| Course | MAT 200 Principles of Accounting I |
|---|---|
| Module | Module 1 |
| Paper type | Accounting users paper |
| Length | About 1,040 words, 6 pages |
| Format | APA 7 student paper |
| School | Aspen University |
| Program | Business Administration |
| Updated | October 2026 |
Free sample paper for MAT 200 Module 1
Who Reads the Books? The Users of a New Bike Shop's Accounting Information and What They Need
Student Name
Business Administration Program, Aspen University
MAT 200: Principles of Accounting I
Instructor Name
Month Day, Year
Who Reads the Books? The Users of a New Bike Shop's Accounting Information and What They Need
Prairie Spoke Cycles opened in April in a storefront near the trail network in Lincoln, Nebraska. Its owner, Sam Whitaker, invested $85,000 of personal savings and borrowed $60,000 from a local bank to buy inventory, tools and a fleet of twelve electric bikes for rent. The shop sells new bikes and parts, repairs bikes and rents e-bikes to visitors. Sam has been keeping records in a notebook and the shop's bank statement. The bank has asked for quarterly financial statements under the loan agreement. This paper identifies who will use the shop's accounting information, what each needs and how the shop should set up its records.
What Accounting Is For
Accounting records, reports, summarizes and interprets economic data so that people can make decisions. A shop's accounting system turns thousands of transactions, such as a $1,200 bike sale, a $45 tune-up or a $7,000 inventory order, into reports that show what the business owns, what it owes, whether it is earning a profit and where its cash went. Different people need different parts of that picture.
The Users
| User | Type | Decisions | Information needed |
|---|---|---|---|
| Sam, the owner | Internal | Pricing, ordering, hiring, whether to expand rentals | Profit by line of business; cash on hand; inventory levels |
| Part-time mechanics | Internal | Whether the share of repair revenue is fair | Monthly repair revenue |
| Bank | External | Whether to renew or extend the loan | Quarterly income statement and balance sheet; cash flow |
| Supplier offering 30-day credit | External | How much credit to extend | Payment history; current liabilities |
| Landlord | External | Lease renewal, any rent tied to sales | Annual sales |
| Internal Revenue Service and Nebraska Department of Revenue | External | Taxes owed | Taxable income; sales tax collected |
| The owner's aunt, a possible investor | External | Whether to invest $40,000 | Full financial statements; forecasts |
Why Small Firms Prepare Statements
Allee and Yohn (2009) studied privately held small businesses, which face no requirement to publish financial statements. Using survey data, they examined which firms prepared statements, whether those statements followed accrual accounting or were audited and what benefits followed. They found that many small businesses prepare financial statements, mainly in response to demand from outsiders, especially lenders. Firms with accrual-based statements were more likely to get credit, and those with audited statements had a lower cost of credit. The study shows that a small business's accounting choices affect its access to money.
What Verification Is Worth
Minnis (2011) used data on private U.S. firms and their loans to study whether lenders value verified financial statements. Firms whose statements were audited paid significantly lower interest rates, and lenders relied more heavily on the accounting information of audited firms when setting loan terms. Verification made the numbers more credible, and credibility had a price.
Prairie Spoke is too small for an audit to make sense now, but the finding explains why the bank wants statements prepared consistently, and why a review by an outside accountant might pay for itself if Sam later seeks a larger loan.
Accounting Numbers Carry Information
Ball and Brown (1968) examined whether accounting income was useful to investors in publicly traded companies. They found that when a firm's earnings rose more than expected, its stock price tended to rise, and when earnings fell short, its price tended to fall, and that much of this movement happened before the earnings were announced, as other sources reflected the same news. Their study helped establish that accounting income captures real economic information, even though it is not the only source. The same logic applies at a smaller scale: the bank and Sam's aunt will read the shop's income figures as evidence of how the business is really doing.
Cash Basis and Accrual Basis
The choice between cash and accrual accounting matters to several users at once. Under the cash basis, Sam's notebook records revenue when money arrives and expenses when money leaves. Under the accrual basis, revenue is recorded when the shop earns it and expenses when the shop incurs them. Suppose the shop repairs fifteen bikes for a cycling club in June and the club pays in July. The cash basis shows nothing in June and a jump in July; the accrual basis shows June's revenue in June, when the work was done. The bank wants to see whether the shop's operations are profitable month by month, which is what the accrual basis shows. Allee and Yohn's finding that accrual-based statements improved access to credit reflects the same reason.
What the Loan Agreement Requires
Sam's loan agreement requires quarterly statements and a minimum ratio of current assets to current liabilities of 1.5. The bank will check that ratio every quarter. If Sam's records do not separate current assets, such as cash and inventory, from long-term assets, such as the e-bike fleet, Sam cannot even tell whether the shop meets the requirement. The bank is therefore not only a user of the shop's statements; its requirements shape how the accounts must be organized.
Business and Personal Money
The notebook mixes business and personal spending, as Sam sometimes pays shop bills from a personal card. Every user in the table needs the shop's records to reflect the shop alone. The recommendation therefore includes a separate business bank account and card, and a rule that any money Sam takes out is recorded as a withdrawal, not an expense.
Recommendation
Prairie Spoke should move from the notebook to accounting software now, using accrual accounting, which matches income and costs to the month the work happens, whatever the timing of cash. Separate revenue accounts for sales, repairs and rentals will show Sam which part of the business makes money. Monthly statements will serve Sam, and quarterly statements will meet the bank's requirement. Sales tax collected from customers should be recorded as a liability until it is paid to the state, so it is never mistaken for the shop's own money.
Conclusion
Prairie Spoke's accounting information serves the owner, employees, lenders, suppliers, the landlord, tax authorities and a possible investor, each with different needs. Allee and Yohn, Minnis and Ball and Brown show that this information affects real decisions about credit and investment. A well-designed system from the start serves all of them.
References
Allee, K. D., & Yohn, T. L. (2009). The demand for financial statements in an unregulated environment: An examination of the production and use of financial statements by privately held small businesses. The Accounting Review, 84(1), 1-25. https://doi.org/10.2308/accr.2009.84.1.1
Ball, R., & Brown, P. (1968). An empirical evaluation of accounting income numbers. Journal of Accounting Research, 6(2), 159-178. https://doi.org/10.2307/2490232
Minnis, M. (2011). The value of financial statement verification in debt financing: Evidence from private U.S. firms. Journal of Accounting Research, 49(2), 457-506. https://doi.org/10.1111/j.1475-679X.2011.00411.x
Reading the MAT 200 Module 1 assignment instructions
MAT 200 begins with accounting and its users, and Module 1 typically asks students to explain the purpose of accounting and who relies on it, often for a specific business. The Module 1 instructions in your course govern; Prairie Spoke Cycles and its figures are invented. Describe the business. Identify internal and external users. Explain what decisions each user makes and what information each needs. Explain why accounting information is useful to them, with evidence. Recommend how the business should set up its accounting, including whether it should use cash or accrual records. Cite sources in APA 7 form.
How the MAT 200 Module 1 example is put together
Prairie Spoke Cycles sells and repairs bicycles and rents electric bikes to visitors along the city's trail network. Its users include the owner, two part-time mechanics who receive a share of repair revenue, the bank that made the loan, the Internal Revenue Service and the Nebraska Department of Revenue, the landlord, a key supplier offering trade credit and the owner's aunt, who may invest. Allee and Yohn's Accounting Review study examined survey data on small private firms and the demand for their statements. Minnis's Journal of Accounting Research study used data from private U.S. firms to examine how verified statements affected borrowing costs. Ball and Brown's Journal of Accounting Research article found that the direction of unexpected earnings changes was associated with stock price movements. The users table pairs each user with decisions and needs. The paper recommends accrual-based records in accounting software from the start, with monthly statements.
Reading the MAT 200 Module 1 grading rubric
Users papers earn credit when they move beyond a generic list of users to the specific decisions each makes for a real or described business. This example identifies the shop's users, explains what each needs and uses Allee and Yohn, Minnis and Ball and Brown to show that accounting information affects real decisions. The table makes the analysis clear, and the recommendation follows from the users' needs. Distinguishing internal from external users, and connecting the bank's needs to the loan the shop already has, shows practical understanding. Explaining the difference between cash and accrual records with an example from the business makes an abstract choice concrete.
MAT 200 Module 1 help from the desk
Users papers often list "investors, creditors and management" without connecting them to a specific business. Name the actual users and the decisions they make. Another weakness is stating that accounting is useful without evidence; draw on research showing how statements are used. Distinguish internal users, who can ask for any report, from external users, who rely on general-purpose statements. Explain why some users want verified or accrual-based information. Recommend a system that serves the users you identified. Finally, define accounting terms in plain language. Keep business and personal money apart in your example, since mixed records serve no user well.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Aspen University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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MAT 200 Module 1 questions, answered
What does MAT 200 Module 1 usually ask for?
Aspen's MAT 200 begins with accounting and its users, so a paper explaining who relies on accounting information and what they need is typical. Open your classroom prompt.
Who uses a small business's accounting information?
Internal users such as the owner and managers, and external users such as lenders, tax authorities, suppliers, landlords and potential investors.
Why do small private businesses prepare financial statements?
Allee and Yohn found that many do so even without regulation, largely because lenders and other outside parties want them.
Where can I find a free MAT 200 Module 1 sample paper?
The example above identifies the users of a new bike shop's accounting information and what each needs.
Does verified accounting information matter to lenders?
Minnis found that private firms whose statements had been audited were charged less interest, suggesting lenders value verified information.