Accounting

ACCOUNTING

12/09/2023

Economic problems resources are less than needed (energy).

 Non-economic problem resources are more than needed (air)



BUSINESS ECONOMICS—POLITICAL ECONOMICS

1. PO (Micro and Macroeconomics behaviors of individuals and how they interact)

Economics

Political economics Business economics

Microeconom Macroecono Management Accounting

ics mics Strategy Organizati Finan Operations Technical

1. Mission on of ce 1. Purchasi language

to set. human ng 1. Recordin

(idea) resources 2. Selling g and

2. Strategy 3. Marketin present

to g 2. Analyze

accompli

sh

2. BS(Organization of a production to satisfy human needs) behaviors of singles

productive individuals.

FOR PROFIT Firm (even state owned—ITA, Trenitalia, Eni, Enel)

o NON-PROFIT- no rewards

o Private (Foundations, Associations—contribution paid by the

 associate)

Public Administration



ACCOUNTING

Business produce lots of effects environmental, social, economical all of them

influence the performing of the business…

Technical language of the economic effects () of business

1. Recording and present economics effects on business transactions

Report internal inside the business.

o Report external mandatory by corporate law. Business involves a world

o variety of interest stakeholders (shareholders), government, people.

2. Analyzing information on the economics effects of business

Technique about organizing the interpretation of the information.

o

USERS OF FINANTIAL INFORMATION

INTERNAL

EXTERNAL MANAGERS CEO, C-level goals (once a year).

o Consiglio administration

managers, anyone who

has responsibility in the SHAREHOLDERS

business. o

EMPLOYES as a BANKS Seen they land

o o

representative’s money to the companies

organizations (unions) COMPETITORSTo do a

o

GOVERNANCE BODIES benchmark.

o (Border directors)not on GOVERNMENT

o

a daily basis, their Regulation, Taxes

decisions set the strategic CLIENTS

o

SUPPLIERS  more clients if the payment is

o to fir? to understand if

interested than the they will be paid.

INTERNAL much more information

 EXTERNAL



1. How to prepare financial statements

2. How to analyze financial statement

TRANSACTIONS

SPOT immediate and single payment

o RELATIONSHIP continuous buy, long-term relation (important to the client to

o select a supplier that will continue to produce and to guarantee the supplies he

buys from more suppliers, at least 3

FINANCIAL ACCOUNTING information describes external financial transactions.

MENAGEMENT ACCOUNTING information describes internal financial transactions.

instead of receiving dividends the shareholders can reinvest their profits in the

 company Self-financing.

processing is different, it doesn't include an exchange of money because it is an

 internal activity and there isn’t any contact, or contract, with an external

counterparty (suppliers, investors or costumers).

The external accounting information only represents financing, purchasing and

 selling, it doesn’t describe the internal processing activities, which are included

in the information selected to managers.

competitors, for example, shouldn’t have any internal information.

1. FINANCIAL TRANSACTIONS get capital.

2. PURCHASING TRANSACTIONS buy anything you will need

3. PROCESSING ACTIVITIES use of the materials to product goods

4. SELLING ACTIVITIES  finished product on the market to create a financial

income.

BUSINESS CYCLE FINANCING

financial accounting  financial external

statements to external users transacrion

refers to the whole business.

PURCHASIUNG SELLING

external activity PROCESSING

internal

transaction

in

The processing activity isn’t analyzed by the accounting system but by the

management accounting system managerial report to internal users. It is a matter of

choice of managers, it is not regulated.

19/09/2023

LOGIC OF ACCOUNTING

Information not detailed, but selective and synthetic and presented in a clear way,

understandable for the reads, but complete and so nothing must be excluded. If you

intentionally skip something

Way to defend from frauds are:

PREVENTING Don’t let managers without control CORPORATE CONTROLS,

 functions that controls what managers do, 2 governance bodies: board of

directors and the college syndical ( controls the board of directors), internal

auditee ( internal but )

Shareholders can understand by the financial reporting that something is not

 right.

PARMALAT case Accounting fraud. Asks to the market money issuing bonds. Falsifying

Credibility and Obtaining Loans and Investments: Tanzi and all those who were allegedly

involved in what is known to be one of the biggest scams, managed to borrow money

from banks and even justified these loans for Parmalat through inflating revenues and

fictitious sales in records between 1990 and 2003. 14 billion dets 5 billion liquidity,

why?

Insolvency: loss of support and no possibility to pay the debts

Bankruptcy and liquidation: procedure that starts when you are in a insolvency

situation if they do not manage to reach a point of agreement with the creditors.

Representation of economic effects

Assets (goods, house, car…) and value

 Wage, how much money do you earn?

 Have you any debts?

 Any financial investments?

 Are you owner of shares?

 FUNDAMENTALS QUESTIONS THAT OBLY TO ANSWER COMPLETELY

What do you have? LIST OF RESOURCES

Where do they come from? LIST OF SOURCES

FINANCING

EQUITY FINANCING (shareholders)

 No obligation to repay the financier.

o The reward is only residual through the profits of the company (no money

o back and if there is no profit there is no reward).

Property rights (say something in the shareholders meeting, you can

o express your decision)

DEBT FINANCING

 Obligation to reimburse.

o The reward for the investor is interest that are predetermined (less risky).

o Credit right

o

IN THE REPORT OF A CAPITAL, WE HAVE TO REPRESENT THE RESOURCES AND THE

SOURCES OF IT RESOUCES SOURCES