ACCOUNTING

By

Hanis Amirah bt Haron (2009604032)

Azyan Azilah bt Halimi(2009466372)

E-BUSINESS (ITS450)

TABLE OF CONTENT

Content Page

What is Accounting 1

Basic types of accountancy 2

Division in Principle of Accountancy 3

Basic Ways to Record Your Financial Transaction

4

Basic Accounting Concepts 5

Basic Accounting Types 6

How Accounting Helps in Business Sectors 7

Importance of Accounting Systems 8

WHAT IS ACCOUNTING?

Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character and interpreting with the result thereof.

- defined by AICPA Accountancy also means branch of

mathematical sciences that is useful in discovering the causes of success and failure in business.

4 BASIC TYPES OF ACCOUNTANCY

PUBLIC- Broad range of accounting, auditing, tax & consulting activities

GOVERNMENT ACCOUNTANT- Maintaining & examining records of govn. agencies.

INTERNAL AUDITOR- Verify the accuracy of orga. & check for mismanagement or fraud

Accountancy

DIVISION IN PRINCIPLES OF ACCOUNTANCY

Accounting

Auditing

Bookkeeping

•Keeps track of all the funds ; money paid, money paid out, assets

• goals : keep the ledgers of the company balance.

• protects employees, investors, owner from accounting fraud.• performs by outside agencies.• accountant will examine the ledgers.

• Setting up a system of recording• summarizing financial transaction

BASIC WAYS TO RECORD YOUR FINANCIAL TRANSACTIONSingle Entry Bookkeeping

• Used by small businesses• Balance sheet is not

required for financial control or tax purposes.

Double Entry Bookkeeping

• Required for all type of businesses

• Must produce profit & lost account and balance sheet.

*Balance Sheet : financial statement that reports the amount of company’s assets, liabilities and owners equity at a specific point in time

BASIC ACCOUNTING CONCEPTS

Liabilities

Owner’s

equity

assets

1. The Basic Accounting Equation

2. Debit = Credit

Very important double entry bookkeeping rule!

• In a transaction : all debits must equal all credits

BASIC ACCOUNT TYPES

Assets •The group of things that you own. •Ex : cars, cash, house, stocks, things that you can sell for cash

Liabilities •Group of things on which you owe money.•Ex : car loan, student loan, mortgage

Equity •Net worth = what left after you subtract your liabilities from your assets

Income •Payment you receive for service you provide.•Ex : commissions, tips, dividend income from stocks.

Expenses •Money you spend to purchase goods or services provided by someone else.

HOW ACCOUNTING HELPS IN BUSINESS SECTORSRecord keeping recording business transactions measuring results of financial changes projecting financial effects of future transactions preparing internal reports in a user-friendly format

Planning and control collecting cash controlling stocks controlling expenses co-ordination and monitoring of strategy/performance monitoring gross margins

Decision making using cost information for pricing, capital investment and marketing evaluating market and product profitability evaluating the financial effect of strategies and plans

IMPORTANCE OF ACCOUNTING SYSTEM

Accurate reporting of business transactions.  Easy access to financial statements. Up to date reports on accounts payable, accounts

receivables. Excellent management tool. Minimize problems with IRS & other tax

authorities. Compare your accounts with original budgets or

forecasts. Manage your resources better. Identify trends in your business. Highlight variations in your income or spending

which may require attention.