Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
In Information Technology, computer languages allow a programmer to communicate with machines in order to get the desired output or result
The basic purpose of accounting is to supply financial information to users of the information to help them informed judgement and better decision.
For example, a company is considering obtaining a loan from the bank. Accounting provides the following information, among others, relevant to this decision
or we called
ASSET
If management sees that the company has other resources (for example investments in government Treasury Bills), it may decide instead to sell the investments and use the resulting cash to finance business operations.
or we called
LIABILITY
Management also analyzes the obligations of the business to check if they could still handle additional obligations as a result of borrowing from the bank
Cash inflows and outflows are analyzed to see other possible sources of financing or to determine how the business would repay the bank loan, if it ever materializes
Bookkeeping is the recording of business data in the prescribed manner. Accounting is primarily concerned with the design of the system of records, the preparation of reports and the interpretation of reports.
Audits are performed to ascertain the validity and reliability of information; also to provide an assessment of a system's internal control.
Stakeholder Owner or investor Supplier and other trade creditors Lenders Employee Individual
The preparation and presentation of financial statements is govern by a set of principles known as generally accepting accounting principle or GAAP GAAP comprises the accounting principles and processes, standards, and underlying assumptions that are used in preparing financial statements.
Business entity principle This concept states that the business is considered distinct and separate from the owner(s) of the business. Personal transactions of the owner(s) is/are not included in the records of the business.
Assume that on a certain day, Joy received P25,000 cash P10,000 from the sale of her cellphone to Sheena, a personal friend; and P15,000 from customers of her laundry business.
Under the business transaction principle which is to be accounted in preparing financial statements of?
Dual-effect of business transactions When a business transaction takes place ( for example, the rendering of services, delivery of goods, purchase of equipment, payment of salaries to employees, etc.) accounting assumes that the value received is equal to value given up (for every value received, there is an equal value given up)
Transactions
a. Bought a typewriter for office use, paying cash therefore b. Received cash as payment of professional service rendered c. Payment of debt owing to a credit d. Payment of office rent f. Payment of cash for wages of employess g. Purchase of merchandise for cash h. Sale of merchandise for cash i. Sale of merchandise on credit
Value Received
Value Given Up
Transactions
a. Bought a typewriter for office use, paying cash therefore b. Received cash as payment of professional service rendered
Value Received
Typewriter
Value Given Up
Cash
Cash
Service
Cancellation of debt
Right to use property Merchandise Services rendered by the employees Cash Obligation or debt collectible
Cash
Cash Debt or obligation to pay the seller Cash Merchandise Merchandise
Matching principle Net income or net loss can only be measured if there is a proper matching of the income earned and the expenses incurred within one accounting period
When income from the sale of goods is reported in the financial statements for a particular period, the related sales commissions paid to sales persons, cost of goods sold and other expenses for the same accounting period are also reported in the financial statement
Accrual Basis
There are two common bases in accounting for business transaction. These are the cash and accrual basis. Under the cash, income is recognized when cash is received, and expenses are recognized when it is paid. Under the accrual basis income is recognized when it is earned and, regardless of when cash is received. Expenses are recognized when incurred, regardless of when cash is paid.
Balance Sheet Income Statement Statement of Changes in Equity Statement of Cash Flows Notes to Financial Statements
Increase
Amount of cash in the businesss bank account Amount owed to ABC for prior credit sales Amount of food and paper supplies on hand Cost of ovens, tables, etc. Total amount of the businesss resources
ABC CORPORATION Statement of Comprehensive Income For the month ended December 31, 2009
Increase
Expenses Salaries and wages expense 8,000 Rent expense 2,400 Utilities 600 Advertising expense 400 Insurance expense 300 Total expense 11,700 Net income P 3,300
Cost of renting store space in December Cost of water, power, etc. In December Cost of advertising done in December Cost of insurance coverage in December Sum all expenses
=15,000 11,700