Lesson 2: Income and Balance Sheet Flashcards
A system that identifies, records, and communicates relevant economic events to interested users.
Accounting
Is the process of recording, classifying, and summarizing, in a significant manner and in terms of money, transactions, and events, which are part, at least of a financial in character and interpreting the results thereof.
Accounting
Is a service activity.
●It functions to provide quantitative information, primarily financial in nature about economic entities that are intended to be useful in making economic decisions with reasoned choices among alternative courses of action.
Accounting
This is technically called bookkeeping.
Recording
A systematic and chronological recording of business transactions, observing therein the fundamental principles of accounting.
Recording
transactions should be recorded in accordance with the date of the business transactions, from the first day of the month to the last day of the month.
Chronological
Means the sorting of business transactions to their specific accounts.
Classifying
This is the phase where items are sorted and grouped.
Classifying
Similar items are being classified under the same name.
Classifying
Why is it important to classify accounts?
For easy summarizing.
After each accounting period, data recorded are summarized through financial statements.
Summarizing
Financial Statements are:
Income Statement
Balance Sheet
Statement of Cash flows
Why is it important to interpret?
So they can be used appropriately in decision-making process.
These are the accountant’s interpretation on the Financial statement.
Interpreting
This is called Analysis Report that must be submitted together with the Financial reports.
Interpreting
