2/20/23

Welcome to ACC10007
Financial Information for Decision Making

Session 1 – Video 1
Introduction to Accounting and
Business Decision Making
Presented by:
Dr John Webster and Alan J Serry

Acknowledgement of Country
We respectfully acknowledge the Wurundjeri People of the Kulin Nation, who
are the Traditional Owners of the land on which Swinburne’s Australian
campuses are located in Melbourne’s east and outer-east, and pay our
respect to their Elders past, present and emerging.

We are honoured to recognise our connection to Wurundjeri Country,

history, culture, and spirituality through these locations, and strive to ensure
that we operate in a manner that respects and honours the Elders and
Ancestors of these lands.

We also respectfully acknowledge Swinburne’s Aboriginal and Torres Strait

Islander staff, students, alumni, partners and visitors.

We also acknowledge and respect the Traditional Owners of lands across

Australia, their Elders, Ancestors, cultures, and heritage, and recognise the
continuing sovereignties of all Aboriginal and Torres Strait Islander Nations.

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Welcome

Your lecturers for the semester

Our aim is to produce some videos that

you will find:

Ø Informative

Ø Engaging

Ø A little less formal

1. Learning Outcomes

1. Video Session 1
1. What is Accounting?
2. The ‘Why’ of Accounting
3. Users of Accounting
4. Financial Accounting and Management Accounting

2. Video Session 2
5. Role of Accounting Information in Business Planning
6. Digital Disruption
7. Business Sustainability
3. Video Session 3
8. Financial Statements

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1. What is Accounting?

Accounting is an information system or process that:

Ø identifies
Ø records and
Ø communicates

Ø economic events of an entity

Ø to users
Ø to help them make informed decisions

1. What is Accounting?

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2. The ‘Why’ of Accounting

Ø To assist users in making decisions about the allocation of

scarce resources.

Ø Useful information!

Ø Accounting enables communication of the information to

users who are both internal or external to the entity.

3. Users - Internal Users

Managers who plan, organise and run the business.

Examples:

Ø Chief Executive Officers (CEOs)

Ø Marketing Managers
Ø Production Supervisors
Ø Chief Financial Officers (CFOs)

Detailed and frequent information is needed by these

managers to make business decisions on a day-by-day basis.

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3. Users - External users

Vary in their nature and information requirements.

Examples:
ØInvestors
Øe.g. shareholders
Ø(use information to make decisions to buy, hold or sell shares)

ØCreditors/Lenders
Øe.g. suppliers, bankers
Ø(use information to evaluate risks of giving credit and lending money)

ØGovernment and regulatory bodies

Øe.g. ATO, ASIC
Ø(use information to determine an entity’s compliance with rules and regulations)

3. Users - External users

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4. Financial Accounting and Management Accounting

Management Accounting
• Concerned with providing managers with information required
for day-to-day running of the business

Financial Accounting
• Concerned with providing users (in addition to managers) with
useful information

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4. Financial Accounting and Management Accounting

Financial Accounting Management Accounting

Focus Mainly external Internal only

Nature of reports General purpose Specific purpose

Level of detail Broad overview Quite detailed

Restrictions Accounting standards and No restrictions

other regulations

Reporting interval Mainly annual or semi- Whenever required (normally

annual more frequent)

Time horizon Mainly historical Both past and future

Range of information Quantifiable in money Can contain non-financial

terms; focus on objective information; less focus on
and verifiable data objectivity and verifiability

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Welcome to ACC10007
Financial Information for Decision Making

Session 1 – Video 2
Introduction to Accounting and
Business Decision Making
Presented by:
Dr John Webster and Alan J Serry

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1. Learning Outcomes

Video Session 2

5. Role of Accounting Information in Business Planning

6. Digital Disruption

7. Business Sustainability

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5. Role of accounting information in business

planning

• The business plan

• Explains:

• The goals of the firm

• How it will operate
• Likely outcomes

• It is the blueprint (similar to plans an architect would develop for a new building)

• Benefits of a business plan

• Clear statement of direction and purpose
• Allows management and employees to work towards a set of defined goals
• Provides the ability to periodically evaluate the performance of the firm

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5. Role of accounting information in business

planning

•Components of a business plan

• There is no universal format for a business plan

• Business plans generally include the following components: Marketing, Operations and
Finance

• Accounting plays a vital role in all aspects of the business plan!

• Marketing – eg. Determining advertising expenditure

• Operations – eg. buying raw materials, costing of products

• Finance – eg. Debt versus equity

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Accounting can never stand still

Accounting has had to cope with:

• Digital disruption

• A greater focus on Business Sustainability

Both have consequences for the accounting profession!

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6. Digital Disruption and the Impact on Accounting

Digital disruption has been defined as ‘New technologies and business models
that impact, transform or re-invent existing goods and services, industries and
business activities. It’s a change that can be positive or negative, and can drive
substantial changes across the economy’ (Queensland Government Chief
Information Office 2018).

In recent years we have seen the emergence of:

• Big data and data analytics
• Artificial Intelligence – machine learning
• Cloud computing
• Fintech industry
• Mobile phone technology
• Blockchain – accounting for digital currencies (bitcoin)
All of these have consequences for the accounting profession.

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7. Business Sustainability

Business sustainability refers to use of the world’s resources in a way that does not
compromise the ability of future generations to meet their needs.

A growing environmental and societal awareness has put pressure on entities to

consider their non-financial impacts.

Entities need to account for:

• all resources used (labour, material, energy, forests, water, air etc.)
• all outputs produced (products/services, carbon emissions, waste etc.).

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7. Business Sustainability

Key drivers of sustainability:

• Competition for resources:

• The world’s population is continuously growing.

• Climate change:
• We have a fossil-fuel based economy.

• Economic globalisation:
• The integration of national economies into the global economy. International
expectations

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7. Business Sustainability

Benefits of environmental & sustainability reporting:

• Improving stakeholder relations

• Creating market opportunities

• Improved access to the investor market

• Triggering internal improvement in environmental performance

• Reputation and brand benefits

• Attraction and retention of high-calibre employees

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1. Learning Outcomes

Video Session 2

5. Role of Accounting Information in Business Planning

6. Digital Disruption

7. Business Sustainability

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Welcome to ACC10007
Financial Information for Decision Making

Session 1 – Video 3
Introduction to Accounting and
Business Decision Making
Presented by:
Dr John Webster and Alan J Serry

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1. Learning Outcomes

Video Session 3
8. Introduction to Financial Statements

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8. Financial Statements
The four financial statements are:

Statement of Financial Position (Balance Sheet)

Statement of Profit or Loss (Income Statement)

Statement of Cash Flows

Statement of Changes in Equity

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8. Financial Statements

Statement of Financial Position (Balance Sheet)

Ø Measures financial position at a point in time

Ø “As At” eg. As at 30 June 2021 or as at 31 December 2022

Ø Keeping it simple, it details:

Ø what we have (that gives us benefits - Assets)

Ø what we owe (Liabilities) and
Ø what we are left with (Owners Equity - what we are worth)

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8. Financial Statements

Statement of Profit or Loss (Income Statement)

Ø Measures financial performance over a period of time

Ø “For the period ending” eg. For the year ending 30 June 2023

Ø Tells us whether we are better or worse off for the period

Keeping it simple, it details:

Ø Changes that make us better off (income/revenue)

Ø Changes that make us worse off (expenses)
Ø Net effect (profit or loss)

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8. Financial Statements
Statement of Cash Flows

Ø Measures cash receipts and cash payments over a period of time

Ø “For the period ending” eg. For the year ending 30 June 2024

Ø Tells us the categorised cash inflows and cash outflows over the period

Ø Tells us whether we have more or less cash at the end of the period

Keeping it simple:

Ø Cash inflow represent cash received by the business

Ø Cash outflows represent cash being spent by the business

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8. Financial Statements
Statement of Changes in Equity

Ø Presents a summary of changes that occurred in the entity’s worth (owners

equity) over a period of time

Ø “For the period ending” eg. For the year ending 30 June 2025

Keeping it simple:

Ø Tells us whether the entity increased or decreased its worth over the period.

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Statement of Financial Position - Balance Sheet

• The Statement of Financial Position (Balance Sheet) summarises

the financial position of an entity at a particular date
• As at 30 June 2020

• An entity’s financial position is divided into 3 categories:

ØAssets (A)
ØLiabilities (L)
ØOwner’s Equity (OE)

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Statement of Financial Position - Balance Sheet

Assets are a present economic resource controlled by the entity as a
result of a past event.
Liabilities are present obligations of the entity to transfer an economic
resource as a result of past events.

Owner’s Equity is the owner’s investment in the entity

Ø Itis the residual interest of the owners on the assets of
the entity, after deducting liabilities.
Ø It is measured as the excess of assets over liabilities

OWNER’S EQUITY = ASSETS - LIABILITIES

OE = A - L

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Statement of Financial Position (Balance Sheet)

Example

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Statement of Profit or Loss - Income

Statement

• Provides information on an entity’s profitability for a

period of time
• E.g., for the period ended 30 June 2020

• Measures the difference between:

• Revenues earned during a period and Expenses
incurred in earning the revenues
• The difference is Profit if R > E
• The difference is a Loss if R < E

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Statement of Profit or Loss - Income Statement

• Revenues = Increases in assets or decreases in

liabilities that result in increases in equity, other than
those relating to contributions from holders of equity
claims (e.g. owners).

• Expenses = Decreases in assets or increases in

liabilities that result in decreases in equity, other than
those relating to distributions to holders of equity
claims (e.g. owners).

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Statement of Profit or Loss (Income Statement) – Example

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Statement of Cash Flows

• Shows the changes in the cash account

• Shows cash receipts and cash payments for a period of

time

• Cash transactions are split into 3 categories:

ØOperating activities (day-to-day operations)
ØInvesting activities (acquisition and disposal of non-current
assets)
ØFinancing activities (financial structure)

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Statement of Cash Flows - Example

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Statement of Changes in Equity

This statement shows all changes to owner’s equity that occurred

during the period.

These changes could comprise

• Capital contributions
• Profit or loss
• Drawings / dividends

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Statement of Changes in Equity - Example

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1. Learning Outcomes

1. Video Session 3
8. Introduction to Financial Statements

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Enjoy!

Have a fabulous semester…make it a

success for YOU.

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Thank You

Student Development Team July 2020

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