The Purpose and Nature of Accounting

The underlying purpose of accounting is to provide financial information about an economic entity. The economic entity which we shall be concentrating upon is a business enterprise. The financial information provided by an accounting system is needed by managerial decision makers to help them plan and control the activities of the economic entity. Financial information is also needed by outsiders – owners, creditors, potential investors, the government and the public – who have supplied money to the business or who have some other interest in the business that will be served by information about its financial position and operating results.