The major reason for studying accounting is to acquire relevant knowledge
and skills to participate in important economic decisions. The accountants
provide information about such decisions both inside and outside the business
It is not necessary that every individual engaged in different areas of
business viz., finance, production, marketing, personnel and general management
to be expert accountant, but they are more effective if they have a good
understanding of accounting principles. Everyone engaged in business activity,
from the junior most employee to the manager and owner is associated with
accounting. The higher the level of authority and responsibility, the greater is
the need for understanding of accounting concepts and terminology.
The importance of understanding accounting is not limited the business world.
Many employees with specialized training in non-business areas also make use of
accounting data and need to understand accounting principles and terminology.
For example, an engineer responsible for selecting the most desirable solution
to a technical manufacturing problem considers cost accounting data to be the
deciding factor. Lawyers use accounting data in tax cases and in lawsuits
involving property ownership and damages from breach of contracts. Government
agencies rely on accounting data evaluating tile efficiency of operations and
for appraising the feasibility of proposed taxation and spending measures. Thus,
every adult engaged in business transactions must necessarily be concerned with
the financial aspects of life.
Concluding the discussion, we can say that accounting plays a significant
role in society by providing information to managers of all institutions and to
other persons having direct financial interest in those institutions such as
present or potential investors or creditors. Accounting information is also
important to agencies having indirect financial interest such as taxing
authorities, regulatory agencies, economic planners and other groups.
Accounting as a provider of information to users is illustrated in the
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