By Peter Atrill
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Additional resources for Accounting: An Introduction, 4th Edition
5, the onus is clearly on accountants to provide information in a way that makes it as understandable as possible to non-accountants. But . . is it material? ➔ The qualities, or characteristics, that have just been described will help us to decide whether accounting information is potentially useful. If a particular piece of information has these qualities then it may be useful. However, this does not automatically mean that it should be reported to users. We also have to consider whether the information is material, or significant.
Who are the users of accounting information? For accounting information to be useful, the accountant must be clear for whom the information is being prepared and for what purpose the information will be used. There are likely to be various groups of people (known as ‘user groups’) with an interest in a particular organisation, in the sense of needing to make decisions about it. 1. 1. 1 Main users of financial information relating to a business There are several user groups with an interest in the accounting information relating to a business.
It is the role of the accounting system to provide that information and this will involve information gathering and communication. The accounting information system should have certain features that are common to all valid information systems within a business. These are: ● ● ● ● identifying and capturing relevant information (in this case economic information); recording the information collected in a systematic manner; analysing and interpreting the information collected; reporting the information in a manner that suits the needs of users.
Accounting: An Introduction, 4th Edition by Peter Atrill