1. The users of accounting information are
1. Theusers of accounting information are the way to help users can make a gooddecision in financial sector and understand their financial condition. In fact,the users of accounting information can separate into two types of users whichis internal users and external users. Internal users are for primary used for instance,directors, managers and employees. Directors need to analyse and evaluate theirbusiness organisation’s financial condition in the way of making profit andfinancial position. Manager need to plan the best way and motivate employees togive company get a huge profit in order to avoid facing financial loss.Employees are desire to get the bonus at the end of the year which need to baseon the company’s profitability in the whole year.
There is the reason why theemployees are interested company’s financial condition. For external users are the secondaryusers of accounting information for example creditors, investors, Unions,public and government agencies. Creditors are very interested to somecompanies’ financial statement because they can extend credit for productaccordingly and identify the capability of companies when come to debt.Investors are extremely interested to prosperity of this enterprise, this isbecause they want to know clearly that the entity’s profitability of theenterprise and the financial growth of the enterprise. As investors are notalways involved their daily operation, so they can get financial statement fornext investment. Government agencies will give the financial help to theindustry by identifying the process. Not only that, sometimes the governmentagencies will refuse to lend the hand to some industries because they may usingunfair and unethical way to carry out the trade.
2. Accounting is an information system thatprovides quantitative, financial information to stakeholders about the economicactivities and condition of a business so that they can make business oreconomic decision. From the past decades, accountancy has branched out into fewdifferent types of accounting for instance financial accounting, auditing,taxation, cost and management accounting, forensic accounting and governmentaccounting. Financial accounting is an accounting that involved in recordingand classifying each businesses’ transaction, using various measurement topresent a financial statement used by external users. Furthermore, auditing is theprocess that reviewing and investigating the any aspect of the financialstatements.
Auditors are trained to spot the problem where occurs in thefinancial statement for example some unethical behaviour as embezzle funds.Besides, taxation. In taxation, the tax accountants are responsibilities tohelp client for calculating the individual taxes or taxes in business.Moreover,cost and management accounting considered as subset of management accounting and cost accountants needto analyse actual and standard cost to solve the complicated costing problem.
Meanwhile, managerial accountings involve financial analysis, budgeting, costanalysis and so on. The latest and popular branch of accounting which isforensic accounting. Forensic accounting is involved the application ofknowledge, court, and some litigation cases. Last but not least, governmentagencies are also one of the types accounting. Government agencies is publicsector accounting which includes accounting for legislative bodies andgovernment department.
3. In business entity, sole proprietorshipand partnership is quite popular. Although they are popular and useful inbusiness sector, but it also contains pros and cons in both. Firstly, strengthof sole proprietorship is can formed it easily, dissolve and incorporationcost. Not only that, sole proprietorship can make you enjoy the profit solelyas there no need to share with others. Moreover, the owner has full authorityto run the business and not many regulations to adhere to. Besides, it does notdepend on other people due to it owned by only one individual. Then, soleproprietorship is no need to charge with special income tax.
Onthe other hand, there are also have some weaknesses in sole proprietorship whichis it is financial liability. In sole proprietorship, the owner and thebusiness are legally inseparable, which gives the proprietor unlimitedliability. Furthermore, resource limitations. Because they depend on a single owner,sole proprietorship usually has fewer financial resources and fewer ways to getadditional funds from lenders or investors. Then, no employee benefits for theowner. Moving from a corporate job to sole proprietorship can be a shock foremployees accustomed to paid vacation time, sick leave, health insurance and otherbenefits that many employers offer. Last, limited life span.
Although some soleproprietorship pass their businesses on to their heirs, the owner’s death maymean the demise of the business. Thestrength of partnership is it can be formed easily. Normally, partnership hastwo or more individuals which called partners and who are co-owners of abusiness for profit. Then, single layer of taxation.
Income tax isstraightforward for partnership. Profit is split between or among the ownersbased on whatever percentages they agreed to. Furthermore, cost sharing. An importantfinancial advantage in many partnerships is the opportunity to share the costs.
Moreover, more skills and knowledge. By forming the partnership, you willslowly increase the skills and knowledge together with your partner. Besides,partners can work together for the benefits of the company. For earning moreprofits and benefits, partners will work harder and be ambitious to reach thetarget. Onthe other hand, there are some weaknesses in partnership.
Firstly, unlimitedliability. All owners in partnerships face the unlimited liability. The riskwill be greater because has many people making decisions. Furthermore, profitssharing.
In partnerships, all the profits need to share with others in businessventure. Besides, conflict and misunderstanding. In partnerships which mean ithave more than two bosses. When it have more bosses which mean more disagree overbusiness strategy or even the division of profits and losses. Then, expansion,succession and termination issues. Partnerships need to consider how they willhandle the issues such as expanding by bringing in additional partners, replacingpartners and so on. 4.
To run out a business, you need data, record,analysis on the information of debts, losses, profit that is the reason whyaccounting is very significant and necessary in business. The analysis of informationis very important to give the management making decision, understand theircompanies’ financial condition and economic activities. The management can’t makea decision without a reasonable prove or information. Accounting is a processto let management understand their financial position, losses or profit, liabilityor assets and so on. Not only that, the purpose of accounting is planning howto use the money, recording accounting data, keeping specific records orinformation and use accounting to make a decision. Obviously, accounting playsan important and significant role in business area.