What accounting is. Anybody?

You are certainly right that both internal and external users are relying on the accounting information to make accurate decisions about the company. The great thing about equipment is that it is an asset; however, the acquisition of essential equipment to the company may not be possible if their debt is too high. A company’s frontline manager that has an understanding of accounting may then make the decision to lease the equipment if the profitability or cash position of the company would increase with the control of the asset. Leasing is an interesting tool for businesses in that it preserves lines of credit with the bank and offers the usage or utility value to the corporation. The leasing company maintains ownership of the asset and may even take on debt to acquire it. Lessors use the companies accounting records to make decisions about the creditworthiness of corporations, but more importantly their ability to make the rental payments. Most businesses today lease some if not all of their equipment. They get the benefit of control of the asset while they reduce their tax burden. This often improves the cash position of a company therefore providing an opportunity to pay divides or retain the cash to grow the business. Understanding accounting is essential to all users.