Chapter 8 The role of accouting

Qiang JiangSchool of Business

Sichuan University, Chinajiang.qiang@outlook.com

Topic list

1 The purpose of accounting information2 Nature, principles and scope of accounting3 The regulatory system4 Internal and external financial information5 Control over business transactions 6 The main business financial systems7 Manual and computerised accouting systems8 Databases and spreadsheets

1 The purpose of accounting information

• Accounting is a way of recording, analysing and summarising transactions of a business. – transactions are recorded in books of prime entry; – transactions analysed and posed to the ledgers; – transactions summarised in the financial

statement.

1 The purpose of accounting information

• Accounting systems are affeceted by – Size– Type of organisation– Organisation structure

1 The purpose of accounting information

• The need for accounts– Luca Pacioli in 1494.– The first English book in 1543.the practice of double

entry bookkeeping has barely changed since then and is standard across the world.

– The original role of the accounting function was to record financial information and this is still its main focus.

– There are various groups of people who want or need to know company information.

1 The purpose of accounting information

• User of financial statements and accounting information– Managers – Shareholders – Trade contacts– Providers of finance to the company– Her majesty` s revenue and customs– Employees – Financial analysts and advisers– Government and their agencies– The public

1 The purpose of accounting information

• Qualities of good accounting information– Relevance– Comprehensibility– Reliability– Completeness– Objectivity– Timeliness– comparability

1 The purpose of accounting information

• The structure of accounting functions Relevance

2 Nature, principles and scope of accounting

• Financial accounting and management accouting– Financial accounting is mainly a method of reporting

the results and financial position of a business.– Management accounting is a management

information system which analyses data to provide information as a basis for managerial action .the concern of a management accountant is to present accounting information in the form most helpful to management.

2 Nature, principles and scope of accounting

• The application of information

2 Nature, principles and scope of accounting

• Financial management

2 Nature, principles and scope of accounting

• Auditing

3 The regulatory system

• Auditing

3 The regulatory system

• Factors shaped financial accounting– Company law– Accounting concepts and individual judgement– Accounting standards– The European Union– Other international influences– Generally accepted accounting practice

3 The regulatory system

• Factors shaped financial accounting– Company law– Accounting concepts and individual judgement– Accounting standards– The European Union– Other international influences– Generally accepted accounting practice

4 Internal and external financial information

• External reports• The income statement• The statement of financial position• The statement of cash flows• Internal reports• Cost schedules

5 Control over business transactions

• office organisation – Purchasing: responsible for ensuring necessary

purchases are made– Human resources :responsible for hiring and firing

of staff, for training of staff and for the general welfare of the employees.

– Finance: very wide range– Sales and marketing :deal with taking sales orders,

advertising, and any sales personnel.– General administration: very wide range