Case Study1
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Question 1: What information will Fuller need to manage the business? Classify thus information in two categories: accounting information and non-accounting information.
The content of financial reports can be divided to accounting and non accounting information. According to Ahmed Belkaoui and Alain Cousineau (1977), accounting information is defined as quantitative, formal, structured, audited, numerical and past oriented material. While non accounting information is defined as qualitative, unaudited, narrative and it is future oriented prose. For accounting information, it can further categorized into 4 different categories: 1. Operating information 2. Financial accounting 3. Management accounting 4. Tax accounting
1.) Operating information
This is the information needed on day-to day basis for the organization to conduct their business. In addition, operating information constitutes to the greatest amount of accounting information and it can serve as basic for financial and management accounting. Example of operating information: employees’ payroll, sales, outstanding balance from customers, inventory and so on.
In the Kim Fuller’s case study, operating information that needed to be recorded is: i. Employee’s payroll (2 grinding workers and 1 driver), ii. Invoice and delivery order to customer or former employer, chemical firms. iii. Operating expenses (Electricity, petrol and transport maintenance). iv. Inventory of bottles.
2.) Financial accounting
Information like this is geared toward the external users whom have no control towards the preparation of reports or access to the underlying details, for example: the government, creditors, banks, shareholders, public and etc. To ensure uniformity, the information reported is subjected to a set of ground rules and prepared under generally accepted accounting principles (GAAP). As for the case study, the information needs to be recorded under financial accounting as
Question 1: What information will Fuller need to manage the business? Classify thus information in two categories: accounting information and non-accounting information.
The content of financial reports can be divided to accounting and non accounting information. According to Ahmed Belkaoui and Alain Cousineau (1977), accounting information is defined as quantitative, formal, structured, audited, numerical and past oriented material. While non accounting information is defined as qualitative, unaudited, narrative and it is future oriented prose. For accounting information, it can further categorized into 4 different categories: 1. Operating information 2. Financial accounting 3. Management accounting 4. Tax accounting
1.) Operating information
This is the information needed on day-to day basis for the organization to conduct their business. In addition, operating information constitutes to the greatest amount of accounting information and it can serve as basic for financial and management accounting. Example of operating information: employees’ payroll, sales, outstanding balance from customers, inventory and so on.
In the Kim Fuller’s case study, operating information that needed to be recorded is: i. Employee’s payroll (2 grinding workers and 1 driver), ii. Invoice and delivery order to customer or former employer, chemical firms. iii. Operating expenses (Electricity, petrol and transport maintenance). iv. Inventory of bottles.
2.) Financial accounting
Information like this is geared toward the external users whom have no control towards the preparation of reports or access to the underlying details, for example: the government, creditors, banks, shareholders, public and etc. To ensure uniformity, the information reported is subjected to a set of ground rules and prepared under generally accepted accounting principles (GAAP). As for the case study, the information needs to be recorded under financial accounting as