what is accounting.ppt

7/24/2019 What is Accounting.ppt

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Recording;

classifying,

summarizing and

interpreting of nancial events andtransactions

To provide management and otherinterested parties with the information theyneed to make good decisions.


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Executive Management- Financial statements, budgets, and

performance reports Finance - Cash ow information Human Resources - a!roll information Research " #evelopment $ cost reports roduction $ production reports, internal

controls Mar%eting $ sales reports, cost reports


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&ccounting '''Financial statements ''

Executive Management'

Financial reports ' External decision ma%ers


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(hat organi)ations does the organi)ation

own* (hat debts does it owe*

How much income is it earning* &re the expenses appropriate for the

amount of sales* &re customers accounts being collected

properl!*


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+ther decision ma%ers include people who loanmone! to the organi)ation hese lenders,called creditors need information to decidewhether the compan! has enough .nancial

strength and pro.ts to pa! it/s debts Has the organi)ation promptl! paid it/s debts in

the past*

#ies it have the abilit! to pa! it/s current debts*

#oes it have good prospects for futureearnings*


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0 %e! areas of accounting1 Managerial accounting Financial accounting

Compliance 2&uditing3ax accounting 4overnmental and not-for pro.t accounting


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he role of a managerial accountant is toprovide information to managers in anorgani)ation to aid them in ma%ingdecisions5

art of their role involves measuring andrepairing costs of production, mar%eting,and other functions5

repare budgets, design cost-e6ectivestrategies for the business


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&ll of the information and anal!ses preparedare for people +789#E the organi)ation5

his includes creditor and lenders, emplo!eeunions, customers, suppliers, government

agencies and the general public Much of this information is included in the

compan!/s annual report $ a !earl! report onthe .nancial :health; of the business, and also

the activities and pro


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Reviewing and evaluating the records used toprepare the compan!/s .nancial statements

here are both R9=&E accountants in theorgani)ation that conduct internal audits to

ensure that the business is following properaccounting procedures and .nancial reporting5 7>?9C accountants will conduct an

9@#EE@#E@ &7#98 of the records andstatements of a business5 this is reAuired b! law

for all public corporations in Canada


10/23

art of the role of an accountant is toensure that the information prepared isaccurate

&ccountants following the 4&& principles 4enerall! &ccepted &ccounting rinciples

24&&3 were developed to ensureconsistenc! and compliance across all

accounting designations, such as the C&, C4&, and CM&


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#ue to the man! accounting scandals in recenthistor!, all accounting designations havedeveloped their own Code of Ethics

he 4&& are guidelines that help accountants

ma%e ethical and consistent decisions in thepreparation of accounting statements he 8arbanes-+xle! &ct 2783 $ man!

provisions, including new government reportingstandards for publicl!-traded companies


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B >usiness Entit! Concept $ Ever! business is treated as a separate entit!,

separate and distinct from it/s owner or ownersand from ever! other business

his will avoid over the .nancial position andpro.tabilit! of the business

Example1 the personall! owned car of a businessowner


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Cost rinciple $ &ll goods and servicespurchased are recorded at cost and appearon the statements at cost

Example $ if a business owner purchasesland at D0, for his business, thepurchase should be recorded at D0,regardless of the appraised value or if landprices increase or decrease over time


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+b


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& six-step process that results in thepreparation and anal!sis of the maan% statements, etc


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#etermine !our &ssets, ?iabilities " +wner/s EAuit! &ssets $ cash, eAuipment, land, oGce supplies,

merchandise, and amount owed to the business b!it/s customers 2accounts receivable35 Current &ssets1 can easil! be converted to cash, ie cash,

accounts receivables, inventor!5

Fixed 2Capital3 &ssets1 not easil! converted to cash, iepropert!, plan and eAuipment

9ntangible &ssets1 long-term assets which no real ph!sicalvalue, ie goodwill, etc

?iabilities $ are the compan! debts 2accounts pa!able3salaries " wages, taxes pa!able, interest pa!able, etc

+wner/s eAuit! or 8hareholder/s EAuit!


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?iabilities $ are the compan! debts2accounts pa!able3 salaries " wages,taxes pa!able, interest pa!able, etc

8hareholders eAuit! $ if a business isorgani)ed li%e a corporation, the owners ofthe business are called shareholders orstoc%holders

+wners eAuit! $ if the business is owned b!one person, and not a corporation is called+wners EAuit!


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&ssets ?iabilities I +wner/sEAuit!

(hen !ou are anal!)ing the documents 2the

transactions3 !ou record these into a?E-E@RJ boo%%eeping is

applied his refers to writing ever! transaction in

two places, referred to a debit and a credit


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9t is easier to develop t-accounts to recordthese transactions

Each transaction must have two entries or adebit $ which means to enter an amount onthe left side of an account5

Credit $ which means to enter an amount onthe right side of an account5


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&ssets ?iab/s I +wner/sEAuit!

#rincreases #r for decreases Crdecreases Cr for increases


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B +n &pril B, K ?arr! +wen decides toinvest D0, in a new law practice1

Cash ?arr! +wen, Capital #r D0, Cr D0,


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+n &pril , ?arr! +wen purchases oGceeAuipment for cash, D,L

Cash +Gce EAuipment #R D0, CR D,L #R D,L

after all transactions have been entered,then the account balance


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+n &pril rd, paid the oGce rent for three

months in advance, DK

Cash repaid Rent #r D0, #r DK Cr D,L Cr D K

what is accounting.ppt

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