ABSTRACT
The previous three chapters have explained how business activities are transformed into meaningful information through the accounting process. At each step of the process, it has been illustrated how to view and analyze the changes of business conditions reflected on relevant financial statements. In this context, the purpose of accounting, which goes far beyond just the recording process, is clearly described in the definition of accounting presented by the American Accounting Association as “the system of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information.” Accounting information must be communicated to the user groups to make sound decisions. This chapter, and the following ones, will cover the communicating function of accounting information so that the managers, as the first-hand user group, can make informed judgments.
