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Definition of accounting
The process of classifying, recording and summarizing of
transactions and business events in monetary terms, and
interpreting the results to interested parties (users of financial
statements) to assist them in decision making.
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DIFFERENCE BETWEEN BOOKKEEPING
AND ACCOUNTING
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PROCESS OF ACCOUNTING
JOURNALIZING
PREPARE LEDGER
TRIAL BALANCE
FINANCIAL STATEMENT
As an evidence that
the transactions
have been taken
place.
INTERNAL USERS
Manager Employee
Business owners
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THE USERS AND THE USE OF ACCOUNTING
INFORMATION
EXTERNAL USERS
Current/Potential Government
Creditor/Bankers Investors
Interested to Interested in Interested in
know whether knowing the the business
the business business accounting
can pay the solvency and information for
amount owing financial tax purposes.
to them. strengths.
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TYPES OF BUSINESS ORGANIZATION AND
CHARACTERISTICS OF SOLE PROPRIETORSHIP,
PARTNERSHIP AND COMPANY
1) OWNERSHIP
Sole Partnership Company: Company:
Proprietorship Private Limited Public Limited
register with
ROB
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4) LIABILITY
Sole Partnership Company: Company:
Proprietorship Private Public Limited
Limited
Unlimited All debts and Limited Limited
liability losses will be according to according to
bear by partners capital capital
If the business contribution contribution
faced loss, it will
involved personal
assets if the
business assets
could not cover
all the loss
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