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Introduction Reliable relevant financial statements present the best information about a companys economic history current financial health and prospect for the future Johnson 2004 The preparation and presentation of financial statements require the use of certain rules to ensure truth fairness and consistency Accounting employs a number of concepts They underlie all traditional accounting in commercial organizations and are generally employed in non-commercial organizations as well Bebbington et al 2001 Although various concepts have been employed few have found universal agreement However four are deemed to be important Oxford 2002 The four fundamental accounting concepts can be identified as going concern accruals consistency and prudence concept As mentioned above financial statements are a record used summarize and communicate financial information about a company and there are many groups of people who have an interest in these statements In other words financial statements are important a wide range of groups both internal and external to the organization These different groups are known as stakeholders They always have different purposes by looking at the companys financial statement This study is divided into two parts Part one explains how the fundamental accounting concepts are used in preparing financial statements In this part examples are also given to illustrate the application of the fundamental accounting concepts Part two explains the four main users of financial statements and their interest In this part it will also critically evaluate the role of financial accounting in aiding the decision making processes of the main users of accounts PART I Financial statements Financial statements are necessary sources of information about a company They are used to analyse a companys past present and future performance A financial statement consists of the profit and lost account the balance sheet and the cash flow statement Each of these statements summarizes specific information that has been identified measured recorded and retained during the accounting process Johnson 2004 As said earlier financial accounting employs
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