Understanding the Purpose and Use of Financial Statements: A

School: University of Calgary - Course: ACCT 601 - Subject: Accounting

LO 1: Identify the uses and users of accounting. LO 2:Describe the primary forms of business organization. LO 3:Explain the three main types of business activity. LO 4:Describe the purpose and content of each of the financial statements. LEARNING OBJECTIVES 2

• Accounting identifies and records the economic events of an organization and communicates to interested users • There are two broad categories of users • Internal users • External users Uses and Users of Accounting 3

Internal users • Manage the company, non-profit, government organization • Company officers, managers and directors in finance, marketing, human resources, production External users • Do not work for the company • Investors, lenders, and other creditors • Customers, employees, labour unions • Taxing authorities and regulators Users of Financial Information 4

• For accounting information to have value, preparers must have high ethical standards • Actions are legal and responsible • Consider organization's interests • Accountants, other professionals, and most companies have rules or codes of conduct to guide ethical behaviour