Why Accounts are prepared
Accounts or financial statements are prepared to meet the different information need of different stakeholder. The financial statement is an important source of information for decision making . There are number of user of financial statement.
Accounts or Financial statement are also the statutory requirement in many countries specially in case of public companies which are listed in stock exchange.
User of Financial Statements
Investor
The investor want to decide about the future pay out of dividend . The investor is also interested in expected rate of return on the investment in long run.
Lender
The lender is interested in financial statement to find out whether or not the entity would be able to pay back its amount and interest.
Employees
The employee are interested to know the financial position to know about their career prospect in the organization and ability of organization to pay high remuneration.
Govt
Govt closely look into the financial statement to collect the tax.
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