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Answer 1 (a)
There are two kinds of stakeholders of the business i.e., internal and external.
(a) Internal Stakeholders: These parties are the ones which are constantly engaged in routine or daily activities of the business and are associated with the business in a much closed manner. These parties can be the managers of the business, directors of the business, employees and their trade unions and the pensioners of the business.
(b) External Stakeholders: These are the parties who are although not involved in the day to day tasks of the business but they are concerned with the performance of the business like owners, lenders, competitors, and government and trade creditors.
Answer 1 (b)
The stakeholders of the business are directly and indirectly affected by how an organization performs, what its objectives are and what are its policies. The financial information of the business is needed to them so as to ascertain the position and performance of their business and for the purpose of evaluating the performance of equity investments made by them. Based on this information these stakeholders of the company decide how they will vote on the corporate matters. The accounting information is expressed to the concerned stakeholders in the form of financial statements. Financial statements are documents such as profit and loss account, balance sheet and cash flow statement of the company. The financial information and their uses can be summarized as under:
Owners of company: These people want to know the return that their investment has generated over a period of time. This is because they are the beneficiaries of the surplus that the business would earn.
Government: The government gets tax revenue from a business. The government is concerned about how much has the business earned and what are its tax implications.
Lenders/ Creditors / Financial Institutions: These stakeholders have put in their money into the business in the form of loans or in the form of advances extended by them. They have to ascertain whether or not their money is secured which is lying in the business.
Employees/ Trade Unions: The employees of the company are concerned with the performance of the business since the performance of business is the determining factor of how their future will be shaped. They have expectations in terms of bonus, incentives etc. from the business.
Answer 2(a)
It is important that the financial accounts are showing the true and fair reflection of the subject matter involved in the business operations whether internally or externally. Therefore the concept of the true and fair view is introduced in the accounting practices. The true and fair view is useful in safeguarding and calculating whether accounts do indeed portray accurately the business activities. Also the accountancy has also introduces certain concepts and conventions to support the concept of true and fair view of the financial statement of the entity and the accounting information is keep recorded, and presented in the proper and systematic manner so that the accuracy and the consistency of the data can be maintained.
Therefore the following four concepts to be inherited in the preparation of any financials of the company:
·         Going concern
·         Consistency
·         Prudence
·         Matching or Accruals
While using the 37 years data of the Egyptian the study of empirically investigates results that the environment factors are also affect the presentation and the development of the financial accounting. It can be concluded that the perfect relationship exist between the business environment and the accounting of the entity. There are major four environment factors which affect the presentation and preparation of the accounting. These include the economic environment, political environment, development of the stock market and the privatization of the industrial sector of the economy.
According to the analysis made with the help of statistical tests including the time-series regression there is a strong relationship between the environment factors and the accounting development and the relationship between them also changes with the variation of the time. And the finding of the empirical is also indicates that the level of the economy and the political and the legal environment is perfectly correlated with the accounting development. Alternative way of viewing the society is by segmenting it into different groups or areas, like...