1. How Financial Statements are Used

2. Business Owners and Managers F.S. are invaluable because it can help owners and managers to decide if there have been any changes in their business – either profit or decline F.S. are invaluable because it can help owners and managers to decide if there have been any changes in their business – either profit or decline Can compare company performance from one fiscal period to the next Can compare company performance from one fiscal period to the next Can look for trrends and respond to those trends Can look for trrends and respond to those trends

3. Investors Investors can use f.s. to decide if it is a good thing to invest in a business or not Investors can use f.s. to decide if it is a good thing to invest in a business or not They can look at earnings, losses, trends etc before they invest They can look at earnings, losses, trends etc before they invest

4. Lenders Banks etc need to know and be reassured that loans will be repaid and that the company has the capability of doing so Banks etc need to know and be reassured that loans will be repaid and that the company has the capability of doing so Is the business producing enough income to pay the debt? Is the business producing enough income to pay the debt? Balance sheet shows lenders how much the business owes others and what their assets are Balance sheet shows lenders how much the business owes others and what their assets are

5. Government Government checks businesses’ f.s. to make sure that they have paid all of the income tax that they need to and that all expenses claimed were allowable Government checks businesses’ f.s. to make sure that they have paid all of the income tax that they need to and that all expenses claimed were allowable It also shows what the business owes and owns It also shows what the business owes and owns

6. Computers and Accounting Advantages: computers don’t make arithmetic errors Advantages: computers don’t make arithmetic errors They will also not let a person enter a transaction that puts the fundamental accounting equation out of balance They will also not let a person enter a transaction that puts the fundamental accounting equation out of balance They provide immediate financial information They provide immediate financial information Can create pie graphs and charts to visually display information Can create pie graphs and charts to visually display information