Buy More Notebooks - Fundamentals of Accounting 1

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Accounting is a service activity. Its function is to provide qualitative information, primarily financial in nature, about economics entities that is intended to be useful in making decisions.

USERS OF ACCOUNTING INFORMATION
*External Users (Secondary Users)
   • Creditors - for determining the credit worthiness of the organization. Terms of credit are set by creditors according to the assessment of their customers "financial health." Creditors include suppliers as well as lenders of finance such as banks.
   • Tax Authorities - for determining the credibility of tax returns field on behalf of the company.
   • Investors - for analyzing the feasibility & investing in the company. Investors want to make sure they earn a reasonable return on their investments before they commit any financial resources to the company.
   • Customers - for assessing the financial position of its suppliers which is necessary for them to maintain a stable of supply in the long term.
   • Regulatory Authorities - for ensuring that the company's disclosure of accounting information is in accordance with the rules and regulations set in order to protect the interests of stakeholders who rely on such information in forming their decisions.
   • Suppliers - other business which supply goods to an organizations on credit would also want to assess the repaying capacity of that organization before providing any form of credit. Accounting information plays a crucial role in this case.

*Internal Users (Primary Users)
   • Management - for analyzing the organization's performance and position and taking appropriate measures in improving company results.
   • Employees - for assessing company's profitability and its consequences on their future renumeration and job security.
   • Owners - for analyzing the viability and profitability of their investments and determining any future course of action.

ACCOUNTING is the process or step by step of identifying, classifying, analyzing, recording, verifying, summarizing, interpreting, and reporting of data necessary to a business.

Accounting - "LANGUAGE OF BUSINESS"

4 MAIN FUNCTION OF ACCOUNTING
   • Keeping systematic record of business transaction
   • Protecting properties to the business
   • Communicating results to the various parties in or connected to the business
   • Meeting legal requirements

5 NATURE OF ACCOUNTING
   • Accounting is a process
   • Accounting is an art entails creativity and skill help to attain some objectives
   • Accounting deals with financial information and transaction
   • Accounting is a means not an end– accounting can be thought as a plane that will bring you to your decisions
   • Accounting is an information system– is recognized and charavterized as a storehouse of information. It collects and communicates financial information required by different interested groups.