AK/ADMS 1500
An Introduction to Accounting: The
Analysis and Use of Financial Information
Course Director : Prof Paul Evans
Room 219A Atkinson
pevans@yorku.ca
416-219-4170
Introduction
www.atkinson.yorku.ca/pevans
Review of course outline and course requirements
Organization of class time
Office hours – I am frequently on campus but the
times vary. It is best to call me at 416-219-4170
and ask if I am available.
Textbook – bring to class
Accounting for Non-Financial Managers:
John Parkinson: 2006 – 2nd edition
Prior to each class:
Read the chapter from Parkinson.
Test your understanding by attempting the
quizzes and discussion problems.
You may wish to print out Powerpoint slides to
assist in notetaking.
What is accounting?
Involves gathering, processing,
analyzing and communicating.
This course is concerned with the last part of the
process – analysis and communication.
We will avoid detailed learning of
gathering and processing aspects.
Accounting for Non-Financial Managers:
Chapter 1: Introduction:
Learning Objectives:
After studying this chapter you should understand:
•Who needs to know about accounting;
•Using accounting to keep score;
•Using accounting for attention directing;
•Using accounting to support decisions.
Accounting: who needs it?
Just about everyone who is involved in business or nonbusiness administration needs to be aware of the way
accounting information is prepared and used.
1: as general background (score-keeping):
so that they can present themselves as intelligent, wellinformed members of the management team;
2: to understand budgetary planning & control:
all managers are judged (in part) on their financial
performance;
3: to support decision making:
all managers need to know how to present the financial
aspects of their business proposals
Accounting for Score-Keeping:
All organizations provide general purpose financial
statements to external users:
Income statement:
(revenues, expenses and profits for a year)
Balance sheet:
(assets, liabilities and equity at the end of the year)
Statement of owners’ equity
(changes in owners’ equity)
Cash flow statement
(changes in cash)
These are sent to all shareholders, annually, as well as to
government agencies and stock exchanges.
Accounting for Planning & Control:
Organizational units use budgets for planning & control:
1: define the organizational objectives;
2: make plans to achieve objectives, (including a budget);
3: carry out the activities in the plan;
4: measure the results of operations (score-keeping);
5: compare the results with the plan (budgetary control);
6a: if the objectives have been achieved, move on;
6b: if the objectives have not been achieved instigate
corrective action, then move on.
Decision Making:
There is a financial dimension to decision making
(though that may be only part of the decision).
1: specify the problem or decision;
2: choose an appropriate decision technique;
3: gather relevant information;
4: use the information and the technique to make the
decision;
5: implement the decision;
6: evaluate the outcome.
Accounting:
Financial accounting (for external users);
Management accounting (for internal users);
Auditing (to ensure compliance with rules);
Personal financial planning (applications to personal issues)
Chapter 1: Discussion Questions:
1: Who needs to know about accounting?
2: Why is accounting called the language of business?
3: What are the main uses for which managers will use
accounting information?
4: Why does an investor need score-keeping information?
5: What role does accounting have in the planning
process?
6: How is control made possible by accounting?
7: What steps should be involved in decision making?
8: Why might the outcome of a decision be different from
its expected outcome?
9: What are the main distinctions between financial
accounting and management accounting?
10: What is the role of the Auditor?