Question

1. Accounting information can be considered the heart of business. Decision making is never without accurate and reliable information. The users of accounting information can be internal and external. They use accounting information with different goals. Explain how basic knowledge of accounting can benefits the managers, executives, or the entrepreneur.

Answer 1

Accounting Information plays a major role in running of any organisation. An entity with very good profits with nil knowledge of accounting information I.e., the flow of funds and fund management which can be known by accounting information cannot survive in this competitive world for long.

Basically, Accounting Information tells the managers from where the profits of business are arising and the areas of loopholes and also the areas where improvement is needed. It provides continues trail on the functioning of business. It helps managers to take day to day decisions of the entity. Balance sheets shows how much the business is worth for. It helps enterprenuers to take decisions regarding acquiring other entities, getting high amount of funds from public, financial institutions, whether the company has resources to handle a new project etc..

It also maintains a track of flow of funds in an organisation, misuse of resources, liquidity position of the company, Earnings per share to the shareholders. It also shows company's credit worthiness for getting loans or getting projects by quotes, tenders, bids etc..

It helps enterprenuers to make predictions about the future, to achieve the commitments, to fulfill time bound tasks, budgets v/s actuals can be known. It can also be used as an trusted evidence in a court of law.