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Summary of week 1 of managerial finance: Objective of Accounting R50,00
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  3. University Of Cape Town (UCT)
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  5. Managerial Finance (FTX1005S)

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Summary of week 1 of managerial finance: Objective of Accounting
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Digital and printable summary of week 1 of the managerial finance course. The summary covers the objective of accounting that corresponds with the textbook "Understanding Finance and Accounting" by David Flynn.

Last document update: 3 year ago

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  • No
  • Chapter 1 and 2
  • August 9, 2021
  • August 13, 2021
  • 14
  • 2021/2022
  • Summary

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MANAGERIAL FINANCE
Objectives of Accounting (OOA)

Week 1 learning outcomes:
1.Administration and Objectives (Learning
outcomes)
2.Objectives of Accounting
3.Basic introduction to Statements of
Financial Position (SOFP) and
Comprehensive Income (SOCI)

The Importance of Accounting Knowledge
• Accounting is often referred to as the language of
the business world.
• The principles and techniques of accounting make
it possible to convert financial business
transactions into monetary terms so that the
financial affairs of an undertaking can be recorded,
summarised and evaluated.
• A lack of financial and accounting knowledge
results in financial vulnerability.
• Ignorance will lead to erroneous decision making
within an organisation and the consequences could
be fatal leading to bankruptcy.

, Definition of Accounting
Accounting can be described as the art of classifying,
recording and summarising events and transactions of
a financial nature in monetary terms for the purposes
of reporting and evaluating the results of those
financial events with a view to making economic
decisions.


The Purpose of Accounting
The purpose of accounting and its end product (the
financial statements and/or management reports), is to
provide relevant and reliable financial information
about an entity, which will:
• Be useful for making economic decisions.
• Be seen by interested parties as updated and
useful financial information, i.e. it serves as a way
of communication.


Objectives of Accounting and Annual financial
statements (statement of financial position and
comprehensive income) are the same:
“To provide economic decision useful financial
and non-financial information to a wide range of
users”
-Mainly to investors, lenders & other creditors

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