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Int. Acc. FA LECT 1: Introduction and recap part 1 (MANAGERIAL ACCOUNTING?…
Int. Acc. FA LECT 1: Introduction and recap part 1
Recap of key concepts and the importance of “financial accounting” (maybe also on Wednesday)
Accrual accounting
T-Accounts / Debit & Credit
Overview Financial Statements
Self-study: Fixed assets, depreciation,
inventories
GENERIC BUSINESS MODEL IS A ‘CASH PUMP’ CYCLE
see slide 9/72
ACCOUNTING?
Accounting is the language of business
Accounting is needed to support decision making (resource planning, acquisition and allocation)
Need of language to communicate in: Accounting
Accounting communicates what happens in a company
ACCOUNTING?
Two key missions:
Facilitate value creation by supporting decision-making (daily operation, strategy, investing, financing, taxes, ....)
Measure and report the amount of value created
Steps in the accounting process:
Identify economic transactions/ events
Classify and accumulate transactions
Communicate (report)
Accounting: information for decision-making
To account for something = acknowledge existence and describe it
To be accountable = to explain what one has done and to take
responsibility of consequences
To count = to measure, to quantify
MANAGERIAL ACCOUNTING?
Oriented toward anticipation and analysis of deviations
between anticipated and realized results
Time horizon is flexible and continuous
No regulatory context
Information can be as finely partitioned as needed
Understand how value is created in detail so as to assist internal decisions by managers and decision-makers inside the firm
FINANCIAL ACCOUNTING?
All activities that are related to the collection and communication of information to
external
parties
• Ownership and control usually separated
Goal: provide information to external stakeholders over the use of (their) capital
Historical
Periodic: (half-) yearly, quarterly
Aggregated data
Regulation and external control (auditors)