Hello I need help with the below How are business events cap

Hello,

I need help with the below.

How are business events captured for reporting?

What is the ultimate purpose of communicating accounting information?

Solution

Question 1 How are business events captured for reporting In order to understand how business events are captured firstly we need to understand what are business events. Business events are all the transactions that have financial and quantitative impact and significance on the working of the entity. For instance it may be purchasing and selling of asset and issue and repayment of loan. These financial transactions which are business events are captured by recording and reporting their specific information in the financial statements through preparation of ledger and sub ledger which may be prepared on daily basis or after some specified duration or at period end. Financial information is firstly recorded in accounting records which them is used to prepare financial statement like Balance sheet, Income Statement and Cash flow statement, Statement of retained earnings. 2 What is the ultimate purpose of communication accounting information? The financial and quantative information captured is useful in making economic , informed judgment and decision about the entity by many different stakeholders. Different users are investors, government( they gather taxes information about the entity) and banks etc.It helps different users to gain information relating to financial position, solvency, cash flows and liquidity of the entity and through which they can make informed decision whether they should inves, lend in the entity or not.