what’s is the financial condition of the business?.The management of a business relies on this information to plan, make decisions and control enterprise operations.Īccounting information answers questions such as The general public uses this information to understand how businesses are contributing to the local economy, such as the number of people they employ, how is much of their production inputs are locally sourced. This information also helps government planners to regulate the activities of enterprises, determine taxation policies and as the basis for national income and similar statistics. Governments and their agencies depend on this information to analyze the resources allocation patterns and activities of enterprises. ![]() On the other hand trade creditors are interested in the enterprise over a shorter period than lenders, except in situations where they value the enterprise under consideration as a continuing major customer.Ĭustomers use this information to ascertain the continued existence of an enterprise, in situations where theyĪre involved or dependent on, the enterprise. Suppliers and other creditors use accounting information to determine whether the debt owed to them will be paid when due. Lenders depend on this information to determine affordability by applicant to pay back their loans, and their interest. This information enables them to determine the ability of the employer to pay remuneration, retirement benefits and employment opportunities. This information also help them to determine and report to the Shareholders the ability of the enterprise under consideration to pay dividends.Įmployees and Labour unions always demand to know information regarding the stability and profitability of their respective employers. Investors use the information prepared by bookkeepers and accountants to determine the risk involved in buying, holding or selling an investment. An efficient and quick accounting system that makes it easy view all transactions.Good bookkeeping, detailing all transactions.Availability of sufficient cash or credit.Pacioli noted three things that a successful merchant will need. ![]() This theory was developed by a man named Fra Luca Pacioli. Its known to be the first modern form of accounting and is the base of our accounting system that we still implement today on our society.
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