Accounting Is an Information System That Identifies

1092 WordsNov 27, 20125 Pages
A objectives and the roles of financial accounting “Accounting is an information system that identifies, records, and communicates the economic events of an organization to interested users.”1. The basic objective of accounting is to provide information to the interested users to enable them to make business decisions and “Financial statements are the primary means of communicating financial information to parties outside the business organization.”2. Moreover, accounting can give the essential information, especially for the “external users, is given in the basic financial statements: Profit and loss statement and Balance sheet.”3 On the other hand, accounting can give addition information to the internal user: for example the marketing…show more content…
Of course the manager will be another internal user. This is because manager needs to relay on the financial accounting report to set up the policy of the company. They need to base on the report to find out the profitability. Is the profit can sustain the whole company? Through the report, the manager can change the policy of the business company in order to gain the highest profit, for example, change the supplies which are in a lower cost. The role of financial reporting is to tell those stakeholders about the financial position and the condition of the economic unit or a business company. Because of financial report provides the information, stakeholders can make decisions about future investments Financial reporting is critical in making effective stock investment decisions. When the people do not read the financial report, his or her investment will become a gambling. The financial report includes the balance sheet, income statement, cash flow statement, retaining earning statement and financial position statement. Combining all of them, will give you a clear image of the financial condition of the company. In order to deduce the future of the companies. I think finance market needs financial reporting. However, before my discussion, I want to introduce what is finance market first. “A financial market is a market in which people and entities can trade financia:6 source

More about Accounting Is an Information System That Identifies

Open Document