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ACCOUNTING FOR DECISION MAKERS ESSAY
ACCOUNTING FOR DECISION MAKERS ASSIGNMENT
Financial statements provide the financial status of a business which is crucial to a variety of users in making economic decisions. All business transactions must be reported in books of original entry and later posted to the ledger accounts which provide a basis for creating a trial balance. The trial balance records all debit and credit balances which are critical in crafting financial statements. The statements show the profit earned or the loss sustained by the firm during a given period.
Need for regulation in financial reporting
Accounting standards used today are described as the Generally Accepted Accounting Principles (GAAP) because they are widely accepted and set by an authoritative body. Regulation in financial reporting is important since it provides information to all the stakeholders concerned. The user groups depend on the regulations put by the accounting standards because they do not create bias to any user. Firms cannot prepare financial reports based on their own will because it would create conflicts among users. The accounting standards are therefore used to provide equity to different users of accounting information. Thus, they provide uniformity in accounting practice by ensuring consistency and proper comparison of data in the reports. Practically, they maintain transparency, fairness and consistency that is dependable to all users.
Challenges faced by accountants
Accountants are the most trusted people in the field of businesses, therefore require to have due diligence while performing their duties. They are however face d with the challenge of obtaining transparency in the parties involved. For instance a management that has a close relationship might hide some information when they realize that they have misused a firm’s resources. This condition might prove hard for the accountant to make credible financial statements that can be relied on by all stakeholders. Introduction of new standards by the accounting bodies might also produce conflicting ...........GET A PLAGIARISM FREE COPY