Awesome Tips for Financial Accounting

Is Accounting really important?

In case you are not convinced that accounting numbers (profit and balance sheet figures) are important, I hope the following newspaper extracts may convince you. Quotes of this type appear in the financial section of most newspapers every day. The quotes are ones I though you might find interesting. These clearly convey that a lot of emphasis is placed on accounting figures (especially profits) in decision-making by management and by users such as shareholders and creditors, corporate boards and consumer groups, as well as their impact on a range of other community groups.

Used by management in making business decisions

The following examples illustrate the importance accounting numbers have on management decisions to contract and expand the business, which in turn affects employees, suppliers, contractors and the economy.

• Singapore Airlines will outsource 130 information technology jobs in the latest step to trim its workforce and cut costs, amid rising competition among airlines in Asia. Singapore Airlines will still employ about 270 people in its IT department after the cuts. Earlier this year, chief executive Chew Choon Seng said the airline had to cut costs by 20 per cent to hot its target of an 8 per cent return on capital.
  

• South corp has signalled its willingness to close some of its vineyards, if it can’t make them profitable, as part of an ongoing asset review that has already seen the closure of several wine making and distribution facilities. South corp, Australia’s largest publicly traded winemaker has launched a detailed review of the profitability of its vineyards, as it strives for a better return on capital employed.
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• Sun corp, armed with a strong balance sheet and a low cost base, has warned its general insurance rivals it is prepared to match them in any price was as industry competition gets tougher.

• Coles put itself up for sale in February after admitting it was unable to generate ambitious profits promised in the wake of earlier offers by KKR.

• Woolworth’s will invest more than $1 billion this year accelerating the opening of new stores, refurbishing existing ones and cutting prices across the board to cement its position as the country’s leading retailer and extend its lead over rival Coles. Woolworth’s delivered its strongest profit growth for six years yesterday, lifting net profit by 27 per cent to a record $1.29 billion after reaping the benefits of recent acquisitions and a five-year supply chain transformation.

• Qantas Airways has delivered a record profit as the he airline revels in strong demand for aviation and prepares for a wide-ranging organisational restructure following the failed buyout attempt this year. Chief executive Geoff Dixon confirmed plans to hand $1 billion back to shareholders and announced a rise in the carrier’s dividend payout, after reporting a 50 per cent lift in net profit to $720 million for the year ended June 30.
  
  

  Used by people such as shareholders for decision-making purposes

  Both good and bad accounting new often has a bigger impact on the share market.

• The tremors from Centro’s admissions shook the stock market. Already spooked by higher than expected US inflation numbers, it lost $44 billion in its largest one-day slide since August 10 … At the same time, forecast earnings have been slashed and, for two of its unlisted wholesale funds, withdrawals have been suspended.

• Commonwealth Bank of Australia has set a high benchmark for its major rivals with a 50 per cent jump in first-half profit to $1.86 billion, fuelled by lower restructuring costs and a strong performance by the core banking and funds management businesses. Shares in the country’s biggest retail bank gained almost 4 per cent after chief executive David Murray upgraded its full-year forecast.

Used by boards in takeover battle

More of this content will be coming soon.

The following concept that will be coming soon is something that introduces you to financial accounting and something that will illustrate some useful accounting concpets and techniques. It outlines a way of thinking about financial accounting that will be important to your career, whether you become an accountant or a user of accounting in business or in other walks of life.

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- Larriken21

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