Accounting

Accounting

Bookkeeping
1. Involves recording of business transactions
Accounting
1. Process of recording,summarizing,analysing,interpreting and communicating the financial information of an organisation
Stakeholders
1. Bank
  1. Interested in firm's profit
    1. Decide of they should grant loan to firm
2. Customers
  1. Interested in firm's profit
    1. To know if there is after-sale support
3. Employees
  1. Interested in firm's profit & cash flow
    1. To know if the firm is able to pay their salaries promptly, the amount of bonus, career prospects
Majar roles in business
1. Stewardship
2. Decision-making
Professional ethics
1. Objectivity
  1. Be unbiased
  2. Not influenced by personal feelings, gains
2. Integrity
  1. Straightforward & honest
Sole proprietorship
1. manage business by himself, may hire pro to help
  1. Advantages
    1. Owner has full control
    2. Owner enjoys all profits
  2. Disadvantages
    1. Owner loses all
    2. If buss fails, he has to pay all the debts
  3. Example : Hawker
Company
1. Min 1 owner
2. Public company/ Private company
3. Disadvantage
  1. Control is diluted
  2. Profits are shared among shareholders
Elements of accounting
1. Assets
  1. Resources OWNED by business to carry out its activities
  2. Non-current asset
    1. Intention to be used in business to generate income
  3. Inventory
    1. Intention of resale
2. Liability
  1. Amount OWED by business to other business or individuals (debt)
3. Equity
  1. Amount CONTRIBUTED by the owner and PROFIT made by the business
4. Income
  1. Amount EARNED from selling goods or providing services
5. Expense
  1. INCURRED by business to earn income
  2. Benefits last shorter than assets
Equation
1. A = L + E
  1. Asset = Liability + Equity

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	Created by Eugina Lee over 7 years ago