PURPOSE OF ACCOUNTING FOR DIFFERENT STAKEHOLDERS

Accounting plays a vital function in supplying financial information that meets the different requirements of stakeholders within a business. The fundamental objective is to ensure transparency, accountability, and informed decision-making (Harrison and Van Der Laan Smith, 2015).

Accounting functions as a strategic instrument for management, facilitating the processes of planning, regulating, and assessing the organization's performance. Through the generation of financial statements, management acquires a comprehensive understanding of the company's financial well-being. This enables them to make informed strategic decisions, efficiently allocate resources, and evaluate the overall performance in relation to established goals and objectives (Harrison and Van Der Laan Smith, 2015).

01). Investors / Shareholders

Investors and shareholders rely on accounting information to determine the profitability and financial health of a company. Financial statements such as the income statement, balance sheet, and cash flow statement provide critical data for assessing the company's ability to earn returns, manage its debts, and share gains through dividends

02). Creditors

Creditors, such as banks and other lending organizations, utilize accounting information to assess the creditworthiness of a company before granting loans. The financial statements assist creditors evaluate the company's ability to repay loans, manage cash flow, and maintain financial stability

03). Government Agencies

Government agencies and regulatory bodies utilize accounting information to verify compliance with financial legislation and taxation requirements. Accurate financial reporting is vital for establishing tax responsibilities, combating fraud, and protecting the overall integrity of financial markets.

04.) Employees

Employees, on the other hand, may be interested in accounting information to assess job security, analyze the financial health of their organization, and understand the potential for wage raises or incentives based on company performance.

Overall, accounting plays a critical role in addressing the different informational needs of stakeholders, facilitating openness, and establishing trust and confidence in the financial reporting of an organization. The information generated through accounting processes promotes effective decision-making, regulatory compliance, and the overall health of the corporate environment (Sharma, 2024)