Heavily detailed notes on all chapters for acc a

41 Pages • Complete Study Notes • Year: Pre-2021

Heavily detailed notes on all chapters for acc a CHAPTER 1: ACCOUNTING AND THE BUSINESS ENVIRONMENT Objective 1 - Use accounting vocabulary. Accounting is a system that measures business activities, processes that information into reports, and communicates the results to decision-makers. There are many users of accounting information. Individuals use accounting information to make decisions about purchases and investments and to manage their bank accounts. Businesses use accounting information to set goals for their businesses and to evaluate progress toward achieving those goals. Investors (shareholders) use accounting information to evaluate the prospect of future returns on their investments. Creditors use accounting information to evaluate a borrower’s ability to meet scheduled repayments of money loaned. Accounting information is also used by government regulatory agencies, like the Australian Securities and Investments Commission [ASIC], taxing authorities, non-profit organisations, and others, such as employee and consumer groups. Accounting has a long history; it is said to have been used to track the costs of major ancient constructions. Double entry bookkeeping can be traced back to Italy over 500 years ago. Today professional accounting bodies such as Institute of Chartered Accountants in Australia (ICAA), CPA Australia (CPAA) and the Chartered Institute of Management Accountants (CIMA) promote the profession and high ethical standards. The study and practice of accounting may be categorised in a number of ways. In this textbook the first nineteen chapters deal with financial accounting: the gathering and reporting of information to those outside the organisation. The last five chapters look at management accounting: information for internal decision-makers. Accountants may work in industry (for a company, not-for-profit organisation or government department) or in an accounting business (Chartered Accountant or CPA) that consults and provides services to industry. There are many specialist areas in accounting: auditing, tax, management consulting, insolvency, information systems, budgeting, etc. The three main forms of business organisation we look at in this textbook are: 1. proprietorship - or ‘sole trader’, a business owned by one person 2. partnership - a business owned by two or more individuals 3. company - a business owned by shareholders whose liability for business debts is limited to the amount

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