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The importance of accounting information - Essay Example

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This paper is aimed at understanding the importance of accounting information along with its various aspects such as financial ratios, costs, etc. Accounting information is very important for an organization as it helps to understand its financial health…
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Download file to see previous pages This research will begin with the definition of accounting as the process of “identifying, measuring and communicating economic information to permit informed judgments and decisions” by the users of the information. Hence accounting information is very useful to its various users as it helps them to make informed and calculated decisions. All stakeholders of an organization including the shareholders are potential users of accounting information. Following are some of the user of this information: decision makers inside the organization (such as the directors, managers, etc.), employees, shareholders, customers, lenders, shareholders, suppliers, etc. Traditionally anybody who is interested in the activities and performance of an organization is a stakeholder. Accounting information is useful to different users in a different way. Accounting information such as cash inflows, expenses, fixed assets, liabilities, operating profits, can be used by decision makers inside an organization to make critical decisions such as future investments, pricing strategies, expansion plans, etc. Employees of an organization can use accounting information to analyze the financial and commercial success of a company and in turn understand the security with respect to the job that the organization promises. Lenders and suppliers can use the information to analyze the financial health of the company before lending loans and materials to the organizations. ...Download file to see next pagesRead More
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