Accounting provides a means for any business to record and monitor its flow of money.

This is an essential process for controlling the financial operations of the business, whilst at the same time providing information for management decision making. Without such a formalised process for reporting financial information, it would be impossible to maintain an appropriate watch on the funds of a business and, therefore, to ensure its long-term future.

This module introduces the key principles behind accounting for managers, beginning with an overview of the process of bookkeeping and leading onto the preparation of the three key financial statements: the balance sheet, the profit and loss account and the cash flow statement.

In addition, we consider both the advantages and disadvantages of the accounting systems described.

Once the financial statements have been produced, the process of analysis begins with the use of a range of relevant financial ratios.

Some of the more commonly used ratios are described, with examples to demonstrate their use.

Throughout the module, we must keep in mind the importance of maintaining good cash flow to avoid the pressure of unexpected demands on the financial resources of a business which may, in extreme cases, lead to its failure.