Financial Accounting Tut 1A

• Groups interested in the financial reports of a business

  • Employees
  • Management
  • Current Owners
  • Customers
  • General Public
  • Potential Creditors
  • Bankers
  • Trade Unions
  • The Bureau of Statistics
• Employees are interested in the financial statements because

  Their livelihood, job, and salary depend on the company's performance
• Management needs the financial reports to

  Gauge their employees' performance and know if the company is performing well
• Current owners want to know

  If their company is profitable to safeguard their investment and maximize their return on investment
• Customers may be interested in the company's financial health to


  Ensure the business can continue to provide the products or services they require
• The general public may look for

  Potential investment opportunities in a company based on its financial reports
• Banks and financial institutions (potential creditors) want to

  Assess the company's ability to repay loans
• Bankers evaluate the company's financial reports and

  Assess its creditworthiness to decide whether to approve a loan
• Trade unions are interested in the company's financial performance because

  They represent employees and advocate for their rights
• The Bureau of Statistics collects data from financial reports for

  Economic analysis and tax purposes
• Types of businesses


  • Manufacturing Business
  • Trading Business
  • Service Business
• Manufacturing Business


  • Apple
  • Samsung
• Trading Business


  • Challenger
  • Courts
• Service Business


  • Spotify Premium
  • Law firm
• Types of business structures

  • Sole Proprietorship
  • Partnership
  • Company
• Sole Proprietorship


  Owned by one person, easy to set up, limited funds, and unlimited liability
• Partnership


  Owned by more than one person, easy to set up, more funds, and unlimited liability
• Company


  Limited liability, many owners or shareholders, ownership divided into shares, and access to large funds