Explain the nature and scope of financial accounting, its users and the role of ethics.

1. 1 · Define accounting. Identifying, recording and communicating financial information so that users can make decisions. Call it the language of business.
2. 2 · Show the scope.
   • Financial accounting: outside users, standards, past periods.
   • Management accounting: managers, budgets, the future.
   • Cost accounting, tax accounting and auditing.
3. 3 · Explain the users in a table. Owners, managers, lenders, suppliers, employees, customers, government, investors: one need each.
4. 4 · Name the four main financial statements. Income statement, statement of financial position, statement of changes in equity, statement of cash flows.
5. 5 · Explain ethics.
   • Integrity, objectivity, professional competence and due care, confidentiality, professional behaviour.
   • Give one dilemma: pressure to show a higher profit for a bank loan.
6. 6 · Sri Lankan link. CA Sri Lanka issues SLFRS and LKAS; listed companies publish annual reports for shareholders.
7. 7 · Conclude. Accounting is useful only if users can trust it, so standards and ethics go together.

Scoring tip: A users-and-needs table saves words and earns marks quickly.