Accounts
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| Business Transaction | A business activity that result in an economic exchange between a business entity and another entity | ||||
| Accounting | The process of identifying, recording and communicating economic and financial information | ||||
| Bookkeeping | recording of transactions and events either manually or electronically | ||||
| Branches of Accounting | Financial, Management, Auditing, Taxation, Financial Management | ||||
| Financial Accounting | Accounting process that ends with the preparation of final accounts and is to be given to users (external use) | ||||
| Management Accounting | to provide managers more information for stock valuation and to determine cost of products (internal use) | ||||
| Auditing | examination of accounts to determine whether the accounts is credible | ||||
| Taxation | computing the amount of tax payable by business entities and individuals | ||||
| Financial Management | setting financial objectives, making plans to obtain the finance needed and safeguarding all the financial resources | ||||
| External Users | Banks/Lenders, Shareholders/Investors, Government/Inland Revenue Board, Suppliers, Customers | ||||
| Internal Users | Manages, Employees/Labour Unions | ||||
| Characteristics of Accounting | Relevance, Reliability, Comparability, Consistency, Understandability | ||||
| Predictive Value | helps users forecast future events | ||||
| Feedback Value | confirms or corrects prior expectations | ||||
| Timeliness | information must be available to decision males before it loses its capacity to influences their decisions | ||||
| Verifiable | the information should be free of error and bias | ||||
| Faithful Representation | information dependable in representing the events that it purports to represent | ||||
| Neutrality | the information should be accurate | ||||
| Accounting Concepts | Separate Economic Entity/Dual Aspect, Monetary Unit, Going Concern, Time Period | ||||
| Separate Economic Entity / Dual Aspect | transaction for business us separately recorded from transaction for personal use | ||||
| Monetary Unit | only record transactions that are given in money | ||||
| Going Concern | the business is assumed to continue in the future | ||||
| Time Period | accounts has to be recorded at regular and consistent intervals | ||||
| Accounting Principles | Historical Cost, Revenue Recognition/Prudence, Full Disclosure | ||||
| Historical Cost | long-term assets are recorded at buying price | ||||
| Revenue Recognition / Prudence | revenue is recognised when money is earned and not when money is received | ||||
| Full Disclosure Principle | have to disclose all info in your accounts | ||||
| Accounting Constraints | Materiality Concept | ||||
| Materiality Concept | gives room for error and differs from company to company |
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Created by:
narrthine
on 2011-06-12