Slide 1.

ACCOUNTING INFORMATION AND

FINANCE

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.2

LEARNING OUTCOMES

You should be able to:

Explain the nature and roles of

accounting and finance

Identify the main users of financial

information and discuss their needs

Distinguish between financial accounting and

management accounting

Explain why an understanding of accounting

and finance is likely to be relevant to your needs

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.3

Accounting

Collection, analysis, communication of financial

information about organisations

A source of information to aid decision-making by

insiders and outsiders

Mechanism for making financial controllers inside an

organisation ‘accountable’ to other interested parties

Quality of accounting information should be measured is

its effect on the quality of decisions

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.4

Finance
Businesses: entities that raise capital to invest in wealth
creation

Finance is another category of information focused on

investment appraisal plus fundraising

Investment appraisal is retrospective and forward-looking

Dependence on outsiders for capital makes the quality of

financial information decisively important

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.5

Main users of financial information relating

to a business

Owners Customers Competitors

Employees
Managers and their
representatives
Business

Lenders Government

Investment Community
Suppliers
analysts representatives

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.6

The qualities that influence the usefulness of accounting information

Qualities

Fundamental Enhancing

Faithful
Relevance
representation

Predictive Confirmatory Freedom

Completeness Neutrality
value value from error

Materiality
threshold

Understand-
Comparability Timeliness Verifiability
ability

Figure 1.2 The qualities that influence the usefulness of accounting information
Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.7

Costs and Benefits

Cost of producing information should be less
than benefits accruing from information

Direct costs: accounting staff, external audit

charges

Users’ costs: time and effort

Benefits very difficult to quantify

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.8

The accounting information

system

Information Information Information Information

identification recording analysis reporting

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.9

Management and Financial

Accounting

Management accounting is directed to the

information needs on managers

Financial accounting is directed to the

information needs of other stakeholders

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.10

Financial and management accounting

The major differences concern:

Nature of the reports produced

Level of detail

The existence of regulations

Reporting interval

Time orientation

Range and quality of information

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.11

The changing business environment

Identified reasons include:

Increasing sophistication of customers

Development of global economy

Rapid changes in technology

Deregulation of domestic markets

Increasing pressure from owners

Increasing volatility of financial markets

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015
Slide 1.12

Next week
Labs:
Seminar questions on accounting.

Questions on pages 31 for FIN0303 and 32 for

ACC0303.

Prepare accordingly

Lecture:
Introduction to Finance

Atrill and McLaney, Accounting and Finance for Non-Specialists PowerPoints on the Web, 9th edition © Pearson Education Limited 2015