BSc (Hons) Tourism & Hospitality Management Financial Accounting-Topic 1
1. Definition of accounting
Accounting consists of two elements
Recording Summarising
Transactions must be recorded as they occur in The transactions for a period are summarised
order to provide up-to-date information for in order to provide information about the
management company to interested parties
FINANCIAL STATEMENTS
Income Statement reflects the Statement of Financial
performance of a business over a Position (Balance sheet)
period of time reflects the position of a
business at a point in time
2. Types of business entity
A business can be organised in one of several ways:
• Sole trader – a business owned and operated by one person.
• Partnership - a business owned and operated by two or more people.
• Company - a business owned by many people and operated by many (though not
necessarily the same) people.
1
, BSc (Hons) Tourism & Hospitality Management Financial Accounting-Topic 1
3. Types of accounting
ACCOUNTING
Financial Accounting Management Accounting
• Production of summary financial • Production of detailed accounts,
statements for external users used by management to control the
• Prepared annually (six monthly or business and plan for the future
quarterly in some countries) • Normally prepared monthly, often
• Generally required by law on a rolling basis
• Reflects past performance and • Not mandatory
current position • Includes budgets and forecasts of
• Information is calculated and future activities, as well as
presented in accordance with strict reflecting past performance to be
and legal accounting requirements relevant to managers
• Information is computed and
presented in order to be relevant to
managers
Financial Accounting
Financial Accounting is concerned with the production of financial statements for external users. These
are a report on the directors’ stewardship of the funds entrusted to them by shareholders.
Investors need to be able to choose which companies to invest in and compare their investments. In
order to facilitate comparison, financial accounts are prepared using accepted accounting conventions
and standards. International Accounting Standards (IASs) and International Financial Reporting
2
1. Definition of accounting
Accounting consists of two elements
Recording Summarising
Transactions must be recorded as they occur in The transactions for a period are summarised
order to provide up-to-date information for in order to provide information about the
management company to interested parties
FINANCIAL STATEMENTS
Income Statement reflects the Statement of Financial
performance of a business over a Position (Balance sheet)
period of time reflects the position of a
business at a point in time
2. Types of business entity
A business can be organised in one of several ways:
• Sole trader – a business owned and operated by one person.
• Partnership - a business owned and operated by two or more people.
• Company - a business owned by many people and operated by many (though not
necessarily the same) people.
1
, BSc (Hons) Tourism & Hospitality Management Financial Accounting-Topic 1
3. Types of accounting
ACCOUNTING
Financial Accounting Management Accounting
• Production of summary financial • Production of detailed accounts,
statements for external users used by management to control the
• Prepared annually (six monthly or business and plan for the future
quarterly in some countries) • Normally prepared monthly, often
• Generally required by law on a rolling basis
• Reflects past performance and • Not mandatory
current position • Includes budgets and forecasts of
• Information is calculated and future activities, as well as
presented in accordance with strict reflecting past performance to be
and legal accounting requirements relevant to managers
• Information is computed and
presented in order to be relevant to
managers
Financial Accounting
Financial Accounting is concerned with the production of financial statements for external users. These
are a report on the directors’ stewardship of the funds entrusted to them by shareholders.
Investors need to be able to choose which companies to invest in and compare their investments. In
order to facilitate comparison, financial accounts are prepared using accepted accounting conventions
and standards. International Accounting Standards (IASs) and International Financial Reporting
2
