P22.
6. Internal and external users of accounting information have similar needs in that both groups are required to make financial decisions. Managers (internal users) are required to make many day-to-day decisions in running their organizations; they generally need more detailed and more timely information. The information supplied to managers can be in any form that fits the specific questions and circumstances facing the manager. Investors and creditors, the primary external users, need summarized data to assist in making investing and lending decisions. The information supplied to external users should follow generally accepted accounting principles (GAAP) so that the information is consistent and comparable and, therefore, more useful for decision making.
8. Financial reports are prepared primarily for external users, mainly investors and creditors. It is important that the financial reports of different companies be based on the same set of generally accepted accounting principles (GAAP) so that the results are comparable. Thus, investors can choose from among several companies the ones in which they wish to invest, and lenders can select those entities that they feel are creditworthy. If there were no general guidelines upon which financial reports were based, the reports of companies would likely be so different that comparisons and meaningful analysis of company results would be impossible
P55.
4. Readers of annual reports need to compare the financial status and results of operations of a company with other companies and with the same company's results for previous periods. In this way, users can judge the relative progress of a company toward its goals. Statements covering more than one accounting period and those statements that classify and highlight key relationships assist in this comparative analysis.
