain the users of Accounting Information. Ans. Users of Accounting Information may be categorized into Internal Users and External Users. Internal Users (i) Owners: Owners contribute capital in the business and thus are exposed to maximum risk. (ii) Management: The management makes extensive use of accounting information to arrive at informed decisions such as determination of selling price, cost controls and reduction, etc. (iii) Employees and Workers: Employees and workers are entitled to bonus at the year-end, which is linked to the profit earned by an enterprise. External Users (i) Banks and Financial Institutions: Banks and financial institutions are an essential part of any business as they provide loans to businesses. (ii) Investors and Potential Investors: Investment involves risk and also the investors do not have direct control over the business affairs. (iii) Creditors: Creditors are those parties who supply goods or services on credit. It is a common business practice that a large number of supplier remain invested in credit sales. (iv) Government and its Authorities : The government makes use of financial statements to compile national income accounts and other information. (v) Researchers: Researches use accounting information in their research work. (vi) Consumer: Consumers require accounting information for estabilishing good accounting control so that cost of production may be reduced with the resultant reduction in the prices of products they buy.
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