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Accounting for Decision Making - Essay 2

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Accounting for Decision Making - Essay 2
Accounting for Decision Making
Study Notes
Introduction to Accounting (Week One)
Accounting is the process of identifying, measuring and communicating economic information (transactions) of a business to a variety of users for decision making purposes.
Business transactions are an external exchange of something of value between 2 or more entities. They can reliably be measured and recorded and can affect the assets, liabilities and equity of a business/ organisation.
Accounting information is designed to meet the needs of both internal users (management) and external users (stakeholders).
Financial Accounting and Management Accounting
- Financial Accounting includes the preparation and presentation of financial statements (Income Statement, Statement of Changes in Equity, Balance Sheets and Statement of Cash Flow) for interested parties.
- Management Accounting includes preparing internal reports to assist management in the decision making process. This mostly involves formulating plans and budgets.

Sources of Regulation
A business has many financial obligations that are legally enforceable. 1. Australian Securities & Investments Commission (ASIC): Acts as company watchdog by enforcing company and financial services laws to protect consumers, investors and creditors. Their main roles include: Uphold the law, Promote informed participation, Ensure company info is publicly available and Improve performance of financial system. 2. Corporations Act 2001 (Cwlth): Purpose is to regulate companies. 3. Australian Securities Exchange (ASX): main Australian market place for trading equities (shares), government bonds and other fixed interest securities. 4. Australian Competition & Consumer Commission (ACCC): administers Trade Practices Act and Prices Surveillance Act. The primary role is consumer protection. 5. Reserve Bank of Australia (RBA): responsible for the stability of Australian financial systems and setting monetary policy

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