Intermediate Accounting 1

• What is accounting?

  It is providing information of business transaction to the accounting users so that they can make decisions and judgment on it
• Why is accounting important?

  Helps in decision making

  Helps to measure new strategies

  Backs up tax returns

  Helps to keep you organized

  Helps the business to take up loans and investments

  Helps the business to determine it's financial resources and investments
• What is business accounting?

  Accounting is identifying,recording, analysing, interpreting and providing financial information to it's users
• What are the types of accounting?

  Financial

  Cost

  Managment

  Tax
• What are the 6 primary books of accounting?

  Purchase journal

  Sales journal

  Purchase return journal

  Sales return journal

  Cash book

  General journal
• What is the process of accounting?


  Identify transactions

  Enter in the primary books

  Enter in the ledgers

  Unadjusted trail balance

  Adjust the balance

  Adjust the trail balance

  Financial statement

  Close the account
• What are the roles of accounting?

  Preparing and maintaining important financial reports

  Backs up the tax returns

  Ensure that taxes are paid properly and on time

  Evaluate the financial operations to suggest best practices

  Evaluate the financial problems and suggest a solution to it so that organisation can run smoothly

  Maintaining sound internal control system
• Basic accounting equation?

  Total assets= Total liabilities+Total equity

  Liabilities= Financial obligations of the business

  Owners equity= owners claim the assets of the business
• Expanding basic accounting equation?

  Assets= Liabilities + owners equity

  Assets= Liabilities+ capital+ retained earnings

  Assets = Liabilities+ capital+ revenue- expenses- drawings
• Professional ethics?

  Integrity

  Objectify

  Professional competence and due care

  Confidentiality

  Professional behaviour
• what are the uses of accounting in decision making?

  Track income and expenses

  Statutory compliances

  Safeguard your assets

  Provides quantitative information to aid in decision making
• Limitations of accounting?

  Historical nature is considered

  Qualitative factors are not considered

  Financial data are not comparable and could be misleading

  Financial statements are mostly based on estimates

  Does not consider assets that has no monetary value
• What are the qualitative factors of the business

  Customer satisfaction

  Employee morals

  Product quality

  Relationship with the stakeholders
• What are the quantitative factors

  Market share

  Return of investment

  Profit margin