Financial Accounting and reporting Essay Example | Topics and Well Written Essays - 1000 words - 1

Financial Accounting and reporting - Essay Example The key issues in this essay are diverse users of financial statements and the legal, regulatory; their needs have influences on financial statements, the implication of the regulations for the users, the role of the accounting and reporting standards, and ways through which different needs of various groups of users contrast. The first category of people who use financial information is investors. Investors who provide capital to a company are concerned about the levels of risk, and return from their respective investments. This group of users requires financial information to aid them in deciding whether they should buy or sell shares of a particular company. They are equally concerned about information that assists them to measure the ability of a company to offset cash dividend. The second category of people is employees. Employees need to know whether their employer is financially stable. They use this data to evaluate the employer’s ability to implement a fair remuneration package, provide retirement benefits, and be able to offer employment chances. Lenders use financial information to access the ability of a company to promptly pay both the principal and interest on loans. Other trade creditors and suppliers need financial information to enable them to gauge whether the amount owed to them are payable without default or delay. Customers are interested in financial information to determine the life span of an enterprise, especially when they have a long-term association with an enterprise such as the presenting solutions to both short and long-term problems. Government and their agencies use the financial information to regulate the activities of an enterprise and to determine tax policies. They also use the information to compute national income. Lastly, the public use financial information to determine the trends and recent development activities of an enterprise to