Accounting Flashcards
Define accounting
Accounting is the process of classifying, recording, summarizing financial information in a useful way.
What is the purpose of accounting
To keep track of money in a business,to make good business decisions, and to find out any discrepancies in the business.
Who is an accountant?
A person who records the business transactions of an organization, reports a company’s performance to management and issues financial statements.
What are some duties of an accountant?
To maintain financial records of businesses, to report to management based on financial position of business, and to calculate tax owed to government
Who is a bookkeeper?
A person who records day to day transactions of a business
Duties of a bookkeeper?
They’re responsible for writing the day books which contains records of payments, sales receipts, and purchases & responsible to ensure all transactions whether cash or credit, are recorded in the correct day book.
There are two types of accounting information what are they?
external users
internal users
Examples of internal users of accounting information
owner, manager & employee
External users of accounting?
investors, bank, suppliers & government
What is another name for the accounting equation?
Balanced Sheet Equation
Define the accounting equation
the relationship between assets, liabilities & owner’s equity of a person or business.foundation for the double entry book keeping system.
What is the accounting equation?
A=L+E
What are asstes?
any item/property owned by a person/company regarded has having value
What are liabilities?
any debts your company has
Define equity
owner’s equity represents total asstes minus total liabilities that are available after all obligations havenbeen
