10/13/24

ACCOUNTING & FINANCE FOR

PROFESSIONALS

INTRODUCTION:
A MEANS TO AN
END

Dr Zubir Azhar
Universiti Sains Malaysia

Today’s Agenda

qIce breaking
qTeaching plan Source:
qTextbook Financial & Managerial Accounting (19th Ed)
McGrawHill. Williams, J. R., Bettner, M. S., &
qIntroduction to accounting Carcello, J. V. (2020)

-Types of accounting
Management Accounting for Decision Makers
information (9th Edition), by Atrill & McLaney published by
Pearson
-Financial accounting
-Management accounting

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Accounting Information: A means to an End

• What is the primary objective

of accounting?
• Who makes decisions?
• Language of business?
• Describing business activities
(accounting measurements
through transactions)

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Accounting Information: A means to an End

Good
decisions
Accounting
judgements
Economic
activity
§ Accounting communicates the financial condition/
performance of a business to users
§ Accounting provides information for decision-making
§ Referred to means to an “end”
§ End = decision made using available and reliable information
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Accounting Information: A means to an End

• Financial accounting:
• Describing financial resources,
obligations, and activities of an
economic entity
• Financial position at a point in time
• Results of operations
• Assist investors and creditors
• Managers, income-tax returns

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Accounting Information & Financial Statements

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External Users of Accounting Information

• Have current or potential financial

interests in the reporting enterprise.
• Not involved in day-to-day
operations.
• Who are they? Investors, creditors,
etc.
• Cash flow prospects.
• Return on investment.
• Amount, timing, uncertainty.

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Primary Financial Statements

Balance Sheet
§ Describes where the enterprise stands at a specific date

Income statement
§ Depicts the revenue & expenses for a designated period of time.

Statement of cash flows

§ Depicts the ways cash has changed during a designated period of time

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Characteristics of External Information

Financial reporting – a means

Financial reporting vs Financial
statements
Historical in nature
Approximate measures
General purpose information
Usefulness enhanced via
explanation

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Management Accounting Information

• Development and
interpretation intended
specifically to assist
management in operating
the business

• Who are the internal users?

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Internal Users of Accounting Information

§ Information about decision-making

for the authority, for support, for
evaluating, and for rewarding
performance.
§ Who are they? Board of Directors,
CEOs, Vice Presidents, Business
Managers.
§ Information useful in assessing both
past performance and future
directions of the enterprise

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Major Tasks of the Board

The board of directors is charged

with three major tasks:

Setting the overall direction and

strategy for the business

Monitoring and controlling the

activities of the business

Communicating with shareholders and

others connected with the business

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Departmental Structure

Board of directors

Human
Finance Marketing Operations
resources

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Divisional Organisational Structure

(decentralization, reporting, cost allocation and performance evaluation)

Board of directors

North South East West

Division Division Division Division

Finance Finance Finance Finance

Operations Operations Operations Operations

Marketing Marketing Marketing Marketing

Other Other Other Other

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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

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Changing Business Landscape

Important changes include:

Growth of the service sector

Emergence of new industries

Growth of e-commerce

Automated manufacturing

Lean manufacturing

Greater product innovation

Faster response times

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Strategic Management Framework

Establish mission, vision

and objectives

Undertake a position
analysis

Identify and assess the

strategic options

Select strategic options

and formulate plans

Perform, review and control

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SWOT Analysis of the Business

Strengths

SWOT
Opportunities Threats
analysis

Weaknesses

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Main Users of Accounting Information

Owners Customers Competitors

Employees
Managers and their
representatives

Business

Lenders Government

Investment Community
Suppliers representatives
analysts

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Relationship between the cost and

the value of providing additional
management accounting
information Cost
Total
value or
cost Value
($) (benefit)

Optimal
quantity

Total quantity of information

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Management Accounting Information System

Information Information Information Information

identification recording analysis reporting

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Decision Requiring Management

Accounting Information
Developing
long-term
plans and
strategies

Determining Management- Performance

costs and accounting evaluation
benefits information and control

Allocating
resources

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Characteristics of Management
Accounting Information

• Importance of timeliness
• Identity of decision maker
• Future-oriented
• Measures efficiency and
effectiveness

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Management Accounting Vs.

Financial Accounting

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#ANYQuestion?

DR ZUBIR AZHAR

[email protected]

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