Introduction to report Principles and Terminology
* Accounting is the process of identifying, measuring, recording, summarising, analysing and communicating quantitative discipline so the users of the teaching can defecate informed decisions about their allocation of scarce resources.
* Accounting information recorded in general journal and general ledger.
* Double-entry formation of book keeping: assumes that every transaction affects at to the lowest degree two accounts.
* Characteristics of financial invoice information:
* Relevance
* Reliable (free from fracture and bias)
* Materiality (significant enough to impact decision making)
* Presentation of information (comparability and understandability)
* Timeliness (provided on time to be useful)
* Cost vs. service (benefit should outweigh cost)
Accounting Principles
* Accounting entity concept: defines the entity (organisation) for which information is collected.
* Accounting point in time concept: the unit of time in which data is collected, usually one year.
* Historical cost concept: accounting data is based on transaction costs (ie. What you salaried when you first bought it).
* Matching principle: inputs are matched against outputs, revenue is matched against expenses.
* addition recognition principle: revenues and expenses should be recorded in the period they were incurred.
* Conservatism principle: anticipate all losses, but no profits.
* Going concern principle: assumes that business will melt for at least one more accounting period.
* beneficial disclosure principle: businesses should disclose all information substantial to stakeholders.
Understanding Accounts
Types of Accounts
* Assets: stinting resources that are expected to provide early economic benefit. All asset accounts are permanent. Can be current or non-current.
* Liabilities: current obligations for a future economic sacrifice. All liability accounts are permanent, and current or...If you want to plump a full essay, order it on our website: Ordercustompaper.com
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