Elaborate summary of the lectures of the Accounting course. The lectures are based on the book Accounting and Finance: an introduction, 10th edition. Can be used for the Accounting course of the first year (third module, called Module 3 FAIS) of the International Business Administration program at ...
Accounting = collecting, analyzing and communicating financial information
1. Financial accounting
2. Management accounting
Financial accounting = to satisfy the needs of external users
Management accounting = to satisfy the needs of internal users
Financial accounting Management accounting
Nature of the reports Specific purpose General purpose
Level of detail Very detailed Broad overview
Regulations Unregulated Accounting regulation
Reporting interval As short as required by managers Annual or bi-annual
Time orientation Based on projected future Almost historical
information as well as past
information
Range and quality of Financial and non-financial, often Financial information, great
information use information that can’t be emphasis on objective,
verified verifiable evidence
Finance (financial management) = the ways in which funds for a business are raised and
invested
Fundamental qualities accounting
1. Relevance
2. Faithful representation
Understanding finance helps identifying:
- Main forms of finance available
- Costs, benefits and risk of each form of finance
- Risk associated with each form of finance
- Role of financial markets in supplying finance
Accounting and finance decisions may concern whether to
1. Continue with certain business operation
2. Invest in particular projects
3. Sell particular products
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