Accounting

• Accounting


  The process of identifying, measuring, recording and reporting of economic information
• Purpose of accounting


  • To make informed decisions
• Recording of transactions


  Why is money coming in and going out?
• Management of the business

  • Effective planning
  • Monitor budgets
  • Control finances
• Budget


  A plan for the management of income and expenditure over a given period
• Businesses need to comply with company legislation and the laws of the country
• Accounting is used to measure business performance
• Measuring performance


  • Calculate profits
  • Compare information with previous years
  • Efficiency in collecting money
  • Measure expenditure
• Account receivables


  Money owed to the business
• Account payables


  Money owed by the business
• Businesses need to control their account receivables and payables
• Why do businesses need to control their account receivables and payables?
• Branches of Accounting


  • Financial Accounting
  • Cost and Management Accounting
  • Performance Management
  • Auditing
  • Government Accounting
  • Taxation
  • Financial Management
• Financial Accounting


  • Bookkeeping
  • Financial Statements
• Users of Financial Accounting information


  • Internal users (Management, owners, directors and employees)
  • External users (Creditors, investors, government)
• Advantages of a financial manager

  • Provides information to take future action
  • Usually related to specific products or departments
• Do you sometimes use past information to decide on future actions?
• Performance Management


  Plan, review and assess the effectiveness of the workforce
• Auditing


  • To ensure that financial information is complete and reliable
  • Usually an external person
• Why an auditor?
• Government Accounting


  • Recognise revenue and expenses of the government
  • To provide relevant information
• GOVERNMENTS ARE ACCOUNTABLE FOR THE MONEY RECEIVED BY THEM
• Taxation


  • People should pay tax to the tax authorities
  • Businesses need to understand the tax laws of a country, in order to do proper tax planning
• What are tax revenue used for?
• Financial Management


  • Cash and cash resources
  • Process to ensure the cash resources are effectively managed
• Do you effectively manage your cash?