Chapter 12 Limitations of published accounts
Financial accounting Management accounting
Collection of data on daily transactions Preparation of information for managers on
any financial aspect of a business, its
departments and products
Preparation of the published report and Analysing internal accounts such as
accounts of a business – balance shit, income departmental budgets
statement and cash statement.
Information is used by external groups Information is only made available to
managers of the business – internal users
Accounts usually prepared once or twice a Accounting reports and data prepared as and
year when required by managers and owners
information risk to fall out to competitors.
Things that mustn’t be present making company annual reports:
Details of sales and profitability of each good or service produced by the company and of each
division or department
The research and development plans of the business and proposed new products
The precise future plans for expansion
The performance of each department or division
Evidence of company’s impact on the environment
Fture budgets or financial plans.
Foundations of accounting - accounting concepts and conventions
Important to base all accountings in the same base basic principles.
If not it will be impossible to compare with accounts of other companies based in
Cause huge problems for multinational companies as if accounts based on
activities recorded in other countries using different concepts and conventions.
(There will be no As or A level Business Studies question based on this principles
The double-entry principle
Every time business engage in transactions, there will be two sides to this transactions So this means business must include this transaction twice; Such as sale of goods to a costumer
on credit will lead to stock falling in value (1 record) and the costumer owing money to the
business (2 record)
Some computer programs specially design for keeping accounts would be used for this double-
Accruals arrive when services have been supplied to a busi