It is time now to broaden our view of accounting. So far we have concentrated on the mechanics of accounting — the way in which accounts are prepared and presented. But consider the view taken by John Slater, managing director of Slater’s Stores Ltd:
I have to pay my accountant/auditor a large fee to prepare and approve my company’s accounts. What a waste of money! I don’t understand them, so the business doesn’t benefit. The only people that do are the taxman and the VAT man! OK by law I have to prepare them for the shareholders, but they are me and my wife. The only other person who gets a copy is the Registrar of Companies, but I don’t suppose he’s interested.
It is vital that the information contained in accounts is
. There is little point in preparing them otherwise. In this chapter we will consider the various groups of people who may want to use a company’s accounts and the tools of analysis used to help them make sense of the figures in those accounts. This is a very important chapter in your studies as it begins to show how accounts are used in the business world and how it is possible to understand what they mean.