AY| ‘22 – ‘23
BUSINESS ECONOMICS
ARTEVELDE UNIVERSITY OF APPLIED SCIENCES
IBM 1
,Chapter 1: Management Accounting
I. Business economics
Business economics:
Part of economics
o Unlimited needs vs. limited resources
Scarcity & choice
o Main objective: maximum profit – minimum use of resources
1. Resources: anything used within company
Raw material – personnel – fixed assets – time
2. Using resources costs
Cost = translation of usage of a resource
Principle applied within business organisations
II. Accounting information system
Accounting information system:
o Formal mechanism for gathering, organizing & communicating financial
information
1. General-purpose accounting system used for reducing costs &
complexity
Attempts to meet needs of external & internal users
Users of accounting information
o Management accounting:
1. Branch of accounting
Produces information for managers within organization
2. Identifying – measuring – accumulating – analyzing – preparing –
interpreting – communicating information
Helps managers fulfil organizational objectives
3. For internal decision makers
o Financial accounting:
1. Branch of accounting
Develops information for external decision makers
Stockholders – suppliers – banks – government
2. Identifying – measuring – accumulating – analyzing – preparing –
interpreting – communicating information
3. For external decision makers
1
,2
, Roles of accounting information & importance of accounting information
Decision making
Help answer problem-solving decisions
Problem-solving: Analysis of alternative courses of action &
identification of best course to follow
Helps make decisions
Planning & control
Helps answer scorecard & attention-directing questions
Scorekeeping: Accumulation - classification - reporting of data
Helps understand & evaluate organizational performance
Must be accurate & reliable
Attention-directing: Reporting & interpreting information
Helps managers focus on operating problems
Scorekeeping & Attention-directing related: First useful for
managers - second useful for AD-function of manager's superior
Planning How to achieve objectives?
Controlling: Implement & evaluate achievement of objectives
3
BUSINESS ECONOMICS
ARTEVELDE UNIVERSITY OF APPLIED SCIENCES
IBM 1
,Chapter 1: Management Accounting
I. Business economics
Business economics:
Part of economics
o Unlimited needs vs. limited resources
Scarcity & choice
o Main objective: maximum profit – minimum use of resources
1. Resources: anything used within company
Raw material – personnel – fixed assets – time
2. Using resources costs
Cost = translation of usage of a resource
Principle applied within business organisations
II. Accounting information system
Accounting information system:
o Formal mechanism for gathering, organizing & communicating financial
information
1. General-purpose accounting system used for reducing costs &
complexity
Attempts to meet needs of external & internal users
Users of accounting information
o Management accounting:
1. Branch of accounting
Produces information for managers within organization
2. Identifying – measuring – accumulating – analyzing – preparing –
interpreting – communicating information
Helps managers fulfil organizational objectives
3. For internal decision makers
o Financial accounting:
1. Branch of accounting
Develops information for external decision makers
Stockholders – suppliers – banks – government
2. Identifying – measuring – accumulating – analyzing – preparing –
interpreting – communicating information
3. For external decision makers
1
,2
, Roles of accounting information & importance of accounting information
Decision making
Help answer problem-solving decisions
Problem-solving: Analysis of alternative courses of action &
identification of best course to follow
Helps make decisions
Planning & control
Helps answer scorecard & attention-directing questions
Scorekeeping: Accumulation - classification - reporting of data
Helps understand & evaluate organizational performance
Must be accurate & reliable
Attention-directing: Reporting & interpreting information
Helps managers focus on operating problems
Scorekeeping & Attention-directing related: First useful for
managers - second useful for AD-function of manager's superior
Planning How to achieve objectives?
Controlling: Implement & evaluate achievement of objectives
3
