Chap 1, 2, 10: Accounting basics Flashcards
what’s accounting?
= a process of identifying, measuring, recording n communicating eco info
identify
observe n determine eco events relevant to a biz
eco event = transactions
transaction
qualification in money terms
record
provides a history of the eco activities of a particular entity
communicate
preparing n distributing eco report
Mg Acc vs Fin Acc?
- Users of report
MA: for internal users - managers - CEO - General m.g.r - account m.g.r - sales m.g.r FA: for external users - shareholders - lenders - potential investors - creditors - customers - governments - interested group
MA vs FA?
Type of report
MA: special purposes, NOT have to comply w acc standard
FA: general purposes: BL sheet, IC statement, statement of CF, HAVE TO comply w acc standard
MA vs FA?
Frequency of reports?
MA: on demand, as requested by m.g.r: monthly, weekly, daily
FA: regularly
MA vs FA?
Content?
MA: relate to a particular segment, based on the guidelines of m.g.r
FA: standardise, historical n verificable data, reflect the entity’s results. double-entry system
Assets?
- Def: controlled by acc entities, have future eco benefits, related to past trans (already happend)
- Ex: cash, CurAss, equipment
- Classify:
- current vs non-curr ass
- tangible vs intangible - part of fin state: BL sheet
current asset?
liquidate ass, can be converted into cash
Liabilities?
- Def: present obligation of comp, related to past trans, future eco outflow
- Ex: loan, tax
- Classified: current vs non-current liab
- in BL sheet
Non-current liab
based on the debt due date, due date > 1 yr
equity?
- what’s owner put in
- Ex: capital, dividend, retained earnings
- No classification
- in BL sheet
income?
- sth company earned
- Ex: sale revenue
- direct vs indirect income
- Income statement = Profit n Loss statement
