The Need for Accounts

1
The Need for Accounts
They are used to measure financial information in
a format so that people both inside and outside
the organisation (Stakeholders) can make informed
decisions. This information includes

• The level of profit and how it was used.
• The ways finance was raised.
• The liability for tax.
• The production cost of each product.
• The marketing cost.
• The ability of the firm to pay its debts.
• Money available for investment.
• Has the firm achieved its objectives.
• How the firm compares to its competitors.

2
Who uses the Information

• Management
• Owners
• Financial Institutions
• Trade Unions
• Potential Investors
• Inland Revenue
• Other Stakeholders.

I.T. has increased the use of accounting
information, making it more accessible and
reducing the cost of collating the information.
e.g. Spreadsheets allow an organisation to model
the effects of changing circumstances in the
business.