2.3

• Accounting Information is produced and presented based on the needs of users.
• Internal Users use accounting information for budgeting, forecasting, monitoring of investments and returns and assess the sustainability and security of their remunerations.
• External Users use accounting information for investments, lending, tax and penalty, transactions, and consumer decisions.
• Net Profit is when revenues are greater than expenses.
• Net Loss is when revenue is less than the expenses.
• The Statement of Financial Position shows the current balances of the assets, liabilities and equity.
• Assets are the resources owned by the business.
• Liabilities are the obligations needed to be settled by creditors.
• Equity are the financial claims that owners have in the business, it increases with net income and decreases with net loss.
• The Statement of Cash Flows shows the movement of cash and the activities where cash comes from and goes to, it includes the cash receipts and disbursements.
• Operating activities in the Statement of Cash Flows include cash received from customers, cash paid to suppliers, and other sources or uses of cash from business activities.
• Investing activities in the Statement of Cash Flows include sources and uses of cash from various investments.
• Financing activities in the Statement of Cash Flows include sources from investors or banks and cash paid to shareholders.
• The Schedule of Goods Manufactured shows the cost of producing a product.
• Product Costs include direct materials, direct labor, and overhead.
• Total Units Produced is information for tax management.
• The Statement of Profit or Loss shows the basis of tax computation which is the operating income, higher operating income equals higher taxes.
• Operating Income is the result of deducting the expenses from the revenue.
• Cash flow from Business activities is the taxing authority that regulates guidelines, implements policies and procedures, and monitors the payment of allowable deductions that could lessen the taxes, deductions should be supported by valid and pertinent documents.