What are the specific environmental factors that affect the development of accounting?

Answer 1

Impacts of specific factors such as:

1. Labour unions

2. Government agencies

3. Owner stockholders

4. The public

5. Financial institutions

6. And the suppliers

1-labour unions

Labor is the human resource a company uses to produce goods or services.

A few business industries may use unionized labor in their business operations. Unionized labor represents a group of individuals that use a collective bargaining agreement to define employee relationships with an organization.

For example: labour unions may affect business throughout the following issues:

Ø Increased Wages

Ø Workforce ReductionØ Considerations

2- Government agencies

Governments create the rules and frameworks in which businesses are able to compete against each other. From time to time the government will change these rules and frameworks forcing businesses to change the way they operate. Business is thus keenly affected by government policy.

For example: The government issues National Minimum Wage which the company has to follow it.

3- Owner stockholders

Shareholders are the owners of a business and are the ultimate decision-makers on the direction of a company. While the management of a company has the day-to-day decision-making power, shareholders guide the strategy, financing and selection of management of the firm.

For example: Shareholders primarily affect a business through their voting rights in company decisions. Shareholders generally have power equal to the percentage of shares they own.

4-Public

Public business means government owned business and it has a lot of effect for the organization, so this organization is capable of making monopoly business so that the competitors will be reduced.

For example: Karachi electricity company has a lot of power to control the competition, so other company may not enter the market.

5. Financial institutions

Financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries. Most financial institutions are regulated by the government.

For example: Bank provides a range of banking products and financial services to corporate and private clients, including loans and deposits, securities and custody services, and payment transactions.

6. Suppliers

Suppliers can affect your cost of your production, and the organization is independent on that.

For example: you are the owner of the shop. If you can buy products in a very cheap price, it would be good for you because you can make more profit on that. On the other hand, if suppliers sell you products in high price, you are going to lose revenue.

Answer 2

Specific environmental factors that can affect the development of accounting include changes in regulations and standards, advances in technology, globalization, economic conditions, and stakeholder expectations. These factors can influence the way accounting information is prepared, presented, and reported by organizations.