Accounting Roles in the Company and Importance of Accounting Essay
Accounting Roles in the Company and Importance of Accounting
Accounting is an information and the measurement that system identifies, records and communicates information about an organization business activities. In business we used accounting in all the aspects. The most common contact through accounting is through credit approvals, checking accounts, and payrolls. In a layman term accounting is a language of business because all the organization set up an accounting information in order to communicate information to help people to take decision..
There are 2 kinds of decision makers: 1) External Users and Internal Users
External users: They are not directly involved in running the business. So, they will have a very limited access to an organization details. Still their business decisions depend on the information that is reliable, comparable and relevant. . External users include people like Lenders, Government shareholders, external auditors and regulators..
Example: External auditors use financial statements to verify that they are properly prepared according to GAAP.
2) Lenders would look into the information whether an organization will repay its loan and interest.
3) Customers use financial statement to check the power of the suppliers.
Internal Users: They are directly involved in managing and operating an organization they will help in improving the efficiency of the business. They include managers, officers(employees), internal auditors, and sales staff .
Example: Managers would look into the information about the project cost and revenues in order to makes changes in products and services.
Both Internal and external users rely on internal controls in order to control, monitor company activites.