FINANCIAL ACCOUNTING TOOLS FOR BUSSINESS DECISION
MAKING EXAM LATEST VERSION -2025/2026- 100+ Q AND ANS
ALL THE BEST
What is accounting?
The information system that identifies, records and communicates the economic
events of an organization to interested users.
Who are the users of financial information?
They can be divided broadly into two groups: internal users and external users.
Who are internal users?
Managers who plan, organize and run a business.
What information does accounting provide to its internal users?
Accounting provides internal reports, such as financial comparisons of operating
alternatives, projections of income from new sales campaigns, and forecasts of
cash needs for the next year.
Partnership
A business owned by two or more persons associated as partners.
Reason for setting up a partnership
One individual does not have enough economic resources to initiate or expand
the business.
Pros of forming a partnership
• Partners sometimes bring unique skills or resources to the partnership
• More favorable tax treatment than corporations
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, Cons of forming a partnership
Partners are personally liable for all debts and legal obligations of the business
Corporation
A business organized as a separate legal entity owned by stockholders
Pros of forming a corporation
• Shares of stock are easy to sell (transfer ownership)
• Individuals can become stock holders by investing relatively small amounts of
money
• It is easier for corporations to raise funds
• Corporate stockholders have no personal legal liability
Cons of forming a corporation
• Corporate stockholders generally pay higher taxes
What is the purpose of financial information?
To provide inputs for decision-making.
Who are the external users?
• Investors
• Creditors
• Taxing authorities
• Customers
• Labour unions
• Regulatory agencies
Why do investors use accounting information?
To make decisions to buy, hold, or sell stocks.
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MAKING EXAM LATEST VERSION -2025/2026- 100+ Q AND ANS
ALL THE BEST
What is accounting?
The information system that identifies, records and communicates the economic
events of an organization to interested users.
Who are the users of financial information?
They can be divided broadly into two groups: internal users and external users.
Who are internal users?
Managers who plan, organize and run a business.
What information does accounting provide to its internal users?
Accounting provides internal reports, such as financial comparisons of operating
alternatives, projections of income from new sales campaigns, and forecasts of
cash needs for the next year.
Partnership
A business owned by two or more persons associated as partners.
Reason for setting up a partnership
One individual does not have enough economic resources to initiate or expand
the business.
Pros of forming a partnership
• Partners sometimes bring unique skills or resources to the partnership
• More favorable tax treatment than corporations
1
, Cons of forming a partnership
Partners are personally liable for all debts and legal obligations of the business
Corporation
A business organized as a separate legal entity owned by stockholders
Pros of forming a corporation
• Shares of stock are easy to sell (transfer ownership)
• Individuals can become stock holders by investing relatively small amounts of
money
• It is easier for corporations to raise funds
• Corporate stockholders have no personal legal liability
Cons of forming a corporation
• Corporate stockholders generally pay higher taxes
What is the purpose of financial information?
To provide inputs for decision-making.
Who are the external users?
• Investors
• Creditors
• Taxing authorities
• Customers
• Labour unions
• Regulatory agencies
Why do investors use accounting information?
To make decisions to buy, hold, or sell stocks.
2
