Accounting Flashcards
What is an ECONOMIC ENTITY?
Unit that exists independently.
- e.g. Hospital Ángeles or McDonald’s
What information does accounting COLLECTS?
Economic events (💵 in and out)
How does the accounting information TRANSLATES?
Into accounting transactions.
How does the accounting information PROCESSES?
In a computer system.
How does the accounting information COMMUNICATES?
To decision makers
The accounting information system goes THRU FINANCIAL INFORMATION…
About the entity (what happen with the 💵)
What ACCOUNTANTS do?
Needs for financial information, whether the decision makers are:
- INSIDE or OUTSIDE a business or other economic entity.
Types of DECISION MAKERS
- MANAGEMENT: operational interest.
- DIRECT FINANCIAL INTEREST (outsider)
- INDIRECT FINANCIAL INTEREST (outsiders)
What does MANAGEMENT do?
A company meets its goals of profitability (earning more 💵 than what was spent) and liquidity (to be able to pay).
What does users with DIRECT FINANCIAL INTEREST do?
- Publish monthly financial statements to REPORT their success 🔝 in meeting goals of profitability and liquidity.
- Shows what happened in the PAST.
- Investors and creditors
What are CREDITORS?
Lend money or deliver goods and services before being paid.
- e.g. Coca Cola delivering products
What are INVESTORS?
Judge the prospects for a profitable investment.
- e.g. Buying stoks in a company
What does users with INDIRECT FINANCIAL INTEREST do?
- Tax authorities
- Regulatory agencies
MEXICAN regulatory agency
Comisión Nacional Bancaria y de Valores (CNBV)
Does all decision makers get the same type of financial information?
Depends on the decision needs.
Types of accounting systems
Characteristics about BUSINESS ECONOMIC EVENTS
- Result of a business activity
- Recorded in accounting through transactions (BOOKKEEPING)
- Measured through MONETARY units
- Affect the financial position
Types of BUSINESS ACTIVITY
- Commercial = exchange value 💵
- Operative = no exchange values 💵
What is BOOKKEEPING?
Process of recording financial transactions and keeping financial records
Why MONETARY units?
- Only common factor
- Capable to be compared
- Depends on the country in which the business resides
What is a SEPARATE ENTITY?
Consider only those events that affect that business
If transactions of a business are mixed up (owners and a business) the accounting information would…
Lose its usability
What is a TRANSACTION?
External event
2 or more companies mediating an economic benefit
What are SETTINGS?
Internal event
Decisions affecting the financial structure of the company
Forms of business ORGANIZATION
Accounting events
Main resources of an ECONOMIC resource
- Suppliers
- Owner´s money
What is an ACCOUNTS PAYABLE?
Amount due to vendors or suppliers for goods and services received that have not yet been paid for.
What are ASSETS?
Business economic resource
