STAKEHOLDERS IN BUSINESS

OWNERS / CUSTOMERS
INVESTORS

CREDITORS/
LENDERS
EMPLOYEES

GOVERNMENT
IMPORTANT FINANCIAL STATEMENTS
FOR VARIOUS STAKEHOLDERS
TOOLS AND TECHNIQUES
 BUSINESS ACTIVITIES

Establish Goals & Invest in Conduct

Raise Finance
Strategies Resources Operations

•Goals of a business are the end results the business seeks to achieve, while the strategies
are the means to achieving the goals.
•Two main sources for Finance are Shareholders funds ( Equity ) and Loan Funds ( Debt )
•Finance raised by business is invested in various factors of production ( Land & Building,
Equipment/Machinery, Raw materials, R & D, Manpower training etc.. to carry its
operations.
•Operation activities include Production and delivering goods and services to customers
by charging a price to cover costs and with satisfactory profit margin.
 FINANCIAL ACCOUNTING
The Accounting Model
( Basis for Preperation of Financial Statements)

Economic Acccounting Financial

Transactions Model Statements

Business engages in number of economic transactions. It raises capital, invests in assets

and other operational activites to transform raw material into finished goods by applying
labour, machinery, it sells them on credit and cash, collects payments, pays taxes,
salaries, interest, depreciation on machinery, pays dividends and repay debts etc..

The Financial Accounting model captures and processes the economic transactions to
produce Financial Statements. Financial Accounting is based on various principles,
standards and conventions. ( Let us not focus on learning Financial Accounting here only
a brief introduction and importance)
 FINANCIAL ACCOUNTING /
BOOK KEEPING

Accounting is a process of recording, summarizing, analyzing of financial transactions of

an enterprise. Financial Accounting focuses on statutory reporting.
Accounting is important as it provides quantitative information of financial nature to
various stakeholders which is intended to be used in making an economic decision. These
stakeholders include investors, management, government, suppliers, financiers,
regulators etc. The three major statements which are generated by Business accounting
system are Income Statement, Balance Sheet and Cash Flow Statements.
Accounting Books are to be Up-to-date and Accurate.