Introduction to accounting

Abstract

This chapter will introduce you to the role of accounting, its uses and its users. It will also give you an appreciation of the role of accounting both within a business organization and in its external impacts. We shall introduce some ideas about the ways in which accounting assists managers in meeting business objectives through, for example, providing the information necessary to make a decision about buying or renting premises. The impacts of the size and type of organization on accounting will be discussed. For example, in very small organizations such as a window cleaning business the accounting requirements are likely to be less complex than is the case with a larger business such as British Rail. Another factor that both affects and is affected by accounting is the environment. The effects of the environment on accounting can be through the impact of government legislation as happens every time we adopt a new Companies Act or when a new EC Directive on accounting is added to the United Kingdom’s statute book. Apart from government action, accounting can be affected at this level by changes in technology. For instance the move towards greater use of flexible manufacturing systems poses a major challenge to accountancy whilst the introduction of information technology has allowed accounting information to be provided more quickly and efficiently, thus enabling different decisions to be taken than would otherwise have been the case. From this brief résumé we can see that the accounting activity interacts with all levels of the ‘Business in Context’ model as explained in the Series foreword.