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    Branches of Accounting

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    Mystiquemashal
    There are three main branches of accounting: financial accounting, cost accounting, and managerial accounting. Financial accounting provides financial information to external parties, cost accounting is used to determine the cost of products and services, and managerial accounting provides information to managers to help them make decisions. The accounting equation expresses the relationship between assets, liabilities, and owner's equity. Assets are economic resources owned or controlled by a company that provide future benefits, while liabilities are obligations to transfer assets or provide services in the future. Standards and principles like the entity concept, cost principle, and matching principle provide the basis for preparing financial statements.

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    Branches of Accounting

    Uploaded by

    Mystiquemashal
    48 views12 pages
    There are three main branches of accounting: financial accounting, cost accounting, and managerial accounting. Financial accounting provides financial information to external parties, cost accounting is used to determine the cost of products and services, and managerial accounting provides information to managers to help them make decisions. The accounting equation expresses the relationship between assets, liabilities, and owner's equity. Assets are economic resources owned or controlled by a company that provide future benefits, while liabilities are obligations to transfer assets or provide services in the future. Standards and principles like the entity concept, cost principle, and matching principle provide the basis for preparing financial statements.

    Original Description:

    Managerial Accounting

    Original Title

    LECTURE-2

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    There are three main branches of accounting: financial accounting, cost accounting, and managerial accounting. Financial accounting provides financial information to external parties, cost accounting is used to determine the cost of products and services, and managerial accounting provides information to managers to help them make decisions. The accounting equation expresses the relationship between assets, liabilities, and owner's equity. Assets are economic resources owned or controlled by a company that provide future benefits, while liabilities are obligations to transfer assets or provide services in the future. Standards and principles like the entity concept, cost principle, and matching principle provide the basis for preparing financial statements.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    48 views12 pages

    Branches of Accounting

    Uploaded by

    Mystiquemashal
    There are three main branches of accounting: financial accounting, cost accounting, and managerial accounting. Financial accounting provides financial information to external parties, cost accounting is used to determine the cost of products and services, and managerial accounting provides information to managers to help them make decisions. The accounting equation expresses the relationship between assets, liabilities, and owner's equity. Assets are economic resources owned or controlled by a company that provide future benefits, while liabilities are obligations to transfer assets or provide services in the future. Standards and principles like the entity concept, cost principle, and matching principle provide the basis for preparing financial statements.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    BRANCHES OF ACCOUNTING

    FINANCIAL
    ACCOUNTING
    COST
    ACCOUNTING
    MANAGERIAL
    ACCOUNITNG
    PROVIDES FINANCIAL INFORMATION TO
    EXTERNAL PARTIES
    DETERMINE COST OF PRODUCT AND SERVICES
    PROVIDES INFORMATION TO MANAGRES SO
    THAT THEY WILL BE ABLE TO MAKE DECISIONS
    ACCOUNTING PROVIDES QUANTITATIVE INFORMATION ABOUT
    ECONOMIC ENTITIES THAT IS INTENDED TO BE USEFUL IN MAKING
    DECISIONS
    ACCOUNTING EQUATION
    AN ALGEBRAIC EQUATION THAT EXPRESSES THE RELATIONSHIP
    BETWEEN ASSETS (RESOURCES) ,LIABILITIES (OBLIGATIONS ) AND
    OWNERS EQUITY (NET ASSETS OR RESIDUAL INTEREST IN THE
    BUSINESS AFTER ALL LIABILITIES HAVE BEEN MET)
    ASSETS = LIABILITIES + OWNERS EQUITY
    ASSETS
    ECONOMIC RESOURCES THAT ARE OWNED OR CONTROLLED BY A
    COMPANY AND RESPONSIBLE FOR FUTURE BENEFITS.
    OWNED OR
    CONTROLLED
    RESPONSIBLE FOR
    FUTURE BENEFITS
    TYPES
    CURRENT
    NON CURRENT
    TANGIBLE INTANGIBLE
    ASSETS
    CURRENT
    ASSETS
    LIKELY TO CONVERT INTO CASH WITHIN ONE YEAR
    OR OPERATING CYCLE WHICHEVER IS HIGHER
    EXAMPLES
    CASH/MARKETABLE
    SECURITIES

    ACCOUNT RECEIVABLE
    /NOTES RECEIVABLE
    /ADVANCES

    INVENTORY
    PREPAIDS/SUPPLIES

    Most liquid asset. Standard medium of
    exchange Short-term, highly liquid
    investments Treasury bills,
    commercial Paper paper, market
    funds.
    Claims held against customers and
    others for money, goods, or
    services.
    items held for sale, or
    goods to be used in the production of
    goods to be sold.
    COST EXPIRE WITH THE PASSAGE OF
    TIME OR THROUGH USAGE
    ASSETS
    NON CURRENT ASSETS
    ASSETS ARE NOT EXPECTED TO BE CONVERTED
    TO CASH OR CONSUMED WITHIN ONE YEAR OR
    THE OPERATING CYCLE, WHICHEVER IS LONGER.

    TANGIBLE
    INTANGIBLE
    ARE THOSE ASSETS ASSETS WHICH HAVE
    PHYSICAL EXISTENCE
    NOT PURCHASED WITH AN INTENTION FOR
    RESALE
    SUBJECT TO DEPRECIATION
    EXAMPLES : LAND, BUILDING,
    FURNITURE & FIXTURES, PLANT,
    MACHINERY, MOTOR VEHICLE
    ASSETS WHICH DO NOT HAVE
    PHYSICAL EXISTENCE
    NOT PURCHASED WITH AN
    INTENTION FOR RESALE
    SUBJECT TO AMORTIZATION
    EXAMPLES:PATENTS , COPY RIGHTS ,
    ROYALITY, SOFTWARES,GOOD WILL,
    FRANCHISES
    LIABILITIES
    PROBABLE FUTURE SACRIFICES OF ECONOMIC BENEFITS ARISING FROM
    PRESENT OBLIGATIONS OF A PARTICULAR ENTITY TO TRANSFER ASSETS
    OR PROVIDE SERVICES TO OTHER ENTITIES IN THE FUTURE AS A RESULT OF
    PAST TRANSACTIONS OR EVENTS.

    PAST EVENT
    PRESENT OBLIGATION
    TYPES
    CURRENT
    FUTURE SACRIFICE
    LONG TERM
    LIABILITIES
    CURRENT
    LIABILITIES
    ARE THOSE OBLIGATIONS WHICH NORMALLY
    MATURE/DUE/ PAID WITH IN ONE YEAR FROM
    EXISTING CURRENT ASSETS OR CREATION OF
    OTHER CURRENT LIABILITIES

    EXAMPLES
    ACCOUNT PAYABLE
    /NOTES PAYABLE
    /LOANS
    UNEARNED REVENUE
    Current Maturities of
    Long-Term Debt

    DIVIDEND
    /INTEREST/TAXES
    /PAYROLL


    Balances owed to others for goods,
    supplies, or services purchased on open
    account. Written promises to pay a
    certain sum of money on a specified
    future date.


    Payment received before delivering
    goods or rendering services
    Portion of long-term debt that comes
    due in the current year.
    BUSINESSEXPENES AND OTHER PAYABLES
    LIABILITIES
    LONG TERM
    LIABILITIES
    ARE THOSE OBLIGATIONS WHICH NORMALLY
    MATURE/DUE/ PAID AFTER ONE YEAR
    EXAMPLES
    BONDS PAYABLE
    /NOTES PAYABLE
    /LOANS
    LEASE LIABILITIES
    MORTGAGES
    CONTIGENT
    LIABILITIES/WARRANTY/
    GUARANTEE

    CONTRACTUAL AGREEMENT
    Purpose is to borrow when the amount of capital
    needed is too large for one lender to supply.

    A lease is an agreement in which the lessor
    conveys the right to use property, plant, or
    equipment, for a stated period of time, to the
    lessee
    secured bonds, secured against specific asset
    Promise made by a seller to a buyer to make
    good on a deficiency of quantity, quality, or
    performance in a product
    EQUITY
    OWNERS CLAIM TO ASSET OF BUSINESS
    OWNERS
    EQUITY
    ASSETS LIABILITIES
    MINUS
    =
    OWNERS EQUITY
    SOURCES
    RETAINED EARNING
    (REVENUE MINUS EXPENSES)
    CAPITAL CONTRIBUTED
    ACCOUNTING EQUATION
    REVENUE AND EXPENSES
    REVENUE
    ECONOMIC RESOURCES GENERATED BY A
    BUSINESS IN THE NORMAL COURSE OF BUSINESS
    FOR A PARTICULAR PERIOD OF TIME
    EXPENSES
    COST RESPONSIBLE FOR GENERATING REVENUE
    IN THE NORMAL COURSE OF BUSINESS FOR A
    PARTICULAR PERIOD OF TIME
    BASIS ON WHICH FINANCIAL STATEMENTS ARE PREPARED
    WHAT HAPPENED WHEN NO
    STANDARDS ARE FOLLOWED
    COMPARISIONS
    MISLEADING RESULTS
    STANDARDS
    SETTING
    BODIES
    FASB
    IASB
    GAAP
    IFRS
    STANDARD
    STANDARD
    PRINCIPLE OF ENTITY
    PRINCIPLE OF COST
    MONETORY ASSUMPTION
    UNIT
    PRINCIPLES AND ASSUMPTIONS
    PRINCIPLE OF GOING
    CONCERN
    PRINCIPLE OF BJECTIVITY
    MATCHING PRINCIPLE
    PRINCIPLE OF
    CONSISTENCY
    BUSINESS SHOULD BE TREATED AS SEPARATE
    ECONOMIC ENTITY (TRANSACTIONS SHOULD
    BE SEPARATED FROM MANAGERS AND OTHER
    COMPANIES
    ASSET SHOULD BE RECORDED AT PRICE THEY
    ARE PURCHASED FOR
    EVENTS THAT CAN BE EXPRESSED IN MONEY
    ARE INCLUDE IN ACCOUNTING RECORDS
    BUSINESS WILL REMAIN IN OPERTAION FOR THE
    FORSEEABLE FUTURE
    THERE SHOULD BE DOCUMENTORY PROOF
    BEHIND EVERY BUSINESS TRANSACTION
    REVENUE OF A PERIOD SHOULD BE MATCHED
    WITH THE EXPENSES OF THE SAME PERIOD
    (ACCRUAL BASIS OF ACCOUNTING)
    SAME ACCOUNITNG PRINCIPLES SHOULD BE
    USED BY COMPANY FROM YEAR TO YEAR

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