You should now be aware that an accountant’s role extends beyond mere bookkeeping. The following figure presents an outline of the many duties which an accountant may undertake. In small enterprises, the accountant may be involved in all these areas while in larger organisations specialization may occur with different accountants being responsible for specific tasks.
Accounting is said to be the process of identifying, measuring, recording and communicating economic information to users of that information for decision-making. As mentioned earlier, users can be external or internal to the organisation. For example, internal users are represented by:
owners, partners;
board of directors;
officers of the company;
managers;
department heads; and
supervisors.
These users need information relevant to the smooth operation of the enterprise. You can imagine that many decisions need to be made and that a variety of information is required. An advantage for internal users of information is that special purpose financial reports can be requested and prepared by accountants to facilitate the decision-making process.
External users may consist of the following:
creditors, investors;
customers;
government agencies;
labour unions; and
the stock exchange (ASX).
It is not possible to provide all these users with ‘tailor made’ reports and information although some, such as banks or regulatory agencies, may specifically request them. External users represent a vast variety of needs. To attempt to meet some of these needs, general-purpose financial reports are prepared. These consist of a balance sheet (statement of financial position), an income statement (profit and loss statement/statement of financial performance), a statement of cash flows and a statement of changes in equity (statement of owner’s equity). These reports represent a summary of the economic activities which have occurred in the enterprise. Further, they are the culmination of the accounting...