May 29, 2022

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NEEDS FOR ACCOUNTING INFORMATION

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NEEDS FOR ACCOUNTING INFORMATION

Accounting information is the processed financial data required by users to make informed economic decisions. This users need accounting information for the following reasons discussed below:

(1) INVESTMENT:

Users such as actual and potential shareholders needs accounting information for invetment purposes. They want to know from the interpretation of financial statements if they should continue with thier investments or remove their investment. Potential shareholders want to know if they should invest their money in the company.

(2) PERFORMANCE:

Accounting information can be a scorecard to assessed the efficiency and effectiveness of management. Also, managers and directors can use accounting information to know how well they have performed. If they should include their continue with their current strategies and policies or improve on them.

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(3) PLANNING:

The information provided in a financial statement, quarterly reports and other reports can be used by management for planning and decision making. When planning on increasing of market share, increasing investment, or deinvestment, accounting information can be a usefull guide.

(4) CONTROLLING:

Controlling is a checklist to know if the management and employees are performing above standard or below it. Accounting information provided by a cost accountant can help the management to know who is performing better and who is not performing well.

(5) RESEARCH:

Accounting information can also be ultilised by students of finance, local and international researcher for research purposes. Accounting information especially the financial statement of a company contained informations that are very usefull for research. For example, the revenue value of a company can be added to other companies in a country to calculate the Gross Domestic Product (GDP) of that contry and can still be used to know the percentage of what a company contributed to the GDP.

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Further reading:

differences between book keeping and accounting.

six ways to control your spending.

financial and non financial information.

list of central banks in west Africa.

debentures as sources of finance.

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