Accounting is a definite processes of interlinked activities, that begins with the identification of transactions and ends with the preparation of financial statements.
– Every step in the process of accounting generates information.
-Generation of information is not an end in itself.
-It is a means to facilitate the dissemination of information among different user groups.
-Such information enables the interested parties to take appropriate decisions.
-Therefore, dissemination of information is a essential function of accounting.
-To be useful, the accounting information should ensure to:
• provide information for making economic decisions;
• serve the users who rely on financial statements as their principal source of information;
• provide information useful for predicting and evaluating the amount, timing and uncertainty of potential cash-flows;
• provide information for judging management’s ability to utilise resources effectively in meeting goals;
• provide factual and interpretative information by disclosing underlying assumptions on matters subject to interpretation, evaluation, prediction, or estimation; and
• provide information on activities affecting the society.
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