Main Rationales For The Existence Of Financial Accounting

1837 WordsJul 6, 20158 Pages
Introduction: The aim of this essay is to discuss the main rationales for the existence of financial accounting. In order to discuss in perspective the main rationales for the existence of financial accounting, the rationales will be looked at separately. When it comes to positive rationales it will be focused on its assistance in decision-making, its international recognition and usefulness for external stakeholders, while for negative rationales it will be focused on the fact it relates to the past, the quality of the financial documents and legal tax evasion using financial accounting. The main objective of financial accounting is to provide quantitative information regarding the financial position of a business that can be beneficial to an extensive range of external users to make economic decisions. The statement above gives the fundamental purposes of financial accounting and helps us understand how imperative financial accounting is (Fardon and Cox, 2009). “Present-day accounting can trace its origins to the renaissance; when a new class of merchants needed a means of organising their records of such things as the amounts owed by and to various outsiders, the payment and collection of bills…” (Gordon et al., 1974, p.3). This statement presents us with the history, method and most significantly the reasoning behind the invention of accounting. Financial accounting has changed over the years and now they are predominantly created using computer systems and have pro
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