COMMERCE 2AB3 Lecture : Accounting - Lecture Ch. 1,2,10.docx
30 Jan 2014
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The basic objectives of accounting: basic objective of accounting is to provide stakeholders with useful information about a business enterprise in order to help them make rational economic decisions, similarities between financial and management accounting, deal with economic events of a business, require that results of economic events be quantified and communicated to interested parties. Financial accounting: objective is to provide external users with useful financial info to help them make investment and credit decisions, external users, current owners (shareholders): want to know if they should hold, buy more, or sell shares in company, potential investors: want to know if company is a good investment, creditors: want to know if they should extend credit to firm, income tax authorities: want to know if income is measured properly, others (financial analysts, labour unions, customers, legislators, very regulated, follows ifrs and gaap, focuses on reliability, has financial statements that are required by law, balance sheet (measures financial health)
