ACCOUNITNG

PURCHASE SHARES OF WHICH COMPANY? WHAT IS ACCOUNITNG ? BUY CAR ON CREDIT OR ON CASH? HOW WELL THE BUSINESS IS GOING? HOW MUCH TAXES SHOULD BE PAID? WHICH UNIVERSITY YOU SHOULD GO FOR MBA? DECISION INFORMATION

WHAT IS ACCOUNTING ACCOUNTING PROVIDES QUANTITATIVE INFORMATION ABOUT ECONOMIC ENTITIES THAT IS INTENDED TO BE USEFUL IN MAKING BUSINESS DECISIONS TO BE GOOD AT YOUR BUSINESS YOU HAVE TO KNOW THE NUMBERS (HAROLD GENEEN)

BRANCHES OF ACCOUNTING FINANCIAL ACCOUNTING COST ACCOUNTING MANAGERIAL ACCOUNITNG PROVIDES FINANCIAL INFORMATION TO EXTERNAL PARTIES PROVIDE INFORMATION REGARDING COST OF PRODUCT AND SERVICES TO MANAGEMENT PROVIDES INFORMATION TO MANAGRES SO THAT THEY WILL BE ABLE TO MAKE DECISIONS

WHATS WRONG WITH BOOK KEEPING ? BOOK KEEPING THE PRESERVATION OF A SYSTEMATIC, QUANTITIVE RECORD OF AN ACTIVITY.” SUCCES AND FAILURE OF BUSINESS TYPE OR NATURE OF TRANSACTIONS NOT ABLE TO COMMUNICATE WHAT IS FINANCIAL ACCOUNITNG ?

WHAT IS MISSING IN BOOK KEEPING ? BUSINESS LANGUAGE THAT PROVIDES MEAN OF RECORDING AND COMMUNICATING THE SUCCESS AND FAILURE OF BUSINESS ORGANIZATION BUSINESS LANGUAGE COMMUNICATING SUCCESS AND FAILURE WHAT IS FINANCIAL ACCOUNITNG ? FINANCIAL ACCOUNTING

THE ART OF RECORDING, CLASSIFYING AND SUMMARIZING EVENTS OF FINANCIAL CHARACTER RELATED TO BUSINESS AND INTERPRET RESULTS THEREOF:” ART PROVIDES KNOWLEDGE THAT HELPS IN ASCERTAINING FINACIAL RESULTS RECORDING EVENTS OF FINANCIAL CHARACTER RECODRING TRANSACTION (MEASUREABLE IN MONETORY TERMS) IN ACCORDANCE WITH THE PRINCIPLES,NATURE AND TYPE OF TRANSACTION CLASSIFYING GROUPING TRANSACTION OF THE SAME NATURE AT ONE PLACE SUMMARIZING INTERPRETING RESULTS BY MEANS OF FINANCIAL STATEMENTS

FINANCIAL STATEMENTS REFLECTS FINNACIAL POISTION AND PERFORMANCE OF BUSINESS PRIMARY FINANCIAL STATEMENTS BALANCE SHEET OR STATEMENT OF FINANCIAL POSITION INCOME STATEMENT OR PROFIT AND LOSS ACCOUNT CASH FLOW STATEMENT REPORTS A COMPANY ASSETS, LIABILTIES AND OWNER’S EQUITY AT A PARTICULAR DATE SUMMARY OF REVENUE EARNED AND EXPENSES INCURRED TO EARN THIS REVENUE FOR A SPAN OF TIME REPORTS THE AMOUNT OF CASH COLLECTED AND PAID OUT BY COMPANY DURING A PERIOD OF TIME.

USERS OF FINANCIAL STATEMENTS MANAGEMENT SHAREHOLDERS POTENTIAL INVESTORS LENDERS SUPPLIERS CUSTOMERS EMPLOYEES COMPETITORS GOVERNMENT AGENCIES

BASIS ON WHICH FINANCIAL STATEMENTS ARE PREPARED WHAT HAPPENED WHEN NO STANDARDS ARE FOLLOWED COMPARISIONS MISLEADING RESULTS STANDARDS SETTING BODIES FASB IASB GAAP IFRS STANDARD

PRINCIPLE OF ENTITY PRINCIPLE OF COST MONETORY ASSUMPTION UNIT PRINCIPLES AND ASSUMPTIONS PRINCIPLE OF GOING CONCERN PRINCIPLE OF OBJECTIVITY MATCHING PRINCIPLE PRINCIPLE OF CONSISTENCY BUSINESS SHOULD BE TREATED AS SEPARATE ECONOMIC ENTITY (TRANSACTIONS SHOULD BE SEPARATED FROM MANAGERS AND OTHER COMPANIES ASSET SHOULD BE RECORDED AT PRICE THEY ARE PURCHASED FOR EVENTS THAT CAN BE EXPRESSED IN MONEY ARE INCLUDE IN ACCOUNTING RECORDS BUSINESS WILL REMAIN IN OPERTAION FOR THE FORSEEABLE FUTURE THERE SHOULD BE DOCUMENTORY PROOF BEHIND EVERY BUSINESS TRANSACTION REVENUE OF A PERIOD SHOULD BE MATCHED WITH THE EXPENSES OF THE SAME PERIOD (ACCRUAL BASIS OF ACCOUNTING) SAME ACCOUNITNG PRINCIPLES SHOULD BE USED BY COMPANY FROM YEAR TO YEAR

ASSETS LIABILITIES + EQUITY = BALANCE ACCOUNTING EQUATION