ACCT1101 - Lecture 1

What goals would you have for the business how do you

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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: Question Consider a business you may be interested in starting… 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 resources? How would you organise your Company? Who would your customers be? How would you know if you are reaching your goals? 13 Answers? Answers? 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 uses it? uses AAA definition of Accounting­ “the process of identifying, measuring and communicating economic information to permit informed judgement and decisions by users of the information” 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? What Who are the users? At a basic level, accounting information is an organisation activities measured in $ (and/or quantities) activities 16 Types of Decisions of External Users /Stakeholders External 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 Accounting Accounting Financial Accounting 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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