Week 7 - ACCY 111 RJD Lecture 1

Who wants the information what do the want it for

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who wants the information? what do the want it for?
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What do accountants do? - collect accounting information - classify accounting information - record accounting information - summarise accounting information - interpret accounting information - report accounting information - communicate accounting information
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Users of Accounting Information
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Users of Accounting Information Owners – what is the value of the business? is the capacity and capability of the organisation being eroded? Managers – how efficiently is the organisation functioning? Is it operating in terms of the plan and achieving objectives? Customers – how reliable is the organisation? Employees and their representatives – what risks does the organisation face? Suppliers – how secure is the organisation? Can it pay for goods and services it purchases?
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Users of Accounting Information Lenders – how financially secure is the organisation? Can they repay loans and interest? Government – is the organisation complying with the relevant laws and regulations? Is tax payable on profits and/or purchases and sales? Community Representatives – how environmentally responsible is the organisation Investment Analysts – what potential exists for future growth and profitability? Competitors – what markets is the organisation operating in and/or targeting?
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Characteristics of Accounting Information Relevance : reports that are general in nature are likely to be unhelpful to most managers. Information should be targeted at the requirements of the manager, or managers, to whom it is being provided. To be able to influence decisions it must also be timely. Reliability : information should be free from significant errors or bias.
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Characteristics of Accounting Information Comparability : to enable identification of changes in the enterprise over time and help evaluation of the enterprise in comparison with other, similar enterprises. Comparability is helped by making clear the policies that have been adopted in measuring and presenting the information. Understandability : management accounting reports should be expressed as clearly as possible and should be understood by the managers to whom the information is aimed.
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What is ‘management’?
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