Question

What is the purpose of Accounting?

Identify and describe the four user groups normally interested in financial information. What kind of information is needed by each of these groups?

There are several professional certifications available to accountants. Explain the roles of the Certified Public Accountant (CPA), Certified Management Accountant (CMA), and Certified Internal Auditor (CIA).

If you were planning a career in accounting which of these certifications would you be interested in earning? Why?

Answer 1

- Accounting serves as a vehicle for communicating financial information about an economic entity's condition to different user groups. This is accomplished through preparation of different types of financial statements.

- Major user groups can be classified as under:

1. Owners: Includes both Current Owners, and Prospective Investors. The same is required for making decisions regarding investment in the business.
2. Employees: Employees are also interested in the financial information of the organization. The information helps them in knowing whether they are adequately paid by the company or not.
3. Creditors: Includes both Current Lenders, and Prospective Lenders. Financial information helps them to gauge about the creditworthiness of the business.
4. Government Agencies: Government Agencies are also a part of the user group interested in financial statements prepared by the firm. This helps them in knowing about the profitability of the company, and resultant tax liability of the corporation.

- CPA: A CPA primarily practices providing accounting and attestation services to the general public.

CMA: A CMA specialises in management accounting and financial management tools helping management of a company to make informed decisions resulting in optimal decision-making.

CIA: A CIA is a professional designation aimed towards internal auditing, its knowledge and value.