Accounting Notes

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Decision Making and the Role of Accounting

Wednesday, 30 July 2014

8:27 PM

Accounting: The language of business

• The decision-making progress

1. Decisions mean making choices.

--- We must choose how to spend our time

--- We must choose how to spend our resources

2. Decisions affect the future.

3. Good decisions require good processes.

• Steps in Decision Making

• Economic Decisions

1. Many decisions involve economic resources

2. Economic resources have a price as they are scarce

3. Must also consider:

---- Personal Taste

---- Social Factors

---- Environmental Factors

---- Religious and/ or Moral Factors

---- Government Policy

4. The Nature of Accounting

i. Accounting is a service activity

---- Its function is to provide and interpret financial information to aid decision making

ii. Accounting is used in a range of organisations

---- Business

---- Government

---- Charities

---- Not-for-profits

5. The Accounting Process

Week 1 Lecture Note Page 1

6. Users of Accounting Information

7. Financial Reports and Users

8. Accounting Information and Decisions

i. Many decisions require significant amount of financial information

---- Accounting information is very important

ii. Accountants report on the past

---- Still useful for making decisions about the future

---- Also useful for assessing past decisions

iii. Accountants also look to the future

Week 1 Lecture Note Page 2

iii. Accountants also look to the future

---- Budgeting; Strategy and Planning

9. Management and Financial Accounting

10. Accounting as a Profession--- Australian Perspective

i. Self-regulated profession

ii. Two major professional association

---- CPA Australia

---- Institute of Chartered Accountants Australia (ICAA)

11. Public Accounting

i. Accountants who offer their professional services to the public for a fee

ii. Four main areas with many specialties

---- Auditing and Assurance Services

---- Taxation Services...