Chapter
1
INTRODUCTION TO
ACCOUNTING
INTRODUCTION
We begin this opening chapter of the book by considering the role of
accounting. We shall see how accounting can be a valuable tool for
decision making. We shall also identify the main users of accounting
information and the qualities, or characteristics, needed for accounting
information to be useful for decision-making purposes. We shall then go
on to consider the two main strands of accounting: financial accounting
and management accounting. We shall discuss the differences between
them and why these differences arise.
Since this book is mainly concerned with accounting and financial decision
making for private-sector businesses, we shall devote some time to
examining the business environment. We shall consider the purpose of a
private-sector business, the main forms of business enterprise that exist
and the ways in which businesses may be structured. We also consider
what the key financial objective of a business is likely to be. These are all
important factors that help to shape the accounting and financial
information produced.
Learning outcomes
When you have completed this chapter, you should be able to:
■
explain the nature and role of accounting;
■
identify the main users of financial information and discuss their needs;
■
identify and discuss the qualities that make accounting information
useful; and
■
explain the purpose of a business and describe how businesses are
organised and structured.
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