Accounting System:

Accounting system consists on the following activities in my project

report:

1. Balance Sheet

2. Profit & Loss Accounts

3. Statement of Changes in Equity

4. Statement of Cash Flows

5. Statement of Premiums

6. Statement of Claims

7. Statement of Expenses

8. Statement of Investment Income

Each contains the detailed entries of its specific field.

Activities in Cash flow:

The following are three activities in cash flow statement.

 OPERATIONS Activities: Cash transactions associated

with running the business.

 INVESTMENTS Activities: Cash used in or provided by

the firm’s investment activities.

 FINANCING Activities: Cash raised from the issuance of

new debt or equity capital or cash used to pay business
expenses, past debts, or company dividends.

Partnership:
A partnership is defined as the relationship that exists between
persons carrying on a business. These persons agree to combine
some or all of their property, labour, and skills. This relationship is
based on a contract.
OR

When two or more individuals engage in an enterprise as co-owners,

the organization is known as a partnership. This form of organization
is popular among personal service enterprises, as well as in the legal
and public accounting professions.

Advantages:

• Partnerships allow for a greater amount of money, skill, and

other resources to be pooled.
• They are relatively easy to organize.
• They are subject to limited government regulations and do not
face high tax rates.

Disadvantages:

• Partnerships have a limited life.

• Each partner is subject to unlimited liability. This means that if
the company fails, creditors can take action against both the
partnership and the persons who are in it.
• Partners have mutual agency. This means that one partner can
make decisions without consulting the other(s).

International Accounting Standards:

The IAS (International Accounting Standards) is a set of standards
which state how certain types of transactions and other events
should be reflected in financial statements.

The International Accounting Standards are formulated and issued by

the International Accounting Standards committee (IASC) has so far

Issued 41 International Accounting Standards and their outlines are

given below:
IAS-1: Disclosure of Accounting Policies.

IAS-2: Valuation and presentation of inventories in the

context of the historical cost system.

IAS-3: Consolidated Financial Statements.

IAS-4: Depreciation Accounting.

IAS-5: Information to be disclosed in financial

statements.

IAS-6: Accounting responses to changing prices (superseded

by IAS-15).

IAS-7: Cash flow statements.

IAS-8: Unusual and prior period items and changes in

accounting policies.

IAS-9: Accounting for research and development activities.

IAS-10: Contingencies and events occurring after the

balance sheet date.

IAS-11: Accounting for construction contracts.

IAS-12: Accounting for taxes on income.

IAS-13: Presentation of current assets and current

liabilities.

IAS-14: Reporting financial information by segment.

IAS-15: Information reflecting effects of changing price.

IAS-16: Accounting for property, plant and equipment.

IAS-17: Accounting for leases (revised).

IAS-18: Revenue recognition.

IAS-19: Accounting for retirement benefits in the

financial statement of employers.

IAS-20: Accounting for government grants and disclosure of

government assistance.

IAS-21: Accounting for the effects of changes in foreign

exchange rates.

IAS-22: Accounting for business combinations (revised).

IAS-23: Capitalization of borrowing costs.

IAS-24: Related party disclosures.

IAS-25: Accounting for investments.

IAS-26: Accounting and reporting by retirement benefits

plans.

IAS-27: Consolidation financial statements and accounting

for investments in subsidiaries.

IAS-28: Accounting for investments in associates.

IAS-29: Financial reporting in hyper inflationary

economies.

IAS-30: Disclosures in the financial statements of bank

and similar financial institutions.

IAS-31: Financial reporting of interests in joint

ventures.

IAS-32: Financial instruments: Disclosure and

Presentation.

IAS-33: Earning per share.

IAS-34: Interim financial reporting.

IAS-35: Discontinuing operations.

IAS-36: Impairment (or loss) of assets.

IAS-37: Provisions, contingent liabilities and contingent

assets.

IAS-38: Intangible assets (Supersedes IAS-9).

IAS-39: Financial instruments (Supplements IAS-32).

IAS-40: Investment property (Supersedes IAS-25).

IAS-41: Agriculture.

Corporation & Its Formation:

Corporation is a legal entity that is separate and distinct from its
owners. Corporations enjoy most of the rights and
responsibilities that an individual possesses; that is, a corporation
has the right to enter into contracts, loan and borrow money, sue
and be sued, hire employees, own assets and pay taxes.

The most important aspect of a corporation is limited liability. That

is, shareholders have the right to participate in the profits, through
dividends and/or the appreciation of stock, but are not held
personally liable for the company's debts.

A corporation is created (incorporated) by a group of shareholders

who have ownership of the corporation, represented by their holding
of common stock. Shareholders elect a board of directors (generally
receiving one vote per share) who appoint and oversee management
of the corporation. Although a corporation does not necessarily have
to be for profit, the vast majority of corporations are setup with the
goal of providing a return for its shareholders. When you purchase
stock you are becoming part owner in a corporation.

Corporations are usually registered with the state, province, or

national government and regulated by the laws enacted by that
government. Registration is the main prerequisite to the
corporation's assumption of limited liability. The law sometimes
requires the corporation to designate its principal address, as well as
a registered agent (a person or company designated to receive legal
service of process). It may also be required to designate an agent or
other legal representative of the corporation.

Difference between Long Term and

Short Term Investments:
Short-term investments are designed to be made only for a little
while, and hopefully show a significant yield, whereas long-term
investments are designed to last for years, showing a slow but
steady increase so that there is a significant yield at the end of the
term. They may include stocks, bonds, real estate and cash.

Inventory Management System:

There are mainly two inventory systems used:

1. Periodic Inventory System

2. Perpetual Inventory System

Periodic Inventory System:

Under this system, stock taken is undertaken at the end of the

accounting year. As the stock taking involves verifying the physical
quantities of stores in hand, some firms temporarily suspend plant
operations when this is done.

Perpetual Inventory System:

This is a stock recording system which provides an up to date record

of the stock balances held at any given time. All movements of
materials must be immediately recorded so that ledger and bin card
given up to date information about the balance in store. Perpetual
inventory system involves the following:

1. Reconciliation of Bin Card and Store Ledger.

2. Confirm stock taking i.e. physical checking of stock items is
done regularly. Sufficient items are checked every day so that
in the course of a year, all items are checked at least once.