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ACTG 1P71 (70)

accounting 3

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Richard Brown

Although there is a difference in the type of information presented in financial and management accounts, the underlying objective is the same - to satisfy the information needs of the user. These needs can be described in terms of the following overall information objectives: Collection in money terms of information relating to transactions that Collection have resulted from business operations Recording and Recording and classifying data into a permanent and logical form. This Classifying is usually referred to as "Book-keeping" Summarising data to produce statements and reports that will be useful Summarising to the various users of accounting information - both external and internal Interpreting and Interpreting and communicating the performance of the business to the Communicating management and its owners Forecasting and Forecasting and planning for future operation of the business by providing management with evaluations of the viability of proposed Planning operations. The key forecasting and planning tool is the "Budget" The process by which accounting information is collected, reported, interpreted and actioned is called "Financial Management". Taking a commercial business as the most common organisational structure, the key objectives of financial management would be to: (1) Create wealth for the business (2) Generate cash, and (3) Provide an adequate return on investment bearing in mind the risks that the business is taking and the resources invested In preparing accounting information, care should be taken to ensure that the information presents an accurate and true view of the business performance and position. To impose some order on what is a subjective task, accounting has adopted certain conventions a
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