Answer
Accounting numbers influence investing decisions. Investors, for instance, utilize the financial reports of various organizations to improve their comprehension of each organization's financial strength and operating outcomes. Since these announcements follow Generally Accepted Accounting Guidelines (GAAG), investors can make meaningful comparisons of various financial statements to aid in their investment decisions.
Work Step by Step
Accounting numbers also affect creditors decisions. A commercial bank normally investigates an organization's financial reports and creditworthiness before choosing whether to grant or deny the loan. The financial reports give a reasonable image of the organization's money related quality (for instance, liquidity and solvency) and working performance for the present period and over some time. The info is fundamental for the bank to guarantee that the loan is safe and sound.
