Accounting Flashcards
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1
Q
Differences between Financial and Management Accounting
A
- Level of reporting detail
- Regulatory Framework
- Time Horizon
- Degree of Standardisation
- Range and quality of info needed.
2
Q
Flow of Accounting Info
A
- Record Accounting Data
- Classify data
- Summarise data
- Communicate info
3
Q
What is Accounting?
A
- Accounting is the system of recording all the transactions of a firm
- They are recorded on a daily at the end of a particular time frame, a report is produced.
4
Q
Why does a Business Organisation have an accounting system?
A
In order to let internal and external parties of the firm:
- if they are making a profit or loss
- what the business worth
- how much is owed.
5
Q
What are the key Elements in an Accounting info flow?
A
- Record accounting data:
collect and record all accounting data - Classify data
classify data to ensure its to the owner. - Summarise Data
provide the managers of the business with info in a concise form - Communicate Information
the final year in presenting the businesses financial statements
6
Q
Users of Info include:
A
- Owners; whether firm is profiting
- Competitors; perhaps to identify weaknesses
- Govt; for taxation regulation
- suppliers; whether or not to do trade
e. g. if the firm in question is unable to make prompt payments, making a loss.
7
Q
gross prof formula
A
sales - cost of sales = gross profit
8
Q
gross prof formula
A
gross - expenses = operating prof
9
Q
net prof/loss formula
A
operating prof + other incomes
- interest paid
- tax
= prof/loss
10
Q
the accounting equation
A
assets - liabilities = owners equity
assets = liabilities + owners equity
11
Q
objectives of accounting?
A
- lets orgs know if they are making prof or loss
- what their business is worth
- how much cash they have
- how much is owed to them
- help them keep a financial check on the things they do
12
Q
accounting map
A
- assets
- liabilities
- equity
- revenues
- expenses
13
Q
what is management accounting
A
- intended to meet the needs of managers within an organisation
- produces detailed reports to support decision making
- reports aren’t subjected to (external) accounting standards or the law, and can be customised to specific managers needs.
14
Q
what is financial accounting
A
- concerned with prep of financial statements for owners and other users mainly outside the firm.
- reports the performance and financial status of the business for the past period
- standardised reports subject to legal requirements, accounting, regulation and standards.
15
Q
Margin Of safety
A
MOS= total sales-breakeven point in sales
