Slide 1.

Chapter 1 Introduction to accounting and finance

LEARNING OUTCOMES

You should be able to:

Explain the nature and roles of

accounting and finance

Identify the main users of financial information

and discuss their needs

Distinguish between financial and

management accounting

Explain why an understanding of accounting and

finance is likely to be relevant to your needs

Peter Atrill & Eddie McLaney, Accounting and Finance for Non-Specialists, 5th Edition © Pearson Education Limited 2006
Slide 1.2

Main users of financial information relating to a business

Owners Customers Competitors

Employees
Managers and their
representatives
Business
organisation

Lenders Government

Investment Community
Suppliers
analysis representatives

Peter Atrill & Eddie McLaney, Accounting and Finance for Non-Specialists, 5th Edition © Pearson Education Limited 2006
Slide 1.3

The characteristics that influence the usefulness of

accounting information
Materiality Cost/Benefit

Comparability

Characteristics
that make
Relevance financial Reliability
information
useful

Understandabilit
y
Necessary for Limitation to the
including application of
information in the the qualitative
financial statements characteristics
Peter Atrill & Eddie McLaney, Accounting and Finance for Non-Specialists, 5th Edition © Pearson Education Limited 2006
Slide 1.4

The accounting information system

Information Information Information Information

identification recording analysis reporting

Peter Atrill & Eddie McLaney, Accounting and Finance for Non-Specialists, 5th Edition © Pearson Education Limited 2006
Slide 1.5

The planning and control process

Step 1 Identify business objectives

Step 2 Consider options

Prepare a long-term plan based on the

Step 3 most appropriate option(s)

Step 4 Prepare short-term plans (budgets)

Perform and collect information

Step 5 on actual performance

Respond to divergences between plans

Step 6 and actuals, and exercise control

Revise plans (and budgets)

Step 7 if necessary
Peter Atrill & Eddie McLaney, Accounting and Finance for Non-Specialists, 5th Edition © Pearson Education Limited 2006
Slide 1.6

Financial and management accounting

The major differences concern:

Nature of the reports produced

Level of detail

The existence of regulations

Reporting interval

Time horizon

Range and quality of information

Peter Atrill & Eddie McLaney, Accounting and Finance for Non-Specialists, 5th Edition © Pearson Education Limited 2006