An Examination Questions about Fundamentals of Financial Accounting Assignment

An Examination Questions about Fundamentals of Financial Accounting - Assignment Example Accounting is an extremely important activity of the business, which plays a critical role in the market economy. For instance, through accounting, it is possible for various stakeholders of different companies, especially investors to evaluate the risks and returns that they speculate to incur or gain from investing in various organizations (Ingram and Albright 22). This is because accounting allows for full and fair disclosure of such companies’ financial information and performance. Secondly, accounting provides capital markets with reliable information about the business activities of various organizations. In turn, this information is used by investors to determine profitable companies, in which they can invest (Ingram and Albright 22). This leads to the addition of value to society because the right decisions to invest and allocate resources to efficient and effective companies are made by the use of accounting information. In addition, accounting plays a role in the evaluation of contracts by society because it avails relevant information (Ingram and Albright 22). Accounting puts organizations on the check so that they can observe environmental laws and conserve the environment while carrying out their operations, which benefits the host society of such organizations at large. For instance, responsibility accounting is charged with informational responsibilities to the society in respect to the law (Bebbington, Laughlin and Gray 407). The recent trends of globalization have influenced accounting practices significantly. For instance, trade and investments between countries have increased. The amount of capital, goods and service flow across domestic borders has increased (Saudagaran 1). This requires that accounting information has to be prepared to meet the required international standards of transparency, reliability, and comparability (CGA Magazine).