Unformatted text preview: r tools and encourage
creative and critical thinking to solve a
range of business issues and
problems…… 12 A Question for you:
Consider a business you may be interested in
What information would you want to know
before investing in or starting a business?
What goals would you have for the
business? How do you plan to reach them?
What resources would you need in your
Company? How would you finance those
How would you organise your Company?
Who would your customers be?
How would you know if you are reaching
Can be provided with the use of
accounting information and techniques
Accounting information helps decisionmakers determine:
a. where they are, b. where they have been, and c. where they are going. 14 2. What is accounting information and who
AAA definition of Accounting
“the process of identifying, measuring and
communicating economic information to permit
informed judgement and decisions by users of the
What does this tell us?
purpose of accounting
accounting has a number of components
* technical (measuring data)
* analytical (identifying data)
* communication – to whom? what form?
Implies information has value in the decision making process.
15 What is accounting information?
Who are the users? At a basic level, accounting information is an organisation
activities measured in $ (and/or quantities)
16 Types of Decisions of External Users /Stakeholders
Stakeholder Use information to determine: Investor Current & future profitability, cash flows for dividends, possibility of capital growth, risk and return… Banks etc Can business repay loan & interest Suppliers Can business repay purchase price of goods/services acquired Employees Potential to pay awards, bonuses, job security… Consumers Ability to provide goods/services, continuity… Gov’t Assess amount of tax to be paid… Regulators Comply with regulations (eg., Corp’ns Act) 17 Typically, Accounting is divided into two
fields: Financial Accounting vs Management
A variety of external users Internal – info for and internal (management) Users Management Acctg management decisions to plan, operate and evaluate business Regulation GAAP( “Objective...
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