By Peter Atrill
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Extra info for Accounting: An Introduction, 4th Edition
4 Small stores keep up with the big boys, © Financial Times, 5 February 2003. In some instances we have been unable to trace the owners of copyright material and we would appreciate any information that would enable us to do so. qxd 7/08/2007 11:20 CHAPTER Page 1 1 Introduction to accounting and finance Introduction n this opening chapter we begin by considering the roles of accounting and finance. We shall see that both can be valuable tools for decision-making purposes. We shall identify the main users of accounting and financial information and discuss the ways in which this information can improve the quality of decisions that those users make.
This is not meant to be an exhaustive list of potential users; however, the groups identified are normally the most important. 1 Ptarmigan Insurance plc (PI) is a large motor insurance business. Taking the user groups identified below, suggest, for each group, the sorts of decisions likely to be made about PI and the factors to be taken into account when making these decisions. Your answer may be as follows: User group Customers Competitors Employees Government Community representatives Investment analysts Suppliers Lenders Managers Owners Decision Whether to take further motor policies with PI.
Telephone calls cost money and involve some of our time. Visiting the garages may not involve the outlay of money, but more of our time will be involved. Is it worth the cost of finding out the price of a car service at the various local garages? The answer, as we have seen, is that if the cost of discovering the price is less than the potential benefit, it is worth having that information. 2 Relationship between costs and the value of providing additional accounting information The benefits of accounting information eventually decline.
Accounting: An Introduction, 4th Edition by Peter Atrill