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Accounts
| Question | Answer |
|---|---|
| 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 |
Created by:
narrthine
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