Accounting in Organisations and Society (acct1046).
Essay by fazcas • March 19, 2019 • Course Note • 501 Words (3 Pages) • 669 Views
Accounting in Organisations and Society (ACCT1046)
Topic 1 Notes
- What is Accounting?
The provision of information about the use of resources and resulting performance of an entity, to stakeholders – both internal and external, (anyone with a vested interest in a business)
- Provision of Information, Accounting Information may be:
- Financial or non-financial
- Objective or Subjective
- About the entity’s internal activities and processes
- About the entity’s customers, suppliers, competitors
- Future focused
- Reflect an entity’s past operation
- Use of resources and entities:
The factors an entity uses to undertake its business activities and processes
Resources are either owned or controlled by an entity
Entities use resources as inputs to performance
Eg. Money, people, machines/equipment, natural materials (land, water)
- Performance: Can be defined as the outcome of using resources to undertake business activities and processes
- Financial Performance
- Customer Performance
- Employee Performance
- Supplier Performance
- Social Performance
- Environment Performance
- Entity: A person, partnership, organisation or business that has a legal and separately identifiable existence.
- Stakeholders: Stakeholders affect or are affected by the organisations actions, objectives and policies.
Internal Stakeholders | External Stakeholders |
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- What is the role of accounting?
Essentially, the role of accounting is to help stakeholders make better business decisions by providing them with useful information.
Internal Stakeholders | External Stakeholders |
Types of Decisions:
| Types of Decisions:
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Information requirements:
| Information requirements:
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- The distinction between internal and external stakeholders leads us to see accounting as having to broad streams
Management Accounting | Financial Accounting |
Provides information primarily for internal stakeholders | Provides information primarily for external stakeholders |
Eg. Managers, employees | Eg. Creditors, Shareholders, etc. |
- Accounting for different types of stakeholders – Management and Financial accounting
Management Accounting | Financial Accounting | |
Users | Internal External | External External |
Purpose | Provision of info to support internal decision making | Provision of info that communicates entities Performance and Financial Position |
Rules for info provision? | No | Yes – E.g. Australian Accounting Standards Board (AASB) Australian Taxation Office |
Time focus of info | Current and Future – focus is on aiding future decisions | Past (historical) focus is on communication of financial performance and position |
Primary info characteristics | Relevant, timely to the decisions it is supporting | Reliable, objective, unbiased verifiable |
Frequency of info provision | As needed for decision making | At regular intervals – i.e. annually, quarterly |
Level of detail of info | Specific to the decision being made. Detailed. | Aggregated, summarised |
Presentation of info | Many types (no regulation or rules)
| Four primary types (content And form is regulated)
in Equity |
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