Financial Accounting And Its Purpose

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• Financial reporting helps to record all financial transactions as per a double-entry system in an organised manner.
• It helps to assess the actual position and performance of the business organisation.
• It assists in projecting anticipated earnings and performance of business organisations.
• Financial reporting provides a basis for better decision-making to investors and other stakeholders about the actual profitability and liquidity situation of a business organisation on a particular date.
• It ensures compliance with statutory requirements, policies, framework, rules, and regulations.
• It provides comparative data and records along with previous years' data and competitors' data and records to evaluate the performance effectively.
• It serves as a formal report of the financial health of business organisations to top management and external users of financial information (Barth, 2015).
• It helps to classify an organisation's various assets and liabilities in order to manage them efficiently.

2. Internal and External Stakeholders:

Stakeholders are persons, individuals, groups, bodies of individuals, or organisations having a direct or indirect interest in the organisation's position, performance, objectives or goals, and results. Stakeholders are classified as internal stakeholders and external stakeholders. Internal stakeholders are persons, groups, or individuals within the business organisation having substantial interest. Whereas external stakeholders are individuals, persons, groups, or organisations outside the business organisation associated with the organisation and having direct or indirect interest (Edwards, 2013).

Internal Stakeholder: In a large business organization, internal stakeholders are shareholders, owners, management, and employees (Stice and Stice, 2013). Following is a brief discussion about major internal stakeholders and the possible way through which they are interested in the financial information of the organisation, a

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