Discuss Internal and External Users of Accounting Information

question 180

Essay

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

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Definitions:

Overhead

Expenses related to the day-to-day running of a business that are not directly linked to the production of goods or services, such as rent and utilities.

Underapplied

A term used in accounting to describe a situation where the allocated manufacturing overhead is less than the actual overhead incurred.

Overapplied

Refers to a situation where the amount of overhead cost allocated to products or services is more than the actual overhead cost incurred.

Manufacturing Overhead Applied

The amount of manufacturing overhead costs allocated to each unit of product based on a predetermined overhead rate.