Abstract

Accounting is a necessary requirement for any business or organization be it a large multinational business such as BP or the society or club you belong to in your local community. It is essential for a business or organization to keep track of its resources. They need to know if they have any cash available, if they have made a profit/surplus or loss/deficit, if they can meet the future needs or requirements of the business, if they can possibly remain in existence, or if they should change their operations in any way. These requirements can be divided into the need for stewardship of resources and the need for decision making. It is also necessary that owners and other interested parties have information on the stewardship of resources and decisions taken or to be taken by a business or organization. For example you might wish to know the uses your subscription money paid to the local tennis club was put to and what changes are going to be made to the club in the future so that you can decide whether you should continue with your membership or not. In the same way a shareholder in BP will also wish to know how the resource of their share capital has been used, if a dividend will be paid now and in the future and how future decisions in BP could affect that dividend. Accounting is the language of business that we use to answer these types of question and, as with all languages, in order to understand it we need to learn its rules and vocabulary.