代写Introduction to business accounting and the role of pro
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代写Introduction to business accounting and the role of professional skills
Chapter 1
Introduction to business
accounting and the role of
professional skills
Key questions
• Why is it necessary to have an understanding of business
before trying to learn about accounting?
• What factors are causing the business environment to
change?
• How does someone become a successful businessperson
in a complex business environment?
• What is a private enterprise, and what forms does it take?
Key questions (2)
• What are the three most common forms of business
organisations and their basic characteristics?
• What types of regulations do business’ face?
• What information does the accounting system provide to
support management activities?
• How does accounting provide support and information to
people making decisions who are external to the business?
Key questions (3)
• What roles do ethics and sustainability play in the business
environment?
The changing business environment
• Accounting information is a powerful tool for making good
business decisions.
• People inside a business use accounting information to help
determine and manage costs, set selling prices and control
the operations of the business.
• People outside the business use accounting information to
help make investment and credit decisions about the
business.
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The changing business environment (2) Private enterprise
• Business’ in most countries operate in an economic
system called private enterprise.
• In this system, individuals own business’ that produce and
sell services and/or goods for a profit.
• These business’ generally fall into three categories,
Service, Merchandising and Manufacturing.
Service business’
• Service business’ perform services or activities that benefit
individuals or business customers.
• Professional practices such as accounting, law and
medicine are all service business’.
• Examples include companies such as Qantas Airlines and
LJ Hooker Real Estate.
• Service businesses are usually the simplest to account for
Merchandising business’
• Merchandising business’ purchase goods for resale to
their customers.
• Some merchandising business’ are wholesalers, meaning
代写Introduction to business accounting and the role of professional skills
• Examples include companies such as Woolworths,
Toys ‘R’ Us and Dick Smith.
• For these businesses have to account for inventory
Manufacturing business’
• Manufacturing business’ make their products and then
sell these products to their customers.
• Unlike merchandisers who purchase ready-to-sell
merchandise, a manufacturer has no goods to sell until
they are manufactured.
• Examples include companies such as Black & Decker
and BHP Steel.
• Accounting for these is complex
Entrepreneurship and sources of capital
All business’ require capital to begin to operate and then to
grow.
Entrepreneurs can raise capital in two ways:
1.Investing their own money into the business or finding other
investors to do the same.
2.Borrowing money from a bank or other lending sources.
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The forms that business’ take
• Sole proprietorship or sole trader – owned by one person
who is the sole investor of capital.
• Partnership – owned by two or more individuals who each
invest capital into the business.
• Company or corporation – a separate legal entity. In New
Zealand we differentiate between “Issuing companies” and
“Non-issuing companies”. An issuing company is
independent of its owners and run by a board of directors.
• Companies are the most common form of business in NZ
The forms that business’ take (2)
The regulatory environment of business
Many different laws and authorities regulate the business
environment, covering issues such as:
• consumer protection
• environmental protection
• employee safety
• hiring practices
• taxes.
The regulatory environment of business (2)
• Companies must comply with different sets of regulations
depending on the nature of their business.
• Regulations are imposed by local, regional and national
government.
• When a business conducts business internationally, it also
must abide by the laws and regulations of the other
countries in which it operates.
The accounting system
• An accounting system allows users to identify, measure,
record and summarise information about the activities of
a business.
• Management accounting is using information in the
accounting system to produce reports for internal users.
• Financial accounting is using information in the
accounting system to produce reports for external users.
Management accounting information
代写Introduction to business accounting and the role of professional skills
Financial accounting information
• Financial accounting information is organised for use by
interested people outside of the business.
• As opposed to management accounting information,
financial accounting information follows specific guidelines,
or rules, known as generally accepted accounting practices
(GAAP). In the U.S. these are known as generally accepted
accounting principles
Basic financial statements
Financial statements summarise and communicate financial
information to external users.
The accounting system produces three major financial
statements:
• the income statement
• the balance sheet
• the cash flow statement
as well as a supporting financial statement – the statement of
changes in owner’s equity.
Income statement
• An income statement summarises the results of a
business’ operating activities for a specific time period.
• It shows the profit for that period.
• Information appearing in an income statement includes
revenues, expenses and net income.
Balance sheet
• A balance sheet shows the financial position of a business
on a given date.
• It is also called a statement of financial position.
• Information appearing in a balance sheet includes assets,
liabilities and owner’s equity.
Statement of changes in owner’s equity
• This statement provides information about the amount
shown in the owner’s equity section of the balance sheet.
• Information appearing in the statement of changes in
owner’s equity includes beginning equity, net income,
owner’s contributions and withdrawals, and the ending
equity.
Cash flow statement
• The cash flow statement summarises cash receipts, cash
payments and net change in cash for a specific time
period.
• Information appearing in the cash flow statement includes
cash flows from operating activities, cash flows from
investing activities and cash flows from financing activities.
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Ethics in business and accounting
• A business’ financial statements should convey
information about the business to internal and external
users in order to facilitate decision making.
• If this information does not convey a realistic picture, the
decisions may have disastrous consequences.
• For this purpose, it is important that accountants maintain
high ethical standards.
Accounting information and
decision making
代写Introduction to business accounting and the role of professional skills
