CHAPTER 1 Flashcards
it is a process of identifying, recording and communicating economic information that is useful in making economic decisions
accounting
accountant analyzes each business transaction and identifies the transactions
identifying
it is recorded in the book of accounts
“accountable event”
not recorded in the book of accounts
” non accountable events”
outside the scope of accounting
Sociological and psychological matters
it affects the assets, liabilities, equity, income or expense of a business
Accountable events
accountant recognizes the identified “accountable events”
Recording (journalizing)
after journalizing accountant classified the effects of the event on the “ accounts”
posting
basic storage of information in accounting (cash, land, sales)
account
a process with the basic purpose of providing information about economic activities intended in making economic decisions
accounting
information expressed in numbers, quantities or units
Quantitative Information
information expressed in words or descriptive form. It is found in the notes to financial statements as well as on the face of the other component of financial statement
Qualitative information
information expressed in money. It is also quantitative information because monetary amounts are normally expressed in numbers
financial information
accounting is a body of knowledge which has been systematically gathered, classified and organized
social science
accounting requires the use of creative skills and judgement
practical art
input:
processes:
output:
input: identified accountable events
processes: recording, classifying and summarizing
output: accounting report that is communicated to the users
refers to the process of recording the accounts or transactions of an entity
bookkeeping
normally ends with the preparation of trial balance and does not require the interpretation pf the significance of the information processed
bookkeeping
covers the whole process of identifying, recording and communicating information to interested users
Acccounting
Accounting is often referred to as the “ “ because it is fundamental to the communication of financial information
language of business
- to provide non - owners of a business (external users) with information that is useful in making, among others, investment and credit decisions
2.to provide business owners (internal users) with the information that is useful in managing the business
accounting two broad functions in a business
key to a business success
good management
one important management tool
accounting
a process of establishing common objectives, coordinating efforts towards those objectives and efficiently and effectively utilizing available resources so as to achieve certain goals
Management