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ACC Question 2

The key accounting information relevant for making economic decisions includes financial statements such as the income statement, statement of comprehensive income, statement of financial position, statement of cash flows, and statement of changes in equity. These statements provide useful information on a company's financial performance, position, cash flows, and equity activity to help assess management and guide decision making. Supplementary notes to the accounts also provide important details and context for the numbers in the financial statements.

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73 views1 page

ACC Question 2

The key accounting information relevant for making economic decisions includes financial statements such as the income statement, statement of comprehensive income, statement of financial position, statement of cash flows, and statement of changes in equity. These statements provide useful information on a company's financial performance, position, cash flows, and equity activity to help assess management and guide decision making. Supplementary notes to the accounts also provide important details and context for the numbers in the financial statements.

Uploaded by

Cheah SimYaen
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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2. What accounting information is relevant and important to you for making economic decision?

Answer: There is a few accounting information that is relevant and important for us to make economic decision. A set of documents called financial statement is the final output of accounting information system. The objective of it is to provide useful financial information about the companys financial performance and position that is very useful to a wide range of users for accessing the stewardship of management and also to make economic decision. First of all, an income statement and statement of comprehensive income. Through both of this financial statement, the financial performance can be measured by recording the revenue generated and expenditure incurred for that particular accounting period. Income statement record lesser transaction if were to compare with the statement of comprehensive income. This is because the statement of comprehensive income involve in deducting the tax for profit plus other comprehensive income. It tells the business owner how much is the profit generated. Second, the statement of financial position is a record of assets owned and liabilities owing by the business within a given period. This statement allows measurement of financial position of the business as at a given date. In the balance sheet, if we can get the final figure balance, this meaning that, all the transaction had been entered correctly. Thirdly, statement of cash flow shows whether the manager manage the cash efficiently or not. It provides information to users of financial statements about an enterprises ability to generate cash and cash equivalents and how well the management manage them for a particular period. Then, a statement of change in equity shows the types of transaction between the company and its owners for the year. It can be created for sole proprietorships, partnerships or corporations. Sole proprietorships and partnerships follow a similar format for their statements of changes in equity, while the corporation format is slightly different. The purpose of the statement is to summarize the activity in the equity accounts for the period. (Kathy Adams McIntosh, January 15, 2012). Lastly, the notes of account are a series of notes that are referred to in the main body of the financial statements. It gives further details on the numbers given in the accounts. The importance of these numbers should not be underestimated. The accounts are not complete without the notes. (Graeme Pietersz, 2005-2012)

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