lOMoAR cPSD| 48243012
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, lOMoAR cPSD| 48243012
Accounting questions
Discuss the nature of accounting.
The nature of accounting: accounting is a
specialised means of communication
which is used to convey a specialised
message about an entity’s finances. The
recipient of this specialised message (the
user of financial information) must
understand it otherwise the information
that is conveyed has no value.
Accounting is therefore a language.
What is the common unit of
measurement in accounting?
The common unit of measurement in
accounting is money.
Name the four main forms of
ownership.
Sole trader, Partnership, Close
Corporation, Company
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, lOMoAR cPSD| 48243012
Discuss the different users of financial
information.
- Investors: these are the providers of
capital. They are concerned with the
risk involved in their investment and
the return (interest or dividends) they
will receive on their investment.
They need information to decide
whether they should invest (buy),
hold or withdraw (sell) share.
- Employees: employees are
interested in information about the
stability and profitability of the
business. They also want to know if
the entity will be able to pay
remuneration and retirement
benefits, and whether there are any
employment opportunities.
- Lenders: lenders need information
to determine whether their loans and
the interest on the loan will be paid
on due dates.
- Suppliers and other trade
creditors: these users need
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, lOMoAR cPSD| 48243012
information that will assure them
that amounts owed to them will be
paid when due.
- Customers: they want to know if the
business will continue to exist,
especially when they are involved
for a long time or when they are
dependent on the entity.
- Government and their agencies:
they are interested in the allocation
of resources and therefore in the
activities of the entity. They also
need information in order to regulate
the activities of entities, determine
taxation policies and use the
information as a basis for national
income and similar statistics.
- Public: members of the public are
affected in several ways. Entities
often contribute to the local
economy by employing people and
supporting local suppliers.
Downloaded by Master vincent ()
Downloaded by Master vincent ()
, lOMoAR cPSD| 48243012
Accounting questions
Discuss the nature of accounting.
The nature of accounting: accounting is a
specialised means of communication
which is used to convey a specialised
message about an entity’s finances. The
recipient of this specialised message (the
user of financial information) must
understand it otherwise the information
that is conveyed has no value.
Accounting is therefore a language.
What is the common unit of
measurement in accounting?
The common unit of measurement in
accounting is money.
Name the four main forms of
ownership.
Sole trader, Partnership, Close
Corporation, Company
Downloaded by Master vincent ()
, lOMoAR cPSD| 48243012
Discuss the different users of financial
information.
- Investors: these are the providers of
capital. They are concerned with the
risk involved in their investment and
the return (interest or dividends) they
will receive on their investment.
They need information to decide
whether they should invest (buy),
hold or withdraw (sell) share.
- Employees: employees are
interested in information about the
stability and profitability of the
business. They also want to know if
the entity will be able to pay
remuneration and retirement
benefits, and whether there are any
employment opportunities.
- Lenders: lenders need information
to determine whether their loans and
the interest on the loan will be paid
on due dates.
- Suppliers and other trade
creditors: these users need
Downloaded by Master vincent ()
, lOMoAR cPSD| 48243012
information that will assure them
that amounts owed to them will be
paid when due.
- Customers: they want to know if the
business will continue to exist,
especially when they are involved
for a long time or when they are
dependent on the entity.
- Government and their agencies:
they are interested in the allocation
of resources and therefore in the
activities of the entity. They also
need information in order to regulate
the activities of entities, determine
taxation policies and use the
information as a basis for national
income and similar statistics.
- Public: members of the public are
affected in several ways. Entities
often contribute to the local
economy by employing people and
supporting local suppliers.
Downloaded by Master vincent ()
