Reading notes:
« Essential Finance and accounting for managers »
Chapter 1: “An introduction to the accounting scene”
• Accounting is not an exact science ! (Example, the depreciation policy)
• Who are the users of financial reports ?
o Directors
o Shareholders
o Bankers
o Tax authorities
o Creditors
o …
Big picture of the accounting landscape:
o Financial accounting:
• Recording
• Reporting
(For internal and external purposes)
The goal of financial accounting is to prepare the three essentials financial statements, Profit and Loss account, the balance sheet and the income statement.
o Management accounting:
• It looks to the future
• The aim is to provide information in order to improve planning, decision making and control (forecasts)
o Financial Management
• Investment decisions
• Financing decisions
• Cash flow management
• Source of finance
• Working capital management
• Cost of capital
• Dividend policy
o Auditing (can be internal or external)
• Detecting and preventing errors and fraud
These reading notes have been made wile i was reading this excellent book: