“ACCOUNTING REPORTS AND

ACCOUNTABILTY”

“ACCOUNTING REPORTS AND

ACCOUNTABILTY”

INDIVIDUAL PAPER

PRESENTED BY SAJID GHAFORSAJID GHAFOOR.DOC 2

Such financial information is used by managers, lenders, investors, tax authorities, regulators, and other decision makers to make resource allocation.

ACCOUNTING - INTRODUCTION :

Accounting is the art of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management.

The American Institute of Certified Public Accountants (AICPA)

ACCOUNTING - INTRODUCTION :

"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 the results thereof.”

Recording, Verifying, andReporting

PROCESS OF ACCOUNTING

Assets,  Liabilities,  Income, and  Expenses

Accounting involves the process of recording, verifying, and reporting of the value of Assets, Liabilities, Income, and Expenses in the books of account (ledger) to which debit and credit entries (recognizing transactions) are chronologically posted to record changes in value

Financial Accounting involving the collection, recording and extraction of financial information, and the summary of it in the form of a periodic profit and loss account, a balance sheet and a cash flow statement in accordance with legal, professional, and capital market requirements.

TYPES OF ACCOUNTING

Management accounting performed within an organization to provide information only accessible to its decision-makers that will allow them to be better equipped in their management and control functions.

There is little contrast to financial accounting information, management accounting information is:•designed and intended for use by managers within the organization, whereas financial accounting information is designed for use by shareholders and creditors. •usually confidential and used by management, instead of publicly reported; •forward-looking, instead of historical; •computed by reference to the needs of managers, often using management information systems, instead of by reference to financial accounting standards.

Financial accounting information

•Strategic Management—Advancing the role of the management accountant as a strategic partner in the organization. •Performance Management—Developing the practice of business decision-making and managing the performance of the organization. •Risk Management—Contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.

The American Institute of Certified Public Accountants (AICPA) states that management accounting as practice extends to the following three areas:

Financial Statements

• Income Statement

• Balance Sheet

• Statement of cash flows

• Statement of retained earnings

Financial statements

Income Statement Balance Sheetreferred to as statement of financial position or condition, reports on a company's assets, liabilities, and Ownership equity as of a given point in time.

Statement of cash flows

Statement of retained earnings

Financial statements

Balance SheetIncome Statementreferred to as Profit and Loss statement, reports on a company's income, expenses and profits over a period of time. Profit & Loss account provide information on the operation of the enterprise.

Statement of cash flows

Statement of retained earnings

Financial statements

Balance Sheet Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period.

Income Statement

Statement of cash flows

Financial statements

Balance SheetStatement of cash flows:Statement of cash flows reports on a company's cash flow activities; particularly it’s operating, investing and financing activities.

Income Statement

Statement of retained earnings

ASSETS Current Assets Cash and cash equivalents Accounts receivable (debtors) InventoriesPrepaid Expenses Investments held for tradingOther current assetsFixed Assets (Non-Current Assets) Property, plant and equipment Less : Accumulated Depreciation Goodwill Other intangible fixed assets Investments in associates Deferred tax assets

Sample balance sheet structure Balance Sheet of XYZ, Ltd.

as of 31 December 2009

LIABILITIES and EQUITYCreditors: (Current Liabilities) Accounts payable Current income tax liabilitiesCurrent portion of bank loans payableShort-term provisionsOther current liabilitiesCreditors: (Long-Term Liabilities) Bank loans Issued debt securities Deferred tax liabilityProvisionsEquityShare Capital Capital reservesRevaluation reservesRetained earnings

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