Making Information Available to Interested Groups

Through serving the purpose of evaluating the profit/loss for a particular period and truly reflecting on the assets, liabilities, capital and financial health on a particular date, not only is useful information provided to persons within the organisation, but the same is also available to various persons and groups as mentioned earlier. Owners, employees and managers are made aware of the profitability and financial position of their concern and can resort to due caution and remedial measures as and when appropriate (under adverse conditions); and also take steps to secure bonuses, pay-rises, etc. (under favorable conditions). Government looks for tax compliance. Customers/consumers look for better quality and lower costs of products. Investors and creditors assess the firm's credit-worthiness, profitability, liquidity and financial soundness; and the prospects of their own committed, and of any prospective, investments. Research scholars may look for the origins on business management aspects and prospects for newer attitudes and venture opportunities. Other social organisations may look for participation, collaboration, sponsorship, etc. Management would make use of the. information for decision-making. Ordinary citizens too are interested as a voter and tax-payer so as to be convinced on hikes in prices and charges - say, from transport companies, universities, electricity boards, etc. and places of worship too. 

Put differently, though accounting by itself does not create wealth, or cause loss or profit, it would, however, hold out an assessment of, and provide assistance for, creation of wealth, and its maintenance and augmentation. This is based on discerning reading of information on : 

1. Availability of Capital and its Form; 
2. Assets and Stock position and also Liabilities; 
3. Quantum and Types of Purchases and Sales; 
4. Debtors and Creditors - List of persons and amounts, respectively; 
5. Costs incurred in several business activities; and 
6. Profits and/or losses - Gross, also Net. 

Providing Assistance for Creation of Wealth and its Maintenance 

Investigative, exploratory and control tools that are employable to process the recorded and generated data for improving the position of the firm can be taken recourse to. These tools include - for researching purposes as well - scrutiny of and inferences from trends and ratios; cost accounting, budgetary control; inventory control; internal auditing; working capital management; receivables management, etc. 

Other Uses (or Advantages) 

Though not primarily so intended, the business accounts, when duly and properly maintained, can and do help : 

1. in payment of taxes (Sales tax, Income tax, etc.) and safeguarding against defaulting in payment of interests due to creditors; 
2. avoiding misappropriation (by employees or other conniving people) since all transactions are recorded; 
3. as evidence in a court of law, both for realization of debts from others, and, if ever so unfortunate, to declare the business as'insolvent; 
4. in realising reasonable price in case the business is to be sold.