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Accounting for Managers

Accounting for Managers

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Published by trb1
Financial Accounting
Financial Accounting

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Published by: trb1 on Oct 23, 2012
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12/05/2013

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Accounting for Managers 1
 
Unit 1 Introduction to Financial Accounting
Learning Outcome
After reading this unit, you will be able to:
 
Explain succinctly financial accounting concepts
 
Elucidate on different principles of financial accounting
 
Explicate the importance and scope of financial accounting
 
Understand Generally Accepted Accounting Principles(GAAP)
 
Identify limitations of Financial Accounting
Time Required to Complete the unit
1.
 
1
st
Reading: It will need 3 Hrs for reading a unit2.
 
2
nd
Reading with understanding: It will need 4 Hrs for reading and understanding aunit3.
 
Self Assessment: It will need 3 Hrs for reading and understanding a unit4.
 
Assignment: It will need 2 Hrs for completing an assignment5.
 
Revision and Further Reading: It is a continuous process
Content Map
1.1 Introduction1.2 Role of Financial Accounting1.3 Principles of Financial Accounting1.4 Importance of Financial Accounting1.5 Benefits of Financial Accounting1.6 Limitations of Financial Accounting
 
2 Accounting for Managers
1.7 Accounting Principles1.8
 
Accounting Concepts and Conventions1.9 Accounting Standards in India and International Accounting Standards1.10 Summary1.11 Self-Assessment Test1.12 Further Reading
 
Accounting for Managers 3
 
1.1 Introduction
Financial accountancy
(or
financial accounting
) is the field of accountancy concernedwith the preparation of financial statements for decision makers, such as stockholders,suppliers, banks, employees, government agencies, owners and other stakeholders.Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. The central need for financial accounting is to reduce thevarious principal-agent problems, by measuring and monitoring the agents' performanceand thereafter reporting the results to interested users.Financial accountancy is used to prepare accountancy data for people outside theorganisation or for those, who are not involved in the mundane administration of thecompany. Management accounting, provides accounting information to help managersmake decisions to manage and enhance the business.In short, financial accounting is the process of summarising financial data, which istaken from an organisation's accounting records and publishing it in the form of annual orquarterly reports, for the benefit of people outside the organisation.Financial accountancy is governed not only by local standards but also byinternational accounting standard.
1.2 Role of Financial Accounting
 
 
Financial accounting generates some key documents, which includes profit and lossaccount, patterning the method of business traded for a specific period and the balancesheet that provides a statement, showing mode of trade in business for a specific period.
 
It records financial transactions showing both the inflows and outflows of money fromsales, wages etc.
 
Financial accounting empowers the managers and aids them in managing moreefficiently by preparing standard financial information, which includes monthlymanagement report tracing the costs and profits against budgets, sales andinvestigations of the cost.
Study Notes

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