1. The Role of Accounting

2. © Hodder Education 2008 What is accounting? Accounting is about accountability. It is a process that involves recording, classifying and summarising business transactions.

3. © Hodder Education 2008 The aim is to generate financial information that can be communicated and understood by stakeholders (people who have an interest in the business).

4. © Hodder Education 2008 Accounting has come to be known as the ‘language of business’.

5. © Hodder Education 2008 We therefore need to calculate: a)How much profit the business makes. b)What the business owns. c)What the business owes to others. The prime objective of most businesses is to increase the wealth of the owner.

6. © Hodder Education 2008 Who produces accounts? The first stages of the accounting process are known as book-keeping. Book-keepers keep and maintain records of business transactions.

7. © Hodder Education 2008 There are two main types of accountants:  Financial accountants  Cost and management accountants Accountants use the book-keeping information to produce and then interpret the accounts.

8. © Hodder Education 2008 Financial accountants They are mainly concerned with past transactions. Their role is to supervise the book- keeping process, produce final accounts and interpret financial information.

9. © Hodder Education 2008 Cost and management accountants They are concerned with providing information to help with the future decision making process of the business.

10. © Hodder Education 2008 As well as the owners there are many other interested parties (known as stakeholders). These include:  Lenders  Suppliers  Customers  Government employees  Potential investors  Employees  Community groups

11. © Hodder Education 2008 Tasks Complete the task sheet.