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Introduction to Accounting                                                      1.3

                     •  Users of Accounting Information: Internal users and External users.

                                 Parties                                Areas of Interest
                     Internal Users
                       1.  Owners or Investors      (i)  Profitability, (ii) Financial Position, (iii) Future Prospects.
                       2.  Management               (i)  Profitability in Relation to Investment, (ii) Managerial Decisions, (iii) Liquidity
                                                       of the Concern.
                       External Users
                       3.  Employees and Workers    (i)  Profitability.
                       4.  Banks and Financial Institutions   (i) Performance, (ii) Profitability, (iii) Financial Position.
                       5.  Investors and Potential Investors   (i) Earning Capacity, (ii) Safety.
                       6.  Creditors                (i) Profitability, (ii) Financial Position.
                       7.  Government and its Authorities  (i)  Profitability, (ii) Financial Position, (iii) Tax Liability.
                       8.  Researchers              (i)  Accounting Theory, (ii) Business Practices, (iii) Future Profitability.
                       9.  Consumers                (i) Pricing.
                      10.  Public                   (i)  Protecting Environment, (ii) Indirect Contribution for Betterment.


                     •  Advantages  of Accounting:  1. Financial  Information about Business,  2. Assistance to
                       Management, 3. Replaces Memory, 4. Facilitates Comparative Study, 5. Facilitates Settlement
                       of Tax Liability, 6. Facilitates Loan, 7. Evidence in Court, 8. Facilitates Sale of Business,
                       9. Assistance in the event of insolvency, 10. Helpful in Partnership Accounts and 11. Helpful
                       in Decision-making.
                     •  Limitations of Accounting:  1. Accounting is not Fully Exact because estimations also
                       have  to  be made.  2.  Accounting does  not Indicate  the  Realisable  Value. 3. Accounting
                       Ignores the Qualitative Elements. 4. Accounting Ignores the Effect of Price Level Changes.
                       5. Accounting may Lead to Window-Dressing.
                     •  Systems of Accounting: 1. Double Entry System, and 2. Single Entry System.
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