Scribd Logo
Upload

Welcome to Scribd!

  • 33 views

    The Nature of Accounting: Things A Company

    Uploaded by

    Keempee Ian Gaviran
    The document discusses key accounting concepts including assets, liabilities, owner's equity, the accounting equation, double-entry bookkeeping, balance sheets, income statements, cash flow statements, and auditing. It also mentions the Big 4 accounting firms.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd

    The Nature of Accounting: Things A Company

    Uploaded by

    Keempee Ian Gaviran
    33 views10 pages
    The document discusses key accounting concepts including assets, liabilities, owner's equity, the accounting equation, double-entry bookkeeping, balance sheets, income statements, cash flow statements, and auditing. It also mentions the Big 4 accounting firms.

    Original Description:

    Nature of accounting Ctto

    Original Title

    The Nature of Accounting

    Copyright

    © © All Rights Reserved

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses key accounting concepts including assets, liabilities, owner's equity, the accounting equation, double-entry bookkeeping, balance sheets, income statements, cash flow statements, and auditing. It also mentions the Big 4 accounting firms.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    33 views10 pages

    The Nature of Accounting: Things A Company

    Uploaded by

    Keempee Ian Gaviran
    The document discusses key accounting concepts including assets, liabilities, owner's equity, the accounting equation, double-entry bookkeeping, balance sheets, income statements, cash flow statements, and auditing. It also mentions the Big 4 accounting firms.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 10

    The nature of accounting

    • ASSETS = things a company owns

    • LIABILITIES = what the company owes to


    others

    • OWNER’S EQUITY = what remains after


    liabilities are deducted from assets
    Two main accounting concepts
    1. accounting equation

    2. double-entry bookkeeping

    Both were developed centuries ago


    but remain central to the accounting
    process.
    accounting equation

    Assets – Liabilities = Owner’s Equity

    Assets = Liabilities + Owner’s Equity


    two main financial statements
    1. balance sheet – shows the current
    financial position of a company

    2. profit and loss account (income


    statement AmE) – shows the results of
    operations (performance) over a period
    of time
    Two other financial statements
    3. Cash flow statement
    - describes how much cash was used in corporate
    operating, investment, and financing activities
    over a period of time.
    - The Cash Flow Statement shows how the
    company is paying for its operations and future
    growth, by detailing the "flow" of cash between
    the company and the outside world; positive
    numbers represent cash flowing in, negative
    numbers represent cash flowing out.
    4. Statement of changes in shareholder equity
    - reconciles the difference between the equity at
    the two different points in time
    balance sheet
    • Assets are divided into:
    – fixed (not expected to be converted into cash
    and comprise property, land and equipment)
    – current (include cash and other items -
    stocks, bonds, amounts due from customers,
    services paid for but not yet used - that will or
    can become cash within the following year
    – intangible (include the costs of organizing the
    business, patents on a process or invention,
    copyrights on written material, trademarks,
    goodwill)
    balance sheet
    • Liabilities are divided into:

    – current (obligations that will have to be


    met within a year of the date of the
    balance sheet)

    – long-term (obligations that fall due a


    year or more after the date of the
    balance sheet)
    profit and loss account
    • it summarizes:
    – all revenues (or sales), the amounts that
    have been or are to be received from
    customers for goods and services delivered to
    them,
    – and all expenses, the costs that have arisen
    in generating revenues.
    – when expenses are subtracted from
    revenues, we obtain the actual profit or loss of
    a company – the BOTTOM LINE
    Auditing
    • Auditing, a related but separate discipline, has
    two sub-disciplines:
    – External auditing - the process whereby an
    independent auditor examines an organization's
    financial statements and accounting records in
    order to express an opinion as to the truth and
    fairness of the statements and the accountant's
    adherence to Generally Accepted Accounting
    Principles (GAAP).
    – Internal auditing - an examination in which
    management, and not the external public, is the
    main beneficiary. It is carried out usually by
    auditors employed by the company.
    The Big 4 (sometimes written as
    the Big Four)
    • a group of international accountancy and
    professional services firms that handles
    the vast majority of audits for publicly
    traded companies as well as many private
    companies.
    • The members of the Big 4 are:
    • PricewaterhouseCoopers
    • Deloitte Touche Tohmatsu
    • Ernst & Young
    • KPMG.

    You might also like