Académique Documents
Professionnel Documents
Culture Documents
1-1
C1
Importance of Accounting
is a Accounting
system that Identifies
Records
Relevant information that is Communicates
Reliable
Comparable
C1
Accounting Activities
Identifying Business Activities Recording Business Activities
1-3
C2
C2
External Users
Internal Users
Financial accounting provides external users with financial statements (shareholders, lenders, etc.).
Managerial accounting provides information needs for internal decision makers (officers, managers, etc.).
1-5
C2
Opportunities in Accounting
Financial Managerial
General accounting Cost accounting Budgeting Internal auditing Consulting Controller Treasurer Strategy Lenders Consultants Analysts Traders Directors Underwriters Planners Appraisers
Taxation
Preparation Planning Regulatory Investigations Consulting Enforcement Legal services Estate plans FBI investigators Market researchers Systems designers Merger services Business valuation Forensic accountant Litigation support Entrepreneurs
1-6
Accounting-related
C4
Reliable Information
Comparable Information
C4
The International Accounting Standards Board (IASB) issues international standards that identify preferred accounting practices in other countries. More than 100 countries now require or permit companies to prepare financial reports following IFRS standards.
1-8
A1
Assets
Cash Accounts Receivable Notes Receivable
Vehicles
Land
Store Supplies
Buildings
Equipment
1-9
A1
Liabilities
Accounts Payable Notes Payable
1-10
A1
Equity
Contributed Capital Retained Earnings
Dividends
1-11
P2
Income Statement
Net income is the difference between Revenues and Expenses.
Scott Company Income Statement For Month Ended December 31, 2011 Revenues: Consulting revenue Expenses: Salaries expense Net income
The income statement describes a companys revenues and expenses along with the resulting net income or loss over a period of time due to earnings activities.
1-12
P2
Balance Sheet
The Balance Sheet describes a companys financial position at a point in time.
Scott Company Statement of Retained Earnings For Month Ended December 31, 2011 Retained Earnings, Dec. 1, 2011 Plus: Net income Less: Dividends Retained Earnings, Dec. 31, 2011 $ 2,200 500 1,700
Total assets
26,900
Liabilities Accounts payable Notes payable Total liabilities Equity Common stock Retained earnings Total liabilities and equity
26,900
1-13
COST ACCOUNTING
INTRODUCTION
COST ACCOUNTING:
England (ICMA) has defined Cost Accounting as the process of accounting for the costs from the point at which expenditure incurred, to the establishment of its ultimate relationship with cost centers and cost units. In its widest sense, it
COST - MEANING
Cost means the amount of expenditure ( actual or notional) incurred on, or attributable to, a given thing.
Cost reduction
Determining selling price Facilitating preparation of financial and other statement Providing basis for operating policy
COST TERMINOLOGY:
COST:
Cost means the amount of expenditure incurred on a particular thing. Costing means the process of ascertainment of costs. The application of cost control methods and the ascertainment of the
COSTING:
COST ACCOUNTING:
COST CONTROL: Cost control means the control of costs by management. Following are the
aspects or stages of cost control.
JOB COSTING: It helps in finding out the cost of production of every order and thus helps in
ascertaining profit or loss made out on its execution. The management can judge the profitability of each job and decide its future courses of action.
BATCH COSTING: Batch costing production is done in batches and each batch consists of a
number of units, the determination of optimum quantity to constitute an economical batch is all the more important.
Process of: Running your business Recording money coming in and out Using reports to: Understand how your business is doing Make decisions
1. Cash Flow. Track the money going in and out of your business.
YOUR BUSINESS
6. Funding. To be considered for a loan or investment, youll need complete financial statements. 5. Insight and Decision Making. Make informed decisions and price your product or service for profitability with financial reports
4. Compliance. Report your companys incomes, expenses, and payroll accurately to the IRS.
Feedback
Primary Users
Financial Investors Creditors Government authorities (IRS, SEC, etc.)
Purpose of Information
Financial Management Help investors, Help managers creditors, and plan and control others make business investment, credit, operations and other decisions
Accounting may be defined as the identifying, measuring, recording and communicating of financial information.
Bierman and Derbin
According to J.R. Batliboi Book-keeping may be defined as the science as well as the art of
Examples
are
Revenue from sale of goods, interest on investments, royalty received, discount received, etc.,
Revenue Expenditure involving cash outgo is Cash Expenditure. Examples are Salary and wages, Repair expenses, interest, etc., . Revenue Expenditure charged to P&L A/c but not involving cash outgo is Non-cash expenditure. Examples are Deprecation and Return on Equity or Profit.