ACCT1101 Lecture Notes - Lecture 1: Fixed Cost, Variable Cost, Contribution Margin
Week 1 - Business Forms & Basics
1. Accounting is the language of business.
2. Useful for planning & control in any type of business.
3. Using accounting information to support business decision making rather
than the process of recording and preparing financial statements.
Business form & environment:
• Private enterprise:
o Service businesses - accountant, builder, medical practitioner etc.
o Merchandising businesses - they have something to sell (usually a
good) eg. retailing.
o Manufacturing businesses -
• Common business forms:
o Sole proprietorship - only one owner.
o Partnership - two or more owners of the business.
o Company -
• Private
• Public
• Inside Users: rely on management accounting information to support
planning, operating & evaluating activities i.e. wages, budgeting etc.
• External Users: competitors, shareholders, potential investors etc. rely on
financial accounting information to decide whether to engage in some
activity with the business i.e. should they invest more or less in the
company etc?
Management Accounting Information for Decision Making: FOR INTERNAL
USERS
• Budgets -
• Cost analysis -
• Cost reports for products & services -
• Periodic - monthly/weekly/daily (actual financial results)
• One-off reports - to support non-routine decision making
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Management accounting information for decision making: for internal. Users: budgets , cost analysis , cost reports for products & services , periodic - monthly/weekly/daily (actual financial results, one-off reports - to support non-routine decision making. Investment decisions, external to the business: form & content determined by gaap (generally accepted accounting. Principles: gaap are the currently accepted principles, procedures, practices & standards used in australia for external reporting, provided annually & sometimes on the interim. What is a business plan: description of the business, marketing plan, operating plan, environmental management plan, financial plan, executive summary. Projected financial performance: how is profit calculated, net income or profit/(loss) = income - expenses, revenues = cash + credit sales, creditors are people that have received the product or service. Cost-volume-profit (cvp) analysis: shows how profit will be affected by different sales volume, selling price.
