MEPX
Chapter 1 of 10All chapters
  1. 1What accounting is for
  2. 2The accounting equation
  3. 3The three statements
  4. 4Accruals and matching
  5. 5Profit against cash
  6. 6Bookkeeping in practice
  7. 7Reading the numbers
  8. 8Costs
  9. 9Controls and audit
  10. 10Reading a company report

Chapter 1 of 10

What accounting is for

A record and a report.

Two audiences

Financial accounting reports outwards to owners, lenders and tax authorities under set rules. Management accounting reports inwards to help decisions and follows whatever format is useful.

  • External reporting follows standards so companies can be compared.
  • Internal reporting is free to be more timely and less precise.

The core idea

Record every transaction consistently, then summarise. Everything else is convention about when to record and how to group.