Accounting Essay

800 Words4 Pages
Topic 1: Accounting Environment Definition of Accounting The process of designing and operating and information system for collecting, measuring and recording an enterprise’s transactions, and summarizing and communicating the results of these transactions to users to facilitate making financial/economic decisions Identify » Measure » Classify » Record } bookkeeping Analyze, interpret, summary, record } communicating Accounting As a Business Language ~ To buy or lease ~ To invest or not ~ Performance ? Profit / Loss? ~ Financing – Equity / Debt ? ~ Cash flow management The needs for timely and accurate information to make various decisions – Accounting as an information system. The better you understand the language, the better you can manage your finances Process and Flow of Accounting Information Users of Accounting Information * Investors/Shareholders * Employees * Lenders * Suppliers and creditors * Customers * Government and their agencies * Other users (analyst-adviser group, competitors and takeover bidders, management) Financial Statements and Relationships Between Financial Accounting vs Management Accounting Topic 2: Accounting And Business Nature of Business Activities Services: * Professional – accounting, architecture, audit, taxation, lawyer * Others – barbers, hospitality, restaurant and catering, wedding planner Trading: * manufacturing * plantation * retailers * wholesalers Characteristics of Business Some of the business characteristics: * Size -Turnover -Number of employees * Type of ownership -Sole proprietorship -Partnership -Company * Nature * Life of the business Classification of Items in Statement of Financial Position Classification of Items in Statement of Comprehensive Income REVENUE * Revenue

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