Accounting for Decision Making - Essay 2
Accounting for Decision Making
Study Notes
Introduction to Accounting (Week One)
Accounting is the process of identifying, measuring and communicating economic information (transactions) of a business to a variety of users for decision making purposes.
Business transactions are an external exchange of something of value between 2 or more entities. They can reliably be measured and recorded and can affect the assets, liabilities and equity of a business/ organisation.
Accounting information is designed to meet the needs of both internal users (management) and external users (stakeholders).
Financial Accounting and Management Accounting
- Financial Accounting includes the preparation and presentation of financial statements (Income Statement, Statement of Changes in Equity, Balance Sheets and Statement of Cash Flow) for interested parties.
- Management Accounting includes preparing internal reports to assist management in the decision making process. This mostly involves formulating plans and budgets.
Sources of Regulation
A business has many financial obligations that are legally enforceable. 1. Australian Securities & Investments Commission (ASIC): Acts as company watchdog by enforcing company and financial services laws to protect consumers, investors and creditors. Their main roles include: Uphold the law, Promote informed participation, Ensure company info is publicly available and Improve performance of financial system. 2. Corporations Act 2001 (Cwlth): Purpose is to regulate companies. 3. Australian Securities Exchange (ASX): main Australian market place for trading equities (shares), government bonds and other fixed interest securities. 4. Australian Competition & Consumer Commission (ACCC): administers Trade Practices Act and Prices Surveillance Act. The primary role is consumer protection. 5. Reserve Bank of Australia (RBA): responsible for the stability of Australian financial systems and setting monetary policy
Study Notes
Introduction to Accounting (Week One)
Accounting is the process of identifying, measuring and communicating economic information (transactions) of a business to a variety of users for decision making purposes.
Business transactions are an external exchange of something of value between 2 or more entities. They can reliably be measured and recorded and can affect the assets, liabilities and equity of a business/ organisation.
Accounting information is designed to meet the needs of both internal users (management) and external users (stakeholders).
Financial Accounting and Management Accounting
- Financial Accounting includes the preparation and presentation of financial statements (Income Statement, Statement of Changes in Equity, Balance Sheets and Statement of Cash Flow) for interested parties.
- Management Accounting includes preparing internal reports to assist management in the decision making process. This mostly involves formulating plans and budgets.
Sources of Regulation
A business has many financial obligations that are legally enforceable. 1. Australian Securities & Investments Commission (ASIC): Acts as company watchdog by enforcing company and financial services laws to protect consumers, investors and creditors. Their main roles include: Uphold the law, Promote informed participation, Ensure company info is publicly available and Improve performance of financial system. 2. Corporations Act 2001 (Cwlth): Purpose is to regulate companies. 3. Australian Securities Exchange (ASX): main Australian market place for trading equities (shares), government bonds and other fixed interest securities. 4. Australian Competition & Consumer Commission (ACCC): administers Trade Practices Act and Prices Surveillance Act. The primary role is consumer protection. 5. Reserve Bank of Australia (RBA): responsible for the stability of Australian financial systems and setting monetary policy