PURPOSE OF ACCOUNTS TO STAKEHOLDERS Flashcards
Financial Accounts
Definition: Financial accounts, also known as financial statements, are formal records of a company’s financial transactions and activities. They provide a summary of a business’s financial performance, position, and cash flows.
Shareholders
Purpose: To inform shareholders about the company’s profitability and financial health, helping them make investment decisions and assess the value and safety of their shares.
Managers
Purpose: To aid in planning, decision-making, and evaluating the company’s financial performance. Managers use financial accounts to assess their strategies and operations.
Employees
Purpose: To offer insights into the company’s financial stability, helping employees gauge job security and assess the possibility of salary increases or bonuses.
Customers
Purpose: To provide assurance of the company’s financial stability and ability to meet commitments, instilling confidence in their purchases and ongoing relationships.
Suppliers
Purpose: To help suppliers assess a company’s ability to meet financial obligations and make timely payments for goods and services provided.
Government
Purpose: To ensure compliance with tax regulations and financial reporting standards. Financial accounts also aid in economic data collection and industry regulation.
Competitors
Purpose: To understand the financial strengths and weaknesses of competitors, potentially informing competitive strategies.
Financiers (Lenders and Investors)
Purpose: To evaluate a company’s creditworthiness and investment potential, influencing decisions related to loans, investments, and interest rates.
Local Community
Purpose: To assess the impact of the business on the local economy, employment, and community well-being, and to determine corporate social responsibility efforts.
