Every business organisation is required to collect data on all its financial transactions and report this on a regular basis in the form of company accounts. The ability to interpret the contents of company accounts is essential for financial managers, investors and other stakeholders

In this module, we look at the process of bookkeeping and show how it is used to gather information for the preparation of formal accounts. The overview provided will allow you to see how each individual transaction is recorded and how, in turn, each one influences the overall financial picture provided by the accounts

The preparation of the three key financial statements is described in detail and a number of examples are suggested for study. The interpretation of these statements is explained, mainly through the use of a range of ratios which indicate the effectiveness of the financial management of the business and its stability. With reference to these statements, the effects that budgets have on operations are described, along with the topics of depreciation and the importance of working capital management

The final section of the module discusses the importance of a set of globally adopted accounting standards, without which it would be almost impossible to make useful comparisons between companies operating in different countries or markets