Advantages of financial accounting notes

Preparation of financial statements:В Systematic records enables the accountants to prepare the financial statements trading and profit & loss account to ascertain profit or loss during a particular accounting period and balance sheet to state the financial position of the business on a particular slate.Д¬omparison of results:В Systematic maintenance of business records enables the accountant to compare profit of one year with those of earlier years to know the significant facts about the change.ДЄcts as Legal Evidence:В Proper books of accounts maintained in systematic.

Accounting helps to overcome this limitation. Human memory is limited by its very nature. Interest groups, formed by various groups of individuals who have a specific interest in the activities and performance of businesses, will also require accounting information.Maintenance of business records:В All financial transactions are recorded in a systematic manner in the books of accounts so that there is no need to rely on memory. However, additional accounting information is usually provided to analysts via formal company briefings and interviews. Much of this is provided by the detailed accounting disclosures that are required by the London Stock Exchange. They require very detailed financial and other information in order to analyse the competitive performance of a business and its sector. Investment analysts are an important user group - specifically for companies quoted on a stock exchange. the Competition Commission and the Environment Agency) need information to support decisions about takeovers and grants, for example. For example, the government needs information on business profitability in order to levy and collect Corporation Tax. There are many government agencies and departments that are interested in accounting information. They are also likely to interested in the pay and benefits obtained by senior management! They are crucially interested in information about employment prospects and the maintenance of pension funding and retirement benefits. trade unions) require information about the stability and continuing profitability of the business. They may even be dependent on the business for certain products or servicesД®mployees (and organisations that represent them - e.g. As customers of the company's products, they have a long-term interest in the company's range of products and services. Is the business able to pay short-term debt when it falls due?Д¬ustomers and trade debtors require information about the ability of the business to survive and prosper. Suppliers and trade creditors require information that helps them understand and assess the short-term liquidity of a business. They also need to be able to assess whether a business will be able to pay dividends, and to measure the performance of the business' management overallД«anks and other financial institutions who lend money to a business require information that helps them determined whether loans and interest will be paid when due They require information to decide whether they should continue to invest in a business. Investors are concerned about risk and return in relation to their investments.

The financial accounts provide a wealth of information that is useful to various users of financial information.

Advantages of financial accounting notes