The paper "Accounting Information of Tesco PLC and British Telecommunications PLC" is a perfect example of a finance and accounting assignment. This research entails the analysis of two companies based on the criteria of four questions. In broad terms, the analysis covers the external and internal users of accounting information. The research also examines the primary and secondary objectives of both companies, the financial ratios of the companies, and further, explores the importance of cash management and capital budgeting in the two companies. Question 1: Users of Accounting Information Accounting information communicates the financial status of a business at a given period.
This information is useful to both the internal and external users as discussed herein. The internal users include the management, the owners, and the employees whereas the external users include the tax authorities, creditors, investors, customers, and regulatory authorities (Shick 2009). The internal & external users of accounting information can be summarized as shown in Figure 1. Figure 1: Diagrammatic Representation of Users of Accounting Information Internal Users of Accounting Information Internal users are also referred to as primary users, who are directly involved on a day to day basis of the company’ s operations. There are different needs and requirements attributed to internal users in regard to accounting information.
For example, management uses accounting information to gauge how the company is performing and how well is management (Pincus 1995). This information includes an analysis of the current result for the management to formulate measures to improve the company performance. The analysis may entail ratio analysis and profit and loss account statements. Accounting helps to fulfill all statutory provisions. Determination of sale price and know how much labor is available for a certain work to be done.
They may also use this information to show evidence in the court. Past information will help to grow the nation and forecast the future demand Employees Employees are internal users who are entitled to access and assess the profitability of the company. The reason for this is to be guaranteed on the stability of the company to pay them remunerations and the possibility for them to grow their career and other benefits and allowances. A highly rewarding institution will motivate its workers to contribute greatly to the set goals, which are usually measured on the basis of companies’ performance as per the numbers on the financial information (Romney & Steinbart, 2006).
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