ACCOUNTING CONCEPTS 7: Business Issues addressed by Accounting
In addition to the owners of a business and those who run it, accounting and financial statements provide information to: employees of the enterprise, those who provide financing, suppliers and other firms engaged in the particular business / industry, the clients and customers of the business, the government and its regulatory and supervisory agencies.
Basically, accounting information addresses the issues of: profitability, liquidity (is there enough cash for operations), solvency and stability (can the business pay for its current liabilities and long term debt), capital or equity (how much of the business’ assets are truly owned and how much have claims from creditors), capacity for growth and further investments.
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POSTED IN: Accounting Concepts, Accounting for NonAccountants
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