Financial Accounting for Decision Makers

How are businesses organised and managed?
■ 
Most businesses of any size are set up as limited companies.
■ 
A board of directors is appointed by owners (shareholders) to oversee the running of 
the business.
The quest for wealth creation
■ 
The key financial objective of a business is to enhance the wealth of the owners.
■ 
To achieve this objective, the needs of other groups connected with the business, 
such as employees, suppliers and the local community, cannot be ignored.
■ 
When setting financial objectives, the right balance must be struck between risk and 
return.
Ethical behaviour
■ 
Accounting staff may be put under pressure to commit unethical acts.
■ 
Many businesses produce a code of ethical conduct to help protect accounting staff 
from this risk.
Not-for-profit organisations
■ 
These organisations also produce accounting information for decision-making 
purposes.
■ 
They have user groups that are similar to, or the same as, those of private-sector 
businesses.
SUMMARY 
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REFERENCES
1. International Accounting Standards Board (2018) 
Conceptual Framework for Financial 
Reporting
, pp. 14–20.
2. Dugdale, D., Jones, C. and Green, S. (2006) 
Contemporary Management Accounting 
 Practices in UK Manufacturing
, CIMA/Elsevier.
3. Drucker, P. (1967) 
The Effective Executive
, Heinemann.
FURTHER READING
If you would like to explore the topics covered in this chapter in more depth, we recommend the 
following:
Alexander, D. and Nobes, C. (2016) 
Financial Accounting: An International Introduction
, 6th edn, 
Pearson, Chapters 1 and 3.
Drury, C. (2018) 
Management and Cost Accounting
, 10th edn, Cengage Learning EMEA, 
Chapter 1.
Elliott, B. and Elliott, J. (2017) 
Financial Accounting and Reporting
, 18th edn, Pearson, 
Chapters 6 and 7.
Scott W. (2014) 
Financial Accounting Theory
, 7th edn, Pearson, Chapters 1 and 3.