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    Week 1 - ACCY111 Notes

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    Darcie
    This document provides an overview of key topics covered in Week 1 of an accounting lecture, including: - The role of accounting in identifying, measuring, recording and communicating economic transactions to aid decision making. - Accountants work as problem solvers and decision makers in a variety of organizations, not just as "bean counters". - Accounting evolves with changes in technology, business, and society. It provides financial and other information to both internal and external users to facilitate decision making. - There are differences between management and financial accounting in terms of their focus, users, reports, and other factors. Both are important to the decision making process.

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    Week 1 - ACCY111 Notes

    Uploaded by

    Darcie
    38 views7 pages
    This document provides an overview of key topics covered in Week 1 of an accounting lecture, including: - The role of accounting in identifying, measuring, recording and communicating economic transactions to aid decision making. - Accountants work as problem solvers and decision makers in a variety of organizations, not just as "bean counters". - Accounting evolves with changes in technology, business, and society. It provides financial and other information to both internal and external users to facilitate decision making. - There are differences between management and financial accounting in terms of their focus, users, reports, and other factors. Both are important to the decision making process.

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    This document provides an overview of key topics covered in Week 1 of an accounting lecture, including: - The role of accounting in identifying, measuring, recording and communicating economic transactions to aid decision making. - Accountants work as problem solvers and decision makers in a variety of organizations, not just as "bean counters". - Accounting evolves with changes in technology, business, and society. It provides financial and other information to both internal and external users to facilitate decision making. - There are differences between management and financial accounting in terms of their focus, users, reports, and other factors. Both are important to the decision making process.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    38 views7 pages

    Week 1 - ACCY111 Notes

    Uploaded by

    Darcie
    This document provides an overview of key topics covered in Week 1 of an accounting lecture, including: - The role of accounting in identifying, measuring, recording and communicating economic transactions to aid decision making. - Accountants work as problem solvers and decision makers in a variety of organizations, not just as "bean counters". - Accounting evolves with changes in technology, business, and society. It provides financial and other information to both internal and external users to facilitate decision making. - There are differences between management and financial accounting in terms of their focus, users, reports, and other factors. Both are important to the decision making process.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 7

    Week 1 – Lecture

    Chapter 1: Decision Making and the Role of Accounting

    Accounting: The language of business – “process of identifying, measuring, recording and


    communicating economic transactions and events of a business operation”
    - More than just bookkeeping
    Accountants: Problem solvers and decision makers
    - Not ‘bean counter’ or number crunchers’
    - Work in a range of organisations
    - In a variety of roles
    The Accounting Environment
    Accounting evolves as society and business changes. Some of these changes include:
    - Rapid developments in information and communication technologies
    - Increasing demand for a range of information about organisational impact
    - Globalisation of business
    - Development of international regulations and standards
    The Nature of Accounting
    Accounting is a service activity; its function is to provide and interpret financial (and other)
    information is to aid decision making
    Accounting is used in a range of organisations:
    - Business
    - Government
    - Charities
    - Not-for-profits
    What is accounting?
    1. Identification
    a. Transactions
    2. Measurement
    a. Quantification in monetary terms
    3. Recording
    a. Recording; classification; summarisation
    4. Communication
    a. Accounting reports; analysis and interpretation
    Users of Accounting Information
    1. Internal Users
    2. External Users
    Financial Reports and Users
    Management and Financial Accounting
    Management Accounting:
    - Internal focus:
    o Planning
    o Controlling
    o Decision-making
    - Cost behaviour
    - Budgeting
    - Strategy
    Financial Accounting:
    - External focus
    - Reporting information
    o Performance
    o Position
    - Financing and investing
    - Compliance
    - Highly regulated
    Users of Reports
    Management accounting:
    - Users are inside the entity
    - Mangers
    - CEO’s
    - General managers
    - Sales managers
    - Account managers
    Financial accounting:
    - Users are outside the entity
    - Shareholders
    - Lenders
    - Potential investors
    - Creditors
    - Customers
    - Government
    - Interest groups
    Types of reports
    Management accounting:
    - Special purpose financial statements for internal users
    - Financial budgets
    - Sales forecasts
    - Performance reports
    - Cost-of-production reports
    - Incremental analysis reports
    - Do not comply with accounting standards
    Financial accounting:
    - General purpose financial statements for external users
    - Balance sheet
    - Income statement
    - Statement of changes in equity
    - Statement of cash flows
    - Required by regulatory authorities; must comply with accounting standards
    Frequency of reports
    Management accounting:
    - On demand reports
    - Daily, weekly, monthly – as requested by management to help with decision making
    Financial accounting:
    - Income tax legislation, the corporations law and securities exchange listing rules
    require reports at regular intervals
    Content and format of reports
    Management accounting:
    - Management establishes own guidelines for structure, content and type of
    information (financial and non-financial); structure and classification of reports are
    tailored to specific needs of decisions to be made
    - Reports can relate to particular segments of an entity or to a particular decision
    Financial accounting:
    - Structure and content are largely standardised with certain disclosures dictate by
    accounting standards
    - Statements generally contain historical, verifiable data
    - Reflect the results of the entity as a whole, thus contain much aggregation,
    summarisation and restricted classification
    - Based on the formal double-entry system
    External verification
    Management accounting:
    - Special purpose financial statements are not required to be audited, but
    management may want verification of the contents by internal auditors
    Financial accounting:
    - General purpose financial statements must be audited by independent external
    auditors who verify that the statements are in compliance with accounting standards
    and provide a true and fair view of the performance and financial position of the
    entity
    Accounting as a profession – Australian Perspective
    Self-regulated profession
    Major professional Associations
    - CPA Australia
    - Charted Accountants Australia and New Zealand (CAANZ)
    - Institute of Public Accountants (IPA)

    Public Accounting
    Accountants who offer their professional services to the public for a fee. Can vary in size
    from small to large international organisations. Four main areas with many specialities:
    1. Auditing and assurance services
    2. Taxation services
    3. Advisory services
    4. Insolvency and administration
    Accounting in Commerce and Industry
    Accountants who are employed in business entities. Many areas of interest:
    - General accounting
    - Cost accounting
    - Accounting information systems
    - Budgeting
    - Taxation accounting
    - Internal auditing and audit committees

    Not-for-profit Accounting
    Many accountants work in the not-for-profit area. This requires a slightly different approach
    as profit is not the primary focus. Includes a range of organisations:

    The Decision-making process


    Steps in decision making:
    1. Goals  what are we trying to achieve
    2. Information  What information do we need?
    3. Consequences  What are the consequences of different alternatives?
    4. Choose  Which course of action should we choose?

    Economic decisions
    Many decisions involve economic resources. Economic resources have a price as they are
    scarce. Must also consider:
    - Personal taste
    - Social factors

    Accounting information and decisions


    Many decisions require significant amounts of financial information.
    - Accounting information is very important
    Accountants report on the past
    - Still useful for making decisions about the future
    - Also useful for assessing past decisions
    Accounts also look to the future
    - Budgeting; future plans, strategy and planning
    Using information in Economic Decisions
    Lecture 1 Example – The story of Joe Surfer and Hawaii Surfboards
    Office $32 000
    Surfboards $6 450
    Leashes $800
    Bags $1 700
    Wax $2 000
    Fins $1 800
    Towels $1 400
    Booking information systems $2 600
    Cash Register $1 850
    $52 550

    Running Costs = $470


    Accountant fees = $1 632 per year
    Surfing lessons 42
    Paddle boarding 12

    Approx. charges per client


    Surfing = $80
    Paddle boarding = $60

    Consequences
    1. 4080 x 48 = $195 840
    2.
    Week 1 – Tutorial
    First hour activity
    DQ 1.1  Economic decisions for investment purposes. Factors to consider:
    - Financial aspects: purchase price, rental, income, other property prices, interest
    rates, strata fees, stamp duty.
    - Personal taste: apartment features e.g. elevator, stairs
    - Environmental factors: location
    - Social factors: near schools, shops
    - Government policy: council rates

    DQ 1.2
    - Everyone involved in business uses accounting in decision-making processes
    - Accounting is used to communicate financial information to be used in making
    economic decisions.
    DQ 1.6
    Internal  information required is financial data for planning and controlling the operations
    of the business entity (how much profit, what should be produced, what resources are
    available, how much does it cost)
    - Mangers
    - Employees
    - CFO
    - Internal management (marketing, production, finance, HR, information systems,
    general managers)
    External  information required includes financial statements, income statement, balance
    sheet, etc.
    - Shareholders, stakeholders
    - Competitors
    - Creditors
    - Investors
    - Customers
    - Unions
    - Banks
    - Government agencies e.g. ATO
    DQ 1.7
    Public Accountants
    - Run business offering their services to the public for a fee
    - Range from small businesses to large international organisations
    4 types of public accounting:
    1. Auditing and assurance services
    2. Taxation services
    3. Advisory serves
    4. Insolvency and administration
    Not-for-profit accounting has the absence of a profit motive.
    e.g. churches, charities, clubs
    Ex 1.8
    Marketing Manager
    - Sales campaigns
    - Research advertising and results
    Production Manager
    - What to produce
    - What is the most efficient production process
    - Machinery costs/replacement
    - KPI
    - Raw material prices
    - Electricity costs
    The CEO of a National football league
    - Ticket prices
    - Wages
    - Salary breach – the players limit of pay
    Manager of a second-hand charity
    - Funds, donations
    - Advertising
    - Prices
    - Rubbish removals
    - Who they help.
    - Volunteers

    Second Hour activity


    DQ 1.13
    No, it isn’t but the numbers help in gathering information, communicating it and making
    economic decisions

    Ex 1.4
    Marketing and management

    Factors:
    - Career options

    Criteria
    - Schedule of study

    Infor sources
    - Career expos
    - Current employment
    Ex 1.9

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