Question

List TEN (10) users of financial statement. Explain the importance of financial information to these 10 users and briefly explain the impact of E-Commerce having upon the role of the organization accountant.

Answer 1

Users of financial statement are:

1. Company Management: These financial statement helps the management team to understand profitability, cash flows and liquidity every month for the organization. These statements help the management team to take operational and financing decisions regarding the business.
2. Government: Government also uses the financial statement. Importance of financial statement for government is that it helps them to determine whether the business have paid appropriate amount of taxes.
3. Investors: It helps them to understand the performance of their investment.
4. Competitors: This helps the to evaluate the financial competition. With this they plan competitive strategies.
5. Lenders. Financial statement helps lenders to evaluate the ability of the borrower to return loan funds and related interest charges.
6. Suppliers: Suppliers requires financial statement to decide whether to extend credit to company or not.
7. Rating agencies: Financial statements helps credit rating agencies to give a credit rating to a company.
8. Employees: A company can decide to provide its financial statements with detailed explanation so as to improve employees understanding and involvement in the business.
9. Customers: Financial statements help customer to select the financial stability of a supplier while considering which supplier to choose for a major contract.
10. Unions: They evaluate the ability of business to pay compensation etc.

E-Commerce has changed the way in which a business is conducted. It changes the organizational structure, delivery mechanism, under which a business is conducted. This have significant impact on accountants. Accountants have to face new challenges. There is need to learn new techniques like development of accounting system that is based on the processes of business to check that the transactions are properly posted and they are in compliance with the legislation and regulations and meet the requirements of accounting standards.