Accounting is defined as the organized way in which the business financial transactions are recorded, analyzed and reported. The accounting responsibility is bestowed on an accountant who has to follow set regulations and rules. A number of people use the accounting information of a company as provided by the accountant.
To start with, accounting information will be required by the investors to assess their investment and thus decide whether to sell, hold or buy more. With the financial information, the investors will be able to assess the firm’s ability to pay dividends. This information is also important to the employees for they will be able to determine the profitability of the employer and thus assess the firm’s ability to provide employment opportunities, retirement benefits and remuneration. The lenders use financial information to determine whether there is a possibility that their loans and the interests will be paid in time. The suppliers and other creditors use the financial information to determine whether they should expect the amount the company owes them would be paid in time. If the customers are dependent on the company, they will need the accounting information to determine the continuance of the firm and thus be certain whether the dependence is short-lived or permanent. Government will also need this information to determine the national income from a firm in terms of tax. The public need this information since they depend on the firm for employment among other community development programs. Although the firm’s management is involved in compiling the financial information, they also require it to be able to control the responsibilities of the firm, make decisions and plan adequately.
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