BU1002 Lecture 1: Introduction to Accounting
14 Jun 2018
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Department
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Lecture 1: Introduction to Accounting
Friday, 13 April 2018
12:25 pm
http://www.wileydirect.com.au/buy/bu1002/
Accounting is the process of identifying, measuring and communicating economic
information about an entity to a variety of users for decision making purposes
Identifying Transactions
• Business transactions:
• External exchange of something of value between 2 or more entities
• Affect assets, liabilities and equity
• Can be reliably measured and recorded
• Relevant information
• Information that makes a difference in decision making
Accounting Role in Decision Making
• Accounting information is designed to meet the needs of both:
• internal users (management) eg. Mangers, supervisors
• external users (stakeholders) eg. Outside of the entity
• External users include:
• Investors – both current and prospective
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• Suppliers and banks
• Employees
• Government authorities (e.g., ATO, ASIC)
Financial vs Management Accounting
• Financial accounting is the preparation and presentation of financial statements to
allow users (external in particular) to make economic decisions about the entity. (to
see how well the business is performing) Financial statements consist of:
• Statement of Cash Flows
• Balance Sheet (also called the Statement of Financial Position)
• Statement of Profit or Loss (Income Statement)
• Statement of Changes in Equity
• Management accounting provides economic information for internal users that is
then reflected in financial accounting statements for external users. (looking more at
budgets and flow ect and also looking at predicting future) Core activities include:
• Formulating plans and budgets so they have a strategic plan of where there
are going to go in the future
• Providing information to be used in monitoring and control within the entity
(are udgets goig ho they predited, if ot hat sort of searios are’t
correct, what needs to be modified)
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The Role of Accounting Information in Business Planning
• Accounting plays a crucial role in the business planning process. (looks at various
requirements and look at an approach of how to complete things – gives business
direction, objectives and helps to assists where the business is headed)
• There are many questions that need to be answered, e.g. Is it a new business or an
existing business? Single owner or several investors? Service or retail firm? Profit-
orientated or not-for-profit business?
• A business plan - used to provide a clear formal statement of goals, direction and
procedures to achieve outcomes.
• Accounting information provides tools to assist decision making in the daily
operation of the business and identifying whether the planned goals are met. We will
learn aspects of both financial and management accounting in this subject that will
assist in decision making.
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find more resources at oneclass.com
