Senior High School

Fundamentals of
Accountancy, Business
and Mangement1
Module 2: Users of Financial Information
Fundamentals of Accountancy, Business and Management – Grade 11
Self-Instructional Learning Material (SILM)
Module 2: Users of Financial Information
First Edition, 2020

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Development Team

Writer: Merven R. Tirado

Content Editors: George P. Fulgencio, Pepito Gardose
Language Editors: Pepito Gardose, Catherine C. Valenzuela
Illustrator: Merven R. Tirado
Layout Artist: Allan T. Basubas, Jaypee K. Balera, Kryss Mayven L. Fabrero,
Sammie Per S. Montero, Merven R. Tirado
Cover Art Designer: Joseph Bacsarpa
Reviewers: Yusof A. Aliudin, Mary Joy D. Bautista, Mary Anne A. Barrientos,
Marivic D. Devibar, , Ruth J. Gumangi, Monica D. Bermejo,
Maria Jane N. Agrave
Management Team
Isagani S. Dela Cruz, CESO V – Schools Division Superintendent
Natividad G. Ocon, CESO VI - Assistant Schools Division Superintendent
Elpidio B. Daquipil – Chief, Curriculum Implementation Division
Juvy B. Nitura – EPSVR-1, Learning Resource Management System
Marcelo A. Bocatera, CESE – ADM and SHS Coordinator
Analyn J. Madera – PDO-II, Learning Resource Management System
George P. Fulgencio - Subject Team Leader

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Office Address: DepEd-Cotabato Division, Capitol Compound, Amas, Kidapawan City

Telefax: (064) 577-7017
E-mail Address: [email protected]
 11
Fundamentals of
Accountancy, Business
and Mangement1
Module 2: Users of Financial Information

`
Introductory Message
For the facilitator:

Welcome to the Fundamentals of Accountancy, Business and Management 1- Grade

11Self-Instructional Learning Material on Users of Financial Information.

This module was collaboratively designed, developed and reviewed by educators both
from public and private institutions to assist you, the teacher or facilitator in helping
the learners meet the standards set by the K to 12 Curriculum while overcoming
their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration their
needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

Hello, dear teacher of learning! You are lucky to have this learning
material intended to easily deliver the lessons for our learners and
enhance their knowledge on Users of Financial Information. Please help
them achieve our learning objective.

Please advise our learners to read, understand, analyze, and

answer all the activities and questions seriously as this material is
designed and made for them. This is also to inform our learners to take
some precautionary measures and some activities need extra care.
This is just a reminder dear teacher of learning, do not go beyond
our objectives and main goal for our learners. Be an agent of learning.
Have fun!

As a facilitator, you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Furthermore, you are expected to encourage and assist the
learners as they do the tasks included in the module.

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For the learner:

Welcome to the Fundamentals of Accountancy, Business and Management 1-Grade

11Self-Instructional Learning Material (SILM) Module on Users of Financial
Information.
The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action, and purpose. Through our hands we may learn, create, and
accomplish. Hence, the hand in this learning resource signifies that you as a learner
is capable and empowered to successfully achieve the relevant competencies and
skills at your own pace and time. Your academic success lies in your own hands!

This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning resource while being an active learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of the

lesson. This aims to help you discover and
understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled into process
what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or skill
into real life situations or concerns.

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 Assessment This is a task which aims to evaluate your
level of mastery in achieving the learning
competency.

Additional Activities In this portion, another activity will be given

to you to enrich your knowledge or skill of the
lesson learned. This also tends retention of
learned concepts.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning and
gain deep understanding of the relevant competencies. You can do it!

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 What I Need to Know
To make good and informed decisions in business, you need transparent and
accurate information. Information, through financial statements, is the means of
communication by the business to its investors, suppliers, customers, competitors,
and its public as well as to the government. The financial information that users
need depends upon the kinds of decisions they make.

In this module, you will learn who the sectors are that needed financial
information and what certain information they usually asked. It will also explain how
that information affects their decisions.

Most Essential Learning Competencies:

1. Define external users and gives examples (ABM_FABM11-IIIa-7)

2. Define internal users and give examples (ABM_FABM11-IIIa-8)

After going through this module, you are expected to:

1. define external and internal users of financial information;

2. identify users whether they are external or internal;
3. determine what type of information needed by the users; and
4. explain how financial information affects user’s business decisions

What I Know

Directions: Read and understand the questions carefully. Write your answers on a
separate sheet of paper.

Test I. Select the correct answer from the given options.

1. They use financial information to help them carry out their planning,
decision-making and control responsibilities in the entity.
a. External Users
b. Internal Users
c. Government Users
d. Public Users

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2. They use financial information to determine whether their respective
concerns are being satisfied. These users normally refer to the general-
purpose financial statements prepared by the entity.
a. External Users
b. Finance Managers
c. Internal Supervisor
d. Manager Supervision

3. They decide for the production and expansion of the business.

a. Creditors
b. Employees
c. Managers
d. Regulators

4. They are interested in the information which enables them to assess the
ability of the entity to provide remuneration, retirement benefits, and
employment opportunities.
a. Creditors
b. Employees
c. Managers
d. Regulators

5. They require information to regulate the activities of entities, determine

taxation policies, and as the basis of national income and other similar
statistics.
a. Government and other Agencies
b. Regulators
c. Customers
d. Public

6. They have interest in information about the continuance of an entity,

especially when they have long-term involvement with, or are dependent
on, the entity.
a. Customer
b. Government
c. Public
d. Regulator

7. They are interested in information that enables them to determine whether

their loans, and the interest attaching to them will be paid when due.
a. Competitors
b. Customers
c. Investors
d. Lenders

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 8. They assist these users by providing information about the trends and
recent development in the prosperity of the entity and the range of its
activities.
a. Government
b. Managers
c. Public
d. Suppliers

9. These users decide on taxation policies.

a. Locals
b. Managers
c. Regulators
d. Tax Authorities

10. The many users of accounting information are called ________________.

a. investors
b. shareholders
c. stakeholders
d. stockholders

Test II. Identify the following whether internal or external users.

11. Employers
12. Customers
13. Suppliers
14. Creditors
15. Employees

What’s In

Directions: Explain the following questions in your own understanding. Write your
answer in a separate sheet of paper.

1. What is accounting?
2. Describe the nature of accounting.
3. Narrate the history or origin of accounting.
4. Relate the importance of accounting in real life situation.

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Rubrics for Scoring

Points
Description Advanced Proficient Approaching Developing
Proficient
(10) (8) (6) (4)
Understanding Understand Understand and Applied two Applied one
and application and applied applied several concepts concept
of concept all concepts concepts

Grammar and Correct Correct Some sentence Some sentence

Organization of grammar, grammar, are are
ideas thoughts are thoughts are grammatically grammatically
well- well-organized wrong, some wrong, many
organized though some are thoughts are thoughts are
misunderstood misplaced misplaced

What’s New

Directions: Read and analyze the following illustrations. Write your answer on a
separate sheet of paper.
Test I. In the box below, find words that you think are users of financial information
outside an entity. It could be arranged horizontally, vertically, or diagonally.

C Q W E R T Y U I O P A S D F
H I F G H J C R E D I T O R S
U A L O V E B U Y O S N M G H
M A R B S O H K G R E R O I E
A E J K U T I X O I S S L D S
N Y M O P P H T V N A R P I R
R T A P P G E T D V M O R V E
E R T H L T S D R E N T D O M
S E S U I O G L O S B I E C O
O D Z P E A Y A M T V T B S T
U F M U R C G E T O C E A U S
R O C O S T D F E R X P B N U
C U M A N A G E R S Z M E G C
E I A T N E M N R E V O G A R
S R O T A L U G E R W C T H S

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Test II: Identify what does the pictures imply.
1.

Hint: This is one of the sectors of

internal management which focuses
mainly on managing the finances and
qualitative data of the company.

2.

Hint: This is one of the sectors of internal

management that deals with the people
who are part of the entity. Their common
work involves hiring, etc.

3.

Hint: This is one of the sectors of internal

management which focuses mainly on
growth, innovation and distribution of
sales.

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 What is It

The financial information that users need depends upon the kinds of decisions
they make. There are two broad groups of users of financial information: internal
users and external users.
Internal users are managers who plan, organize, and run the business. They
use financial information to help them carry out their planning, decision-making and
control responsibilities in the entity. These include marketing managers, production
supervisors, finance directors, and company officers.
External users are individuals and organizations outside a company who
want financial information about the company. They use that to determine whether
their respective concerns are being satisfied. These users normally refer to the
general-purpose financial statements prepared by the entity. These include:
A. Investors. The providers of risk capital and their advisers are concerned with the
risk inherent in, and return provided by, their investments. They need information
to help them determine whether they should buy, hold or sell. Shareholders are
also interested in information which enables them to assess the ability of the entity
to pay dividends.

B. Employees. They are interested in information about the stability and profitability
of their employers. They are also interest in information which enables them to
assess the ability of the entity to provide remunerations, retirement benefits and
employment opportunities.
C. Creditors. Lenders are interested in information that enables them to determine
whether their loans, and the interest attaching to them, will be paid when due.

D. Suppliers. They are interested in information that enables them to determine

whether amounts owing to them will be paid when due. Trade creditors are likely
to be interested in an entity over a short period than lenders unless they are
dependent upon the continuation of the entity as a major customer.

E. Customers. Customers have an interest in information about the continuance of

an entity, especially when they have a long-term involvement with, or are
dependent on, the entity.

F. Competitors. Competitors decide on the market share and profitability.

G. Government and Other Agencies. They are interested in the allocation of

resources, and therefore the activities of the entities. They also require
information to regulate the activities of entities, determine taxation policies, and
as the basis of national income and other similar statistics.

H. Public. Entities affect members of the public in a variety of ways. For example,
entities may make substantial contribution to the local economy in many ways

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 including the number of people they employ and their patronage to the local
suppliers. Financial statement may assist the public by providing information
about the trends and recent developments in the prosperity of the entity and the
range of its activities.

What’s More

Directions: Read and understand the questions or statements carefully. Write your
answer on a separate sheet of paper.

Activity 1: TELL ME
Identify the user who could ask the following questions. Choose your answer
from the box below. Answers may be repeated.

Investors Creditors Management

Finance Human Resources Marketing

1. 4.

Is the Ayala Corporation

Is cash sufficient to pay dividends
earning satisfactory income?
to Microsoft stockholders?

2. 5.

What price should

Apple charge for an
iPod to maximize the
Will the Ford Company be able company's net
to pay to pay its debts as they income?
come due?

3. 6.

How does Disney compare in Can Jollibee Corporation

size and profitability with Time afford to give its employees pay
Warner? raises this year?
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 7.

Which PepsiCo product line is

the most profitable? Should
any product lines be
eliminated?

Activity 2. LET’S DECIDE WHO

Directions: Determine whether external or internal users decide the following

pronouncements.

____________1. Buy, hold, or sell stocks

____________2. Make or buy a component of a certain product
____________3. Regulate activities of the business
____________4. Pay dividends on current year
____________5. Hire permanent or casual employees under its administration
or through an employment agency
____________6. Continue or cease producing a product line
____________7. Provides license to operate business
____________8. Checks the accuracy of tax liabilities the company pays
____________9. Grant or reject employees’ demands
____________10. Continue supplying with the business’ demands

What I Have Learned

Directions: Answer the following questions based on your own understanding. Write
your answer in a separate sheet of paper.

1. Explain and differentiate internal and external users.

2. Give at least five examples of internal and external users and provide a brief
description for each user.
3. How does accounting data provide relevant data to those users?

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Rubrics for Scoring
Points
Description Advanced Proficient Developing Beginning
(10) (8) (6) (4)
Provide good Demonstrate Demonstrate Provide Provide no
definition and an in-depth substantial only the difference
clearly explain understanding understanding of definition
the difference of of the topic the topic, and of users
internal and and provide provide definition
external users clear and differences of
definition and the two users
difference of though some
the two users supporting ideas
may be
misunderstood.
Understanding Applied all Applied several Applied Applied one
and application of concepts and concepts and one concept but did
concept and provide all provide more concept not give any
provide correct examples with than five and did example
examples correct examples but not not provide
description of all at least five
users examples

What I Can Do

Directions: Read and understand the questions carefully. Write your answer on a
separate sheet of paper.
Test I. Identify the users either external users or internal users.
________Customers
________Internal Revenue Service
________Labor unions
________Marketing manager
________Production supervisor
________Securities and Exchange Commission
________Vice president of finance
________Suppliers
________Store manager
________Shop Cashier
Test II. Identify each of the questions as being more likely asked by an internal user
or an external user.

________Can we afford to give our employees a pay raise?

________Did the company earn a satisfactory income?
________Do we need to borrow in the near future?

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 ________How does the company’s profitability compare to other companies?
________What does it cost us to manufacture each unit produced?
________Which product should we emphasize?
________Will the company be able to pay its short-term debts?

Assessment

Directions: Read and understand the questions carefully. Write your answer on a
separate sheet of paper.

Test I: Select the correct answer from the given options.

1. _______________ is mainly composed of the entity’s management team in

various levels.
a. Stakeholders
b. Internal User
c. External User
d. External and Internal Users

2. Employees and their respective groups are mainly interested in information

about ____________________
a. the ability of the enterprise to continue operation for a long period of
time
b. the ability of the enterprise to gain enough profit
c. the stability and profitability of their managers
d. the stability and profitability of the enterprise
3. Lenders and Suppliers needed financial information to ______________
a. determine whether the amount due to them will be paid when due or
on maturity
b. know the capital allocation process of the enterprise
c. determine the continuance of the enterprise
d. assess the ability to pay dividends

4. Which of the following is the best example of government regulating the

operations of the business?
a. The health office under the request of the local government unit
conducts a monthly inspection to establishments for health
protocols.
b. Government requires business establishments to acquire business
permits and licenses
c. The government takes action on the corruption of a specific manager
d. All business entities submit income tax statements yearly.

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 5. Which of the following decisions/activities of the company did not affect
local communities?
a. Dumping of manufacturing scraps and waste to rivers
b. Deciding on how to test the prototype to the market
c. Advertising of new product trend
d. Employment hiring
6. Deciding whether to increase the production of sales is a decision made
by ____________
a. stakeholder
b. internal users
c. external users
d. external and internal users
7. Deciding whether to pay dividends to stockholders is a decision made by
___________.
a. stakeholder
b. internal users
c. external users
d. external and internal users
8. If the company cannot be able to pay its payables due, who will pay their
debt?
a. Investors
b. Managers
c. Stockholders
d. Government
9. How do competitors obtain financial information about a certain company?
a. Financial information presented to the public
b. Financial information are being shared
c. Hostile Takeover
d. Inside Job
10. On what department do employees acquire information about their
salaries?
a. Accounting
b. Finance
c. Human Resource
d. Marketing

Test II: Write TRUE if the statement is true and FALSE if it is not.
11. Those who manage the business usually answer the most important
questions.
12. Customers cannot have a single piece of accounting information about a
certain company because it may leak and passed unto competitors.
13. The financial information that users need depends upon their position in
the company.
14. Competitors also obtain financial data of their rivals when making
business decisions.
15. Internal user cannot be, at the same time, external user.

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 Additional Activities

Directions: Create a literary piece (essay, feature, poem, etc.) about the importance
of producing accurate accounting data towards the users of accounting
information.
Rubrics for Scoring
Points
Description Excellent Very Good Good Developing Beginning
(10) (8) (6) (4) (2)
Knowledge and Employs Employs Employs Employs Employs
content of the all all some some few
topic concepts concepts concepts concepts of concept of
of of internal of internal and internal
internal and internal external and
and external and users, external
external users, external though some users
users though users ideas are
some ideas misunderstoo
are d
misunders
tood
Grammar and Correct Correct Some Some sentence Some
organization of grammar, grammar, sentence are sentence
ideas thoughts thoughts are grammatically are
grammatic
are well- are well- grammatic wrong, some
ally wrong,
organized organized ally wrong thoughts are many
though misplaced thoughts
some are are
misplaced misplaced
Creativity Involves Involves Cited Involves few Purely
new some new some ideas, stories, explanatio
creative ideas, ideas, good poem, n
and stories, stories, etc.
informati good good
ve ideas, poem, etc. poem,
stories, etc.
good
poem,
etc.

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 13
What I Know
1. B 2. A 3. C 4. B 5. A 6. A 7. D 8. C 9. D 10. C
11. Internal 12. External 13. External 14. External 15. External
What’s New
Test I.
Creditors, Suppliers, Customers, Competitors, Government, Public, Investors, Employees
Test II.
1. Finance 2. Human Resource 3. Marketing
Activity 1
1. Investors 2. Creditors 3. Investors 4. Finance 5. Marketing
6. Human Resource 7. Management
Activity 2
1. External 2. Internal 3. External 4. External 5. Internal
6. Internal 7. External 8. External 9. Internal 10. External
What I Can Do
1. External 2. External 3. External 4. Internal 5. Internal
6. External 7. Internal 8. External 9. Internal 10. External
Activity 6
1. Internal 2. External 3. Internal 4. External
5. Internal 6. Internal 7. External
Assessment
1. B
2. D
3. A
4. B
5. B
6. B
7. B
8. C
9. A
10. C
11. TRUE
12. FALSE
13. FALSE
14. TRUE
15 FALSE
Answer Key
References

Claudel, E., E. Dahao, R. Pacaldo, M. Poliran, and S. Poliran. 2018. Accounting

Essentials. Bukidnon: CMU Press.
Weygandt, J., P. Kimmel, and D. Kieso. 2013. Accounting Principles. John & Wiley
Sons Inc.

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 DISCLAIMER
This Self-Instructional Learning Material (SILM) was developed by the Schools
Division of Cotabato. It aims to provide learners with materials that could be
used in the new normal and is based on the modality preferred by most
parents and learners. It is hoped that through this, the education of the
children in the Province of Cotabato shall continue. This shall likewise be
used by the learners of all public schools in the schools division beginning SY
2020-2021. Furthermore, the process of LR development was observed in the
production of this module. This is version 1.0. We highly encourage feedback,
comments, and recommendation.

For inquiries or feedback, please write or call:

Department of Education – Schools Division of Cotabato

Learning Resource Management System (LRMS)

DepEd-Cotabato Division, Capitol Compound, Amas, Kidapawan City

Telefax No.: (064) 577-7017

Email Address: [email protected]