Financial Accounting Processes
Semester 2, 2013
LECTURE OUTLINES 1 – 6
Room 3.70 Law and Commerce Building
Ph: 8201 2013
FLINDERS BUSINESS SCHOOL
BUSN1002 Financial Accounting Processes
Lecture Outline 1
Introduction to Financial Accounting
Reading: Hoggett et al., Chapters 1 and 2
1 Introduction to Accounting
Accounting is an information system designed to communicate financial information to interested users for making economic decisions. Accounting information is useful to those inside and outside of the entity.
Accounting is known as the language of business and generally fulfils two roles: Stewardship
The more traditional role of providing accountability reports of transactions for a given period
Is about assisting users with making informed choices about issues e.g. resource allocation
Accounting seeks to satisfy the needs of a wide range of users: Internal Users
• Internal focus
• Cost behaviour
• Budgeting Reports on-demand
• How much profit is being earned?
• What products should be produced?
• What resources are available?
• What is the most efficient production
• What is the cost to reduce carbon
• What will be the effect of increasing
or decreasing selling prices?
• How much profit is owing to
• Will cash be available to pay debts as
they fall due?
• What are benefits of owning vs
• Suppliers and
• Governments and
• External focus
• Reporting information
• Performance (Income statement flow concept)
• Position (Balance Sheet - stock
• Financing and investing
• Reports at regular intervals
• Should I invest money in this
• Will the business be able to repay
money lent to it?
• What are the business’s earning
• Is the business financially sound?
• Is the business providing products
that are socially and environmentally
2 Introduction to Financial Accounting
Financial accounting communicates financial information to interested users, external to the entity, for making economic decisions.
Nature of reports
Level of detail
Accounting standards and other
Mainly semi-annual or annual
Both past and future
Range of information
Quantifiable in money terms; focus
on objective and verifiable data
Can contain non-financial
information; less focus on
objectivity and verifiability
General Financial Purpose Report (GPFR): A financial report intended to meet the information needs common to users who are unable to command the preparation of reports tailored so as to satisfy, specifically, all of their information needs (SAC 1, par 6).
The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions (AASB Framework, par 12) Accounting as an information system
• Identify and capture relevant economic information
• Measure the economic information in monetary terms
• Record the information (classify and summarise)
• Communicate the information in a manner suitable to the needs of users 2
Accounting as a service function...
Please join StudyMode to read the full document