Who needs own service

1 

Owners and Managers

• Needed information: Owners and Managers need accounting information to plan, monitor and make business decisions. Specially, owners and Managers need to allocate the financial, human and capital resources towards competing needs of the business through the budgeting process.

• Advantages and disadvantages:​

- Advantages: Accounting provides a clear picture of the company's financial health, enabling informed decision-making, strategic planning, and budgeting.

- Disadvantages: Focusing too heavily on short-term financial metrics might lead to neglect of long-term strategic planning and sustainable business practices. Besides, maintaining accounting departments and systems can be costly, especially for small businesses. Allocating resources to accounting might divert funds from core business activities.

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2

Investors and Creditors

• Needed information: Investors and creditors need to know how well their investment is performing. Investors primarily rely on the financial statements published by companies to assess the profitability, valuation and risk of their investment.

• Advantages and disadvantages:​

- Advantages: Investors and creditors furnish the money that a company needs to operate.

- Disadvantages: Investors and creditors might view rigorous accounting standards as burdensome, leading to reluctance in investment or lending.

3

Government

• Needed information: Businesses are required to furnish financial information to a number of government agencies. Publicly owned companies, for example—the ones whose shares are traded on a stock exchange—must provide annual financial reports to the Securities and Exchange Commission (SEC), a federal agency that regulates stock trades. Companies must also provide financial information to local, state, and federal taxing agencies, including the Internal Revenue Service.

• Advantages and disadvantages:​

- Advantages: Government defines and monitors accounting thresholds such as sales revenue and net profit to determine the size of each business for the purpose of ensuring that it complies with the relevant employee, consumer and safety regulations.

- Disadvantages: Accounting standards and regulations can be complex and rigid, making compliance challenging, especially for small businesses with limited resources.