Accounting and Finance: An Introduction - McLaney and Atrill (2018) - Chapter 1 (Summary)

Accounting and Finance – Week 1



Chapter 1 – Introduction to accounting and finance

What are accounting and finance?
- Accounting = collecting, analyzing and communicating financial information; aid to
make informed decisions
- Finance (financial management) = the ways in which funds for a business are raised
and invested; help decision makers
- An understanding of finance should help in identifying:
o Main forms of finance available
o Costs, benefits and risks of each form of finance
o Risks associated with each form of finance
o Role of financial markets in supplying finance


Who are the users of accounting information?
- For accounting information to be useful, accountant must be clear for whom the
information is being prepared and for what purpose the information is used
- Main users of financial information relating to a business:




The conflicting interests of users
- Possibility of collision of interests; distribution of business wealth is most likely area
of collision
- Accounting can play an important role in monitoring and reporting how various
groups benefit from the business