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Assignment in Financial Accounting

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Introduction

Joey Chan (BA IBA) 252RFRFNO03 Assignment in Financial Accounting Companies operate to achieve varies goals. They may be interested in providing a healthy work environment for their employees, in reaching a high level of control, or making contributions to civic and social organization and activities. However, to meet these goals, a company must first achieve its two primary objectives: earning a satisfactory profit and remaining solvent. If a company failed to meet either of these objectives, it will not be able to achieve its various goals and will not be able to survive in the long run. In order to show others how well one company has performed, financial statement is necessary, it is because " Financial statements are accounting reported used to summarize and communicate financial information about a company. A company's integrated accounting system produces three major financial statements: the income statement, the balance sheet, and the cash flow statement. Each of these statements summarizes specific information that has been identified, measured, recorded, and retained during the accounting process." ...read more.

Middle

In fact, the financial statement could be used for a wide rage of user. For example, from time to time, owners and creditors want financial information about the business. Owners of a small business may want information very frequently, e.g., monthly, to help manage the business. Creditors may call for information less frequently to evaluate the company's ability to repay a loan. Aside from the creditors and owners, there are seven major user groups require the statement. Investor group: Both existing and potential shareholders are integrated in this group. Information will be required for them to consider whether to invest in the business or sell current investments. In addition, dividends and share price have to be taken into account by investors in their investment. Short-terms for the investors are interest, and long-term view is future earnings. They might also concern profitability and its trend over a period of time. Employees: The employees would be interested in clear, simple and understand form of information about the stability and profitability of their employers together with a value-added approach rather than just a profit and loss account view of performance. ...read more.

Conclusion

Government: The government is the decision maker; they are interested in the allocation of resources and their forward economic places are influenced by performance of all different kind of business in the economy. TA published financial statement information will be used for company taxation and VAT, regulating the activities, and providing a basis for national income and related data. Furthermore, they also require the current financial report as a base of economic models assessing future performance. The public: This group would have interest in the substantial contribution is made to the local economy by the enterprise together with the local and national factors such as employment and environment. Some of these issues are included in their financial information and long-term strategy. Overall, relevance and reliability are major characteristics of a financial statement. Irrelevant information is useless; consequently, the financial statement must be reliable and relevant in order to meet the basic objective. Information must be accurate since they are always influencing the decision of the users, and moreover relevant accounting information is capable of making a difference in a decision by helping users to form predictions about the outcomes of past, present, and future events or to confirm or correct prior expectations. ...read more.

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