Question

Question three:   

Changes in the form of business organizations and ownerships created a conflict of interest between many interested groups, explain and how accounting solved this problem?

Answer 1

Answer)

Different groups exists in an organisation like Owners who want more returns on their investment, employees who want more benefits for their work, government want more taxes etc. In absence of the real numbers every group feel like they are exploited by the other. Hence, When accounts are prepared with applicable financial framework every group will know that what they got like what owner are finally left with (profits), what employees got paid which solves the conflict among them as they will be come to know what portion of companies income they got. Moreover in recent trends there are other accounts introduced which says what the individual group compensated and the best example for it is Value added statements which clearly shows what percentage of income that each group got after paying all the general expenditure.