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Customers - They are the purchasers of the organizations. They are reliant on the organizations
for the products or services for the purpose of personal consumption or for resale, their main
purpose for accounting information is in order to evaluate the capability of the firms to continue
supplying them with their needs in the future.
Suppliers - These are the parties responsible for providing the organizations and institutions
with the products or services necessary for operation and sustenance. Usually, suppliers are
compensated either in cash or in credit basis. Their need for accounting information comes from
the intention to determine whether the organization is capable of meeting its obligations to pay
for the supplies it receives either on the short or long run.
Lenders - They are the parties that provide alternative capital sources to the organizations.
While the owners provide equity capital, lenders usually provide the organization with debt
capital and usually get a return in the form of interest. Examples of lenders include debenture
holders in companies, banks and other financial institutions that grant loans. The need to have
real-time accounting information on the economic performance and financial position of
organizations is in order to assess whether the entities are sufficiently profitable to pay the
interest on loans and whether the organizations possess enough resources to pay back the
principal amount.
The accounting equation
The accounting equation is a basic principle of accounting and a fundamental element of the balance
sheet. The equation is as follows:
Assets = Liabilities + Shareholder’s Equity
Examples of items that fall under each section:
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