Accounting in Organisations: Definition, Stakeholders, and Role

School: Royal Melbourne Institute of Technology - Course: ACCOUNTING ECON1010 - Subject: Accounting

Accounting in organisations Week 1, topic 1, what is accounting? Definition: Simply stated, 'accounting' can be defined as the provision of information about the use of resources and resulting performance of an entity, to a particular group of people with an interest in that entity - we can call these people stakeholders (can be internal and external to the entity). 'Accounting is the language of Business' Provision of Information: Accounting Information may be • Financial or non-financial • Objective or subjective • About the entity's internal activities and processes • About the entity's customers, suppliers, competitors • Future focused • Reflect an entity's past operations Use of resources and entities Resources • The factors an entity uses to undertake its business activities and processes • Resources are either owned or controlled by an entity • Entities use resources as inputs to performance • ExamplesMoney, people, machines/equipment, natural resources (e.g. land, water), raw materials Performance Performance can be defined as the outcome of using resources to undertake business activities and processes Performance - it's not just "economic" "Performance" can have a number of aspects • Financial Performance • Customer performance • Employee Performance • Supplier Performance • Social Performance • Environment Performance An entity Entity: • A person, partnership, organisation, or business that has a legal and separately identifiable existence. Organisation • An organisation is a collection of people who work toward a common goal or objective

Organisational forms • Sole Trader • Partnership • Company