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Finance and management accounting
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ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 1
ASSIGNMENT
STATISTICS FOR MANAGEMENT
REG NO :
NAME : MOHAMMED THOUFEEQ
COURSE : MBA
SEMESTER : FIRST SEMISTER
SUBJECT CODE : MB 0041
SUBJECT NAME : FINANCIAL AND MANAGEMENT ACCOUNTING
SET NO : 1&2
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 2
ASSIGNMENT SET - 1
Q.1 Assure you have just started a Mobile store. You sell mobile sets and currencies of
Airtel, Vodaphone, Reliance and BSNL. Take five transactions and prepare a position
statement after every transaction. Did you firm earn profit or incurred loss at the end?
Make a small comment on your financial position at the end.
Particulars
Stock
Debtors Cash Capital Creditors
Hand set vouchers
Started business with cash 40000 40000 purchased nokia handsets 25000 -25000 purchased BSNL and Reliance recharge vouchers 5000 -5000 sold a handset for 6000 costing 5850 -5850 6000 150 Sold recharge vouchers of 1500 profit 6% -1500 1590 90 Puchased a second hand cell on crerdit 3000 3000 sold a handset for 10000 costing 9150 -9150 10000 850 Repair work of the second hand set -1000 -1000 Sold the hand set for 5000 -3000 5000 2000 Sold a hand set on credit for 10000 costing 9500 on credit -9500 10000 500 Realised 70% from the customer -7000 7000 Customer became bad debt -3000 -3000
500 3500 0 38590 39590 3000
42590 42590
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 3
Q.2 (a) List the accounting Standards as issued by ICAI.
Accounting Standards (ASs)
AS 1 Disclosure of Accounting Policies
AS 2 Valuation of Inventories
AS 3 Cash Flow Statements
AS 4 Contingencies and Events Occurring after the Balance Sheet Date
AS 5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies
AS 6 Depreciation Accounting
AS 7 Construction Contracts (revised 2002)
AS 8 Accounting for Research and Development
AS 9 Revenue Recognition
AS 10 Accounting for Fixed Assets
AS 11 The Effects of Changes in Foreign Exchange Rates (revised 2003),
AS 12 Accounting for Government Grants
AS 13 Accounting for Investments
AS 14 Accounting for Amalgamations
AS 15 Employee Benefits Limited Revision to Accounting Standard (AS) 15, Employee Benefits
AS 15 (issued 1995) Accounting for Retirement Benefits in the Financial Statement of Employers
AS 16 Borrowing Costs
AS 17 Segment Reporting
AS 18, Related Party Disclosures
AS 19 Leases
AS 20 Earnings Per Share
AS 21 Consolidated Financial Statements
AS 22 Accounting for Taxes on Income.
AS 23 Accounting for Investments in Associates in Consolidated Financial Statements
AS 24 Discontinuing Operations
AS 25 Interim Financial Reporting
AS 26 Intangible Assets
AS 27 Financial Reporting of Interests in Joint Ventures
AS 28 Impairment of Assets
AS 29 Provisions,Contingent` Liabilities and Contingent Assets
AS 30 Financial Instruments: Recognition and Measurement and Limited Revisions to AS 2, AS 11
(revised 2003), AS 21, AS 23, AS 26, AS 27, AS 28 and AS 29
AS 31, Financial Instruments: Presentation
Accounting Standard (AS) 32, Financial Instruments: Disclosures, and limited revision to Accounting
Standard (AS) 19, Leases
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 4
Q.2 (b) Write short notes of IFRS.
IFRS
The IFRS Foundation is an independent, not-for-profit private sector organisation working in the
public interest. Its principal objectives are:
to develop a single set of high quality, understandable, enforceable and globally accepted
international financial reporting standards (IFRSs) through its standard-setting body, the IASB;
to promote the use and rigorous application of those standards;
to take account of the financial reporting needs of emerging economies and small and
medium-sized entities (SMEs); and
to bring convergence of national accounting standards and IFRSs to high quality solutions.
The governance and oversight of the activities undertaken by the IFRS Foundation and its
standard-setting body rests with its Trustees, who are also responsible for safeguarding the
independence of the IASB and ensuring the financing of the organisation. The Trustees are publicly
accountable to a Monitoring Board of public authorities.
Standard-setting
The IASB (International Accounting Standards Board)
The IASB is the independent standard-setting body of the IFRS Foundation. Its members (currently
15 full-time members) are responsible for the development and publication of IFRSs, including the
IFRS for SMEs and for approving Interpretations of IFRSs as developed by the IFRS Interpretations
Committee (formerly called the IFRIC). All meetings of the IASB are held in public and webcast. In
fulfilling its standard-setting duties the IASB follows a thorough, open and transparent due process of
which the publication of consultative documents, such as discussion papers and exposure drafts, for
public comment is an important component. The IASB engages closely with stakeholders around the
world, including investors, analysts, regulators, business leaders, accounting standard-setters and the
accountancy profession.
The IFRS Interpretations Committee
The IFRS Interpretations Committee (formerly called the IFRIC) is the interpretative body of the IASB.
The Interpretations Committee comprises 14 voting members appointed by the Trustees and drawn
from a variety of countries and professional backgrounds. The mandate of the Interpretations
Committee is to review on a timely basis widespread accounting issues that have arisen within the
context of current IFRSs and to provide authoritative guidance (IFRICs) on those issues.
Interpretation Committee meetings are open to the public and webcast. In developing interpretations,
the Interpretations Committee works closely with similar national committees and follows a
transparent, thorough and open due process.
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 5
Q.3 Prepare Three-column Cash Book of M/s Thuglak & Co. from following particulars
20X1Jan 1. Cash in hand Rs. 50,000, Bank Overdraft Rs. 20,000
2. Paid into bank Rs. 10,000
3. Bought goods from Hari for Rs, 200 for each
4. Bought goods for Rs. 2,000 paid cheque for them, discount allowed 1%
5. Sold goods to Mohan for each Rs. 1.175
6. Received a cheque from Shyam to whom goods were sold for Rs.
800.Discount allowed 12.5%
7. Shyam’s cheque deposited into bank
8. Purchased an old typewriter for Rs. 200 , Spent Rs. 50 on its repairs
9. Bank notified that Shyam’s cheque has been returned dishonored and
debited the account in respect of charges Rs. 10
10. Received a money order Rs. 25 from Hari
11. Shyam settled account by cheque for Rs. 820,Rs.20 for interest charged.
12.Withdrew from the bank Rs. 10,000
18. Discounted a B/E for Rs. 1,000 at 1% through bank
20. Honored our own acceptance by cheque Rs. 5,000
22. Withdrew fir personal use Rs. 1,000
24. Paid tread expenses Rs. 2,000
25. Withdrew from bank for private expenses Rs. 1,500
26. Purchased machinery from Rajiv for 5,000 and paid him by means of a
bank draft purchased for Rs. 5,005
27. Issued cheque to Ram Saran for cash purchased of furniture Rs. 1,575
28. Received commission cheque Rs. 500 from R.& Co, deposited in bank
29. Ramesh who owned us Rs. 500 became bankrupt paid 50 paise in rupee
30. Received payment of a loan of Rs. 5,000 & deposited Rs. 3,000 into bank
31. Paid rent to landlord “Mohan” by cheque of Rs. 220
31. Interest allowed by bank Rs. 30
31. Half-yearly bank charges Rs. 50
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 6
Solution
Dr In the books of M/s Tuglak& Co. Cash Book Cr
Date Partriculars LF VN Cash Bank Disc Date Partriculars LF VN Cash Bank Disc
2011 2011
1-Jan To, Balance B/d 50000 1-Jan By, Balance B/d 20000
2-Jan To, Cash © 10000 2-Jan By, Bank © 10000
5-Jan To, Mohan 1175 3-Jan By, Hari 200
6-Jan To, Shyam 700 100 4-Jan By, Purchase 1980 20
7-Jan To, Cash © 700 7-Jan By, Bank © 700
10-Jan To, Hari 25 8-Jan By, Typewriter 250
11-Jan To, Shyam 820 9-Jan By, Shyam 700
12-Jan To, Bank © 10000 9-Jan By, Charges 10
18-Jan To, Bills Receivable 990 12-Jan By, Cash © 10000
28-Jan To, Commission 500 20-Jan By, Bills Payable 5000
29-Jan To, Ramesh 250 22-Jan By, Drawings 1000
30-Jan To, Loan Repayment 2000 3000
24-Jan By, Trade Exp 2000
31-Jan To, Interest 30 25-Jan By, Drawings 1500
26-Jan By Machinery 5005
27-Jan By, furniture 1575
31-Jan By, Rent 220
31-Jan By, Bank Charge 50
31-Jan To, Balance c/d 29750 31-Jan By, Balance c/d 49750
63900 46040 100 63900 46040 20
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 7
Q.4 Choose an Indian Company of your choice that has adopted Balance Score Card
and detail on it.
Tata motors
Tata Motors is the first Indian company to be inducted in the Balance Scorecard Hall of Fame.
Joins the thirty-member elite club of organizations including Hilton Hotels, BMW Financial Services,
US Army, Korea Telecom and Norwegian Air Force for achieving excellence in performance.
The commercial vehicle business unit (CVBU) of Tata Motors, India's largest automobile
manufacturer, received prestigious Balanced Scorecard Collaborative, The coveted Steuben crystal
'Rising Star' trophy was presented at Balanced Scorecard Asia Pacific Summit held at Australia.
Tata Motors-CVBU has been recognized for having achieved a significant turnaround in its
overall performance. The implementation of the Balanced Scorecard has enabled greater focus on
different elements of operational performance. Defining, cascading and communicating strategies
across the organisation have brought about transparency and alignment. The scorecard incorporates
SQDCM (safety, quality, delivery, cost and morale) and VMCDR (volume, market share, customer
satisfaction, dealer satisfaction and receivables).Ravi Kant, executive director, CVBU, Tata Motors,
said, "While we were conscious of the benefits of the Balanced Scorecard when we began
implementing it three years back, we are extremely pleased that it has helped us achieve significant
improvements in our overall performance. I am quite positive that the BSC will play an important part
in our objective to become a world-class organization."Balanced Scorecard Collaborative president Dr
David P Norton said, "We created the Hall of Fame to publicly acknowledge the hard work and
remarkable results of implementing the Balanced Scorecard to create the strategy-focused
organization. The Balanced Scorecard Hall of Fame pays tribute to the success that each
organization has attained. Tata Motors- CVBU shares the honour with the city of Brisbane and Korea
Telecom (KT).The Balanced Scorecard (BSC) concept-created by Dr Robert S Kaplan and Dr David
P Norton in 1992, has been implemented in thousands of corporations, organizations, and
government agencies worldwide. Based on the simple premise that "measurement motivates," the
BSC puts strategy at the centre of the management process, allowing organizations to implement
strategies rapidly and reliably. Balanced Scorecard Collaborative, Inc. is a new kind of professional
services firm dedicated to the worldwide awareness, use, enhancement, and integrity of the Balanced
Scorecard as a value-added management process. Tata Motors range of commercial vehicles spans
over 135 models and can haul loads ranging from 2 to 40 tones. The product portfolio also includes
12 to 60-seater buses, tippers and tractor-trailers. Tata Motors vehicles meet the stringent Euro
emission norms. The company currently has an export base in most parts of South Asia, Africa,
Middle East and Europe. Tata Motors recently crossed the 3-million production milestone.
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 8
Q.5 From the following data of Jagdish Company prepare (a) a statement of source
and uses of working capital (funds) (b) a schedule of changes in working capital
Assets 2008 2007
Cash 1,26,000 1,14,000
Short-term investment 42,400 20,000
Debtors 60,000 50,000
Stock 38,000 28,000
Long term Investment 28,000 44,000
Machinery 2,00,000 1,40,000
Building 2,40,000 80,000
Land 14,000 14,000
Total 7,48,400 4,90,000
Liabilities and Equity
Accumulated depreciation 1,10,000 60,000
Creditors 40,000 30,000
Bills Payable 20,000 10,000
Secured loans 2,00,000 1,00,000
Share capital 2,20,000 1,60,000
Share premium 24,000 Nil
Reserves and surplus 1,34,400 1,30,000
Total 7,48,400 4,90,000
Income statement
Sales 2,40,000
Cost of goods sold 1,34,600
Gross Profit 1,05,200
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 9
Less Operating expenses:
Depreciation – machinery 20,000
Depreciation – building 32,000
Other expenses 40,000
92,000
Net profit from operation 13,200
Gain on sale on long-term investment 4,800
Total 18,000
Loss on sale of machinery 2,000
Net Profit 16,000
Adjustments:
Machinery worth Rs.70000 was purchased and worth Rs.10000 was sold during the year
[Accumulated depreciation on machinery is Rs.18000 after adjusting depreciation on machinery sold].
Proceeds from the sale of machinery were Rs.6000
Dividends paid during the year Rs.11600
Solution
Schedule of change in working capital
Particulars 2007 2008
Effect in working Capital
Increase Decrease
Current Assets
Cash 114000 126000 12000
Short term investment 20000 42400 22400
debtors 50000 60000 10000
Stock 28000 38000 10000
(A) 212000 266400
Current Liabilities
Creditors 30000 40000 10000
Bills Payable 10000 20000 10000
(B) 40000 60000
Net working capital (A-B) 172000 206400
Increase in working capital 34400 34400
206400 206400 54400 54400
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 10
Adjusted P/L A/c
Partriculars Rs Partriculars Rs
dividend paid 11600 By balance b/d 130000 Depreciation on building 32000
profit on sale of investment 4800
Depreciation on machinery 20000 Fund from operation 65200 loss on sale of machinery 2000
To, Balance c/d 134400
200000 200000
Fund flow statement
Source Rs Application Rs
Loan taken 100000 increase in working capital 34400
share issued at premium 84000 dividend paid 11600
Sale of investment 20800 purchase of building 192000
sale of machinery 6000 purchase machinery 70000
Fund from operation 65200
Sale of machinery 32000
308000 308000
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 11
Q.6 What is a cash budget? How it is useful in managerial decision making?
Cash budget is an estimation of the cash inflows and outflows for a business or individual for a
specific period of time. Cash budgets are often used to assess whether the entity has sufficient cash
to fulfill regular operations and/or whether too much cash is being left in unproductive capacities.
A cash budget is extremely important, especially for small businesses, because it allows a company
to determine how much credit it can extend to customers before it begins to have liquidity problems.
For individuals, creating a cash budget is a good method for determining where their cash is regularly
being spent. This awareness can be beneficial because knowing the value of certain expenditures
can yield opportunities for additional savings by cutting unnecessary costs.
For example, without setting a cash budget, spending a dollar a day on a cup of coffee seems fairly
unimpressive. However, upon setting a cash budget to account for regular annual cash expenditures,
this expenditure comes out to an annual total of $365, which may be better spent on other things. If
you frequently visit specialty coffee shops, your annual expenditure will be substantially more.
The importance of cash budget may be summarized as follow:-
(1) Helpful in Planning. Cash budget helps planning for the most efficient use of cash. It points out
cash surplus or deficiency at selected point of time and enables arrange for the deficiency before time
or to plan for investing the surplus money as profitable as possible without any threat to the liquidity.
(2) Forecasting the Future needs. Cash budget forecasts the future needs of funds, its time and the
amount well in advance. It, thus, helps planning for raising the funds through the most profitable
sources at reasonable terms and costs.
(3) Maintenance of Ample cash Balance. Cash is the basis of liquidity of the enterprise. Cash
budget helps in maintaining the liquidity. It suggests adequate cash balance for expected
requirements and a fair margin for the contingencies.
(4) Controlling Cash Expenditure. Cash budget acts as a controlling device. The expenses of
various departments in the firm can best be controlled so as not to exceed the budgeted limit.
(5) Evaluation of Performance. It acts as a standard for evaluating the financial performance.
(6) Testing the Influence of proposed Expansion Programme. Cash budget forecasts the inflows
from a proposed expansion or investment programme and testify its impact on cash position.
(7) Sound Dividend Policy. Cash budget plans for cash dividend to shareholders, consistent with
the liquid position of the firm. It helps in following a sound consistent dividend policy.
(8) Basis of Long-term Planning and Co-ordination. Cash budget helps in co-ordinating the
various finance functions, such as sales, credit, investment, working capital etc. it is an important
basis of long term financial planning and helpful in the study of long term financing with respect to
probable amount, timing, forms of security and methods of repayment.
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 12
ASSIGNMENT SET - 2
Q.1 Selected financial information about Vijay merchant company is given below:
Compute the current ratio, quick ratio, average debt collection period and inventory turnover for
2009 and 2010. State whether there is a favorable or unfavorable change in liquidity from 2009 to
2010. At the beginning of 2009, the company had debtors of Rs..2500 and inventory of Rs.3000.
Year Current Assets Current Liabilities Current Ratio 2009 12000 11000 1.090909091
2010 24100 16000 1.50625
Year Quick Assets Quick Liability Quick ratio
2009 6500 11000 0.590909091
2010 12700 16000 0.79375
Year Credit Sales Average Debtors Debtors Turn over
2009 43000 4500 9.555555556
2010 69000 6100 11.31147541
Year Year in days Debtors Turnover Debt Collection period
2009 365 9.555555556 38.19767442
2010 365 11.31147541 32.26811594
Year Cost of goods sold Inventory Stock Turnover period
2009 32500 5500 5.909090909
2010 57000 11400 5
2010 2009
Sales 69,000 43,000
Cost of Goods Sold 57,000 32,500
Debtors 7,200 3,000
Inventories 11,400 5,500
Cash 1,500 800
Other current assets 4,000 2,700
Current liabilities 16,000 11,000
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 13
Q.2 Explain different methods of costing. Your answer should be studded with examples (preferably firm name and product) for each method of costing Job Costing:
This is a product related classification of costing system. The cost is ascertained for each job or
work order processed. This system is used where most of the manufacturing activities are planned
and carried out for distinct jobs or customers. The utility of this method increases when there is great
variability in nature of jobs or work orders processed.
Batch Costing :
This method determines the cost associated with each batch pf products manufactured. This
differs from job or work order costing in the variability of the production batches. In this case the
production batches consist of mostly standard products or components. What varies is mostly the
size of batches and the timing of their processing.
Process Costing:
In this method of costing the costs are determined for various different manufacturing activities or
processes. These costs are the assigned to different products on the basis of some criteria like
quantity processed or the time taken for processing. This method of costing is suitable for
manufacturing units that use continuous processes or mass production techniques. This method is
particularly suitable where there are many different products and process routes, where output of one
process becomes input for another.
Operation Costing:
This method is similar to the process costing. However the products manufactured have limited
variation. For example a cement plant may use this method.
Multiple costing:
Most of the organizations use a combination of different costing method rather than just one
method. Multiple costing refers to such combinations of different methods.
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 14
Q.3 State the importance of differentiating between the fixed costs and variable costs in managerial decision.
Variable costs are costs that can be varied flexibly as conditions change. In the John Bates
Clark model of the firm that we are studying, labor costs are the variable costs. Fixed costs are the
costs of the investment goods used by the firm, on the idea that these reflect a long-term commitment
that can be recovered only by wearing them out in the production of goods and services for sale.
The idea here is that labor is a much more flexible resource than capital investment. People can
change from one task to another flexibly (whether within the same firm or in a new job at another
firm), while machinery tends to be designed for a very specific use. If it isn't used for that purpose, it
can't produce anything at all. Thus, capital investment is much more of a commitment than hiring is.
In the eighteen-hundreds, when John Bates Clark was writing, this was pretty clearly true. Over the
past century, a) education and experience have become more important for labor, and have made
labor more specialized, and b) increasing automatic control has made some machinery more flexible.
So the differences between capital and labor are less than they once were, but all the same, it seems
labor is still relatively more flexible than capital. It is this (relative) difference in flexibility that is
expressed by the simplified distinction of long and short run.
Of course, productivity and costs are inversely related, so the variable costs will change as the
productivity of labor changes.
Here is a picture of the fixed costs (FC), variable costs (VC) and the total of both kinds of costs (TC)
for the productivity
Output produced is measured toward the right on the horizontal axis. The cost numbers are on the
vertical axis. Notice that the variable and total cost curves are parallel, since the distance between
them is a constant number -- the fixed cost.
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 15
Q.4 Following are the extracts from the trial balance of a firm as at 31st March 2009
Name of the account Dr Cr
Sundry debtors 2,05,000
Bad debts 3,000
Additional Information
1) After preparing the trial balance, it is learnt that Mr.X a debtor has become insolvent and
nothing could be recovered from him and entire 5,000 due from him was irrecoverable.
2) Create 10% provision for doubtful debt.
Required: Pass the necessary journal entries and show the sundry debtors account, bad debts
account, provision for doubtful debts account, P&L a/c and Balance sheet as at 31st March 2009.
Sundry debtors 205000
Less Bad debt 5000
less PBD 20000
180000
Date Particulars LF Dr Cr
Bad debt A/c ………………………………………………………. Dr To, Debtors A/c
5000 5000
P/L A/c ………………………………………………………………… Dr To Bad debt A/c
5000 5000
P/L A/c ……………………………………………………………….. Dr To, Provision for bad debt A/c
20000 20000
Dr Bad Debt A/c Cr
Date Partriculars LF Rs Date Partriculars LF Rs
To P/L A/c 5000 By, Debtors A/c 5000
5000 5000
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 16
Dr P/L A/c Cr
Date Partriculars LF Rs Date Partriculars LF Rs
To Bad debt A/c 5000
To, PBD 20000
25000
Balance Sheet
Liability Rs Assets Rs
Sundry debtors 205000
LESS Bad debt 5000
LESS PBD 20000
180000
Q.5 A change in credit policy has caused an increase in sales, an increase in discounts
taken, a decrease in the amount of bad debts, and a decrease in investment in
accounts receivable. Based upon this information, the company’s (select the best one
and give reason)
1) Average collection period has decreased
2) Percentage discount offered has decreased
3) Accounts receivable turnover has decreased
4) Working Capital has increased.
Solution
1) Average collection period has decreased
Since sales have increased, you would expect accounts receivable to increase too, if the
Average collection period remained the same. But you're told that AR has decreased, so the Average
collection period must have decreased, i.e. the customers are taking fewer days to pay up.
ASSIGNMENT - FINANCIAL AND MANAGEMENT ACCOUNTING - MB0041
Page 17
Q.6 Identify the users of accounting information.
Accounting plays a very important role in all businesses but it is not just the business itself that
finds accounting information useful. There are other stake holders who rely on accounting information
to make decisions. These stakeholders include:
1. Shareholders - Shareholders use the balance sheet and profit and loss account produced by
limited companies to decide if they are going to increase or decrease their holding.
2. Management - Management in every level of the business from director level to supervisor level
rely on accounting information to do their job properly. They all use the same information for different
purposes. For example, directors use it for strategic purposes and middle management can use it to
see if they are meeting their financial targets.
3. Suppliers - Along with other data suppliers will look at a company's balance sheet and profit and
loss account to see if and how much credit they are willing to give to present and potential customers.
4. Lenders - Similar to suppliers lenders also need to make sure a company is in a healthy financial
situation before they start to lend money.
5. Government - Governments use the information provided by a company about its finances to levy
tax on the profits.
6. Customers - Before another company becomes a customer or enters into a joint venture, they will
look at the company's finances to make sure the company is not in trouble and that their supplies are
not about to dry up.
7. Employees - Employees also have an interest in how well their employer is doing so use financial
accounting information for this purpose.