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    Accounting Chap 2 3

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    Fritzl Literal
    Accounting involves the interpretation of financial information while bookkeeping only involves recording transactions. Accounting is the language of business. The financial information will normally depend on the kinds of users. Accounting has concepts and conventions that will be used in recording financial transactions.

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    Accounting Chap 2 3

    Uploaded by

    Fritzl Literal
    9 views2 pages
    Accounting involves the interpretation of financial information while bookkeeping only involves recording transactions. Accounting is the language of business. The financial information will normally depend on the kinds of users. Accounting has concepts and conventions that will be used in recording financial transactions.

    Original Description:

    Fundamental of Accounting

    Original Title

    Accounting-Chap-2-3

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    Accounting involves the interpretation of financial information while bookkeeping only involves recording transactions. Accounting is the language of business. The financial information will normally depend on the kinds of users. Accounting has concepts and conventions that will be used in recording financial transactions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    9 views2 pages

    Accounting Chap 2 3

    Uploaded by

    Fritzl Literal
    Accounting involves the interpretation of financial information while bookkeeping only involves recording transactions. Accounting is the language of business. The financial information will normally depend on the kinds of users. Accounting has concepts and conventions that will be used in recording financial transactions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    What is Accounting?

    “Accounting is a service activity. Its


    Types of Business
    function is to provide quantitative
    information, primarily financial in Manufacturing Business
    nature, about economic entities that is Merchandising Business
    useful in making decisions, and in Service Business
    making reasoned choices among
    alternative courses of action.”
    Forms of Business Organization
    Proprietorship- A proprietorship is
    ACCOUNTING
    the process of owned by one individual.
    recording, analyzing, Advantages
    and interpreting the • Ease in organizing
    economic activities of • Low cost of organizing
    a business. Disadvantage
    • Limited source of financial resources
    BOOKKEEPING
    • Unlimited liability
    a method of recording
    all transactions for a Partnership- A partnership is owned
    business in a specific by two or more individuals.
    format. Advantages
    • More financial resources than a
    proprietorship.
    Purpose of Accounting
    • Additional management skills.
    ·Communicate Financial Status Disadvantage
    ·Assist Decision Making • Unlimited liability.
    ·Comply with Law
    ·Plan Future Activities
    ·Ensure Control of Assets Corporation- A corporation is
    organized under state or federal
    Users of Accounting
    statutes as a
    Primary Users:
    separate legal entity.
    Investors- buy, hold, sell their shares Advantage
    Lender- Amount Owed + Interest • The ability to obtain
    Other Users: large amounts of
    resources by issuing
    Government- Taxation & Allocation of
    stocks.
    Resource
    Disadvantage
    Customers- Continuance of the • Double taxation.
    Business
    Employee- Remuneration, stability and
    profitability
    Public- Trend and Development
    Suppliers- Amount Owed
    Accounting Concepts and Summary
    Conventions • Accounting involves the interpretation
    of financial information while
    Matching Principle
    bookkeeping only involves recording
    • Resources generated compared with
    transactions.
    those used up the process.
    • Accounting is the language of
    • Revenues matched with expense
    business.
    Monetary Unit • The financial information will normally
    • Transactions can be converted into a depend on the kinds of users.
    unit of measure based on the operating • Accounting has concepts and
    currency conventions that will be used in
    •It helps determined the value of an recording financial transactions.
    entity
    Going Concern
    • A reporting entity to continue
    operating into the future.
    • No winding up of activities is
    foreseen.
    Time Period
    • The continuous lifetime of an entity
    can be separated into distinct reporting
    periods
    • Useful in assessing the performance
    an organization of time.
    Separate Entity
    • The business is distinct from its
    owners.
    • Helps to assess value of an
    organization independent of owners.

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