to hv or receive the advantage of profit is gain

The long-term lenders are interested in knowing if they are likely to get their money back or not. They look particularly at the liquidity of the business, i.e., the ability of the company or organisation to repay its debts and its interest when they become due. They just want to judge the repaying capacity of the business.

Analysis and interpretation of financial statements means looking at the various parts of the financial statements, relating the parts to each other and to the picture as a whole, and determining if any meaningful and useful interpretation can be made. Analysis refers to the process of fact-finding and breaking down a complex set of figures into simple components while interpretation stands for explaining the real significance of those simplified components. Thus, an analysis is a pre-requisite to the interpretation.

Accounting can be defined, as the process of identifying, measuring, recording and communicating the required information relating to the economic events or an organisation to the interested users or such information.

The objectives of accounting are as follows :

1. To keep the Systematic Records of Business Transactions: The main objective of accounting is to keep the proper and systematic record of all business transactions. In other words, Accounting systematically records all financial transactions and events of the enterprise in the books of accounts. It classifies the recorded data under relevant accounts and summarises them into financial statements. Accounting is done to keep a systematic record of all financial transactions, assets and liabilities. The recorded information enables verifiability and acts as evidence.
2. To Calculate Profit or Loss: Another main objective of accounting is to ascertain the profit earned or loss sustained by a business during an accounting period. For this purpose, a statement called the income statement or the trading and profit and loss account is prepared at the end of each financial year. In this account, the revenue and the expenses incurred in the accounting period are recorded, and the comparison of the two shows whether the business has earned profit or incurred loss.
3. To Ascertain the Financial Position of business: Accounting also aims at ascertaining the financial position of the business by preparing a position statement called as balance sheet. Balance sheet is a systematic record of various assets and liabilities of the business on a particular date. It is like a screen picture of the financial position of the business showing its all the assets and liabilities.
4. To Provide Accounting Information to Its Users for Decision-making: Another important objective of accounting is to provide accounting information to its user. Users are generally of two types internal and external. Internal users include management, owners etc. and external users include creditors, investors, government etc. The accounting information is communicated in the form of reports, statements, graphs, charts, etc. to these users. This information helps them for financial planning and controlling.

The value of fixed assets reduce after years because of usage and passage of time. It is well known that fixed assets are used for earning revenue. Therefore, decrease in their value is considered as an expense or loss incurred in earning revenue and like other expenses or losses, is charged to the Profit & Loss Account. Otherwise, profit will be overstated.

As accounting information is presented and communicated in the form of financial statements, reports, graphs, charts, etc. to various interested parties. Therefore, the primary reason for business students and others to study accounting discipline is to acquire that knowledge, which is helpful in understanding and using this accounting information. In other words, to study the financial statements and to derive results from them, it is essential to study Accounting discipline.