Conventionally, accounting focuses on making decisions for
economic reasons and indeed a lot of people
believe it's about making decisions for economic sustainability.
In this slide, we can see that we start off with decisions or
actions made by an organization and
I'm going to try and build a model of decision-making.
Very simplified model of
complex decision-making starts from a decision or action taken by an organization.
Every decision made by an organization has an impact
on the economy and those impacts can be positive or negative.
Conventionally, accounting looks at the direct impacts that a decision
or an action by an organization has on the economy and each of those impacts,
then changes the economy in a way that feeds back onto the organization.
Within conventional accounting, we tend to draw a boundary around
the business or the organization and we call that the Entity Boundary.
Accounting then records and communicates
the interactions between the organization and the economy.
So, the direct impacts of the organization has on the economy and
the impacts that the changes in the economy have on the organization.
As I said, that's a very,
very simplified model of what accounting does and we all know that accounting is a very,
very complex range of processes,
and practices that tried to capture.
In essence, the economic impacts of decisions made by an organization.