Chapter 1

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Akli

Cards (20)

Accounting - is defined as an information system that measures, processes, and communicates information which are primarily financial in nature, about an identifiable entity for the purpose of making economic decisions.
Accounting has been referred to as the "Language of business"
Financial Information to Financial Statements
Documented Business Activity to Supporting Accounting Document to Accounting Journals\
Analyzing - look for transactions entered into, economic events that have taken place, and determine their effects on the business
Recording - writing the effects of transaction and events of the transactions and events that have been analyzed
Classifying - sorting or grouping of similar transactions and events into specific account titles
Summarizing - Involves grouping the various accounts referred to in the classifying process
Reporting - involves the preparation of financial summaries
Financial Statements - the financial summary
Interpreting - involves the computation of relationships of figures from the financial report and schedules. It is a combination of figures and narrations
Double Entry system - It means that for every transaction or economic event, there are at least two effects in the accounting equation
Investors - to determine whether to buy, hold or sell their investment in equity ownership or to assess the ability of the entity to pay dividends
Employees - to determine the stability of and probability of an entity
Lenders - to determine the ability of the borrowers to pay loans on time
Suppliers - to determine the ability of the customers to remain as a contributing buyer
Customers - to determine the ability of the enterprise to be a continuing source of supply
Government Agencies - to determine the capacity of the enterprise to pay taxes and its tax compliance
Public - to determine the activities of the enterprise and contribution to the economy
Management - to determine the activities of the enterprise for planning, organizing, and controlling