2. OCR Level 3 Cambridge Technicals in Business Unit 4: Business Accounting Why Keep Accounts?

3. Definition of accounting “The process of identifying, measuring and communicating, economic information to permit informed judgements and decisions by users of the information” Quotation taken from: Frank Wood – Business Accounting 1 – Tenth Edition

4. Definition of accounting So what did that long quotation actually mean? Accounting involves deciding what amounts of money will be involved in the transactions of buying and selling. This information then needs to be organised in such a way that it is useful for decision making.

5. Why keep accounts? A business keeps accounts for the following reasons: To record transactions To monitor activity To manage and make decisions To measure business performance To communicate with stakeholders

6. Who uses the accounts? Managers Owner(s) of the business Prospective partners Prospective buyers of the business The bank Tax inspectors Potential investors/ shareholders

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