3 Answers
The following are the roles of corporate accounting:
- Provide a basis for the accounting system
- Reflects the creditworthiness of the company
- Reflects assets and liabilities of a company.
- Helps the investors in decision-making by showing the financial position of a company.
- Reflects the company's management system.
The role of corporate accounting is to serve two groups in a business, i.e., the insiders and the outsiders. To insiders, it helps in reflecting the company's efficiency or inefficiency in meeting liabilities, its strengths and weaknesses, fluctuating market risks, profit and loss, and company management. To outsiders, it reflects the financial position and profit-earning capacity of the firm so they can make investment decisions easily.
Corporate accounting plays an important role by providing necessary information to the users, such as the business's financial position, assets, liabilities, profits, various policies, its contribution to society, etc. This information further helps the users to make various decisions, such as the expansion of business, whether to invest in the company or not and how much dividend is to be distributed and how much should be retained, etc.
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