Accounting Information Users, Assets, Liabilities, and Balance

Users of Accounting Information

The use of accounting information is key for obtaining a systematic, quantifiable, objective, and economic view of a company. The relationships and transactions that a company maintains directly affect its operators and social users. Among these are:

• Management and Owners: Informed of the company's assets and all accounts that are growing.
• Investors: Need accounting information to assess the risks and returns of their investments.
• Workers and Unions: Need data to assess work conditions and negotiate wage agreements.
• Financial Institutions and Creditors: Assess risk using accounting information to determine the company's ability to repay loans and interest payments.
• Customers: Have an interest in the company's continuance to secure the supply of its products.
• Competition: Valuable information to understand the company's adequacy to its most direct competitive environment.
• Public Bodies: Also utilize accounting information for various regulatory and oversight purposes.

Accounting Heritage Concept

This is the set of goods and rights that the company owns, as well as the debts or obligations incurred. In a real economy, assets are classified as tangible and intangible assets, which the company uses to develop its financial activity. On the other hand, liabilities and net equity provide information about the origin and composition of the company's own financial resources or external assets. The structure of the company should have an optimal dimension that allows the steady development of productive capacity, and assets should be managed to maintain a minimum stock level, avoiding distortions in the phases of the activity cycle.

Asset and Liability Categories

These are all the components that make up the heritage of the company, such as assets, rights, and obligations. Each is represented in an account where the contents and valuation of the economic assets are reported. These elements are configured with the same economic or financial significance. There are two levels: assets and liabilities/net equity.

• Fixed Assets: Non-cyclical constituent elements for business that express the company's capacity. These include intangible assets (patent applications), plant and equipment (machinery, vehicles), and financial assets (long-term loans and deposits).
• Current Assets: Cyclical elements that make up the company's operating cycle and become liquid in less than one year. These include inventory (raw materials, goods), receivables (customers, debtors), short-term investments (short-term loans and deposits), and cash.
• Long-Term Liabilities: Formed by long-term debt.
• Short-Term Liabilities: Formed by short-term creditors.
• Net Equity: Represents the equity of the company.

Financial Balance in Accounting

Balance differs between financial support, economic equilibrium, and financial balance. Economic equilibrium is reached when a company is profitable. Financial balance determines the adequacy of the company's financial structure to its investments. For a company to thrive, it must offer a balance between its economic structure and its financial structure. Financial sources must also comply with a financial plan. When there is a financial imbalance due to poor financing design, the balance is measured using working capital.

• If working capital is positive, it means that part of the current assets is being financed with permanent capital, giving the company the right balance.
• If working capital is negative, it means that part of the fixed assets is being funded with short-term debt, leading to a financial imbalance.

Types of Financial Positions

• Maximum Balance: When there is no debt, and all assets are financed with equity.
• Normal Equilibrium: Where all fixed assets and part of the current assets are subsidized through permanent capital.
• Imbalance: Where part of the fixed assets is funded with short-term resources, potentially triggering a default.
• Bankruptcy: Where losses have been absorbed, and the net equity is negative. This does not necessarily mean the company is unsustainable, but it often ends in bankruptcy.