1. a) Accounting concept refers to the basic assumptions and rules and principles which work as the basis of recording of business transactions and preparing accounts. Accounting Concepts Business entity Money Measurement/stable monetary unit Going Concern Historical Cost Prudence/conservatism Materiality Objectivity Consistency Accruals/matching Realization Uniformity b) The main objective is to maintain uniformity and consistency in accounting records. These concepts constitute the very basis of accounting. All the concepts have been developed over the years from experience: Business entity concept, Money measurement concept, Going concern concept, Accounting period concept, Accounting cost concept, Duality aspect concept, Realisation concept, …show more content…
Or profit and loss. 2. a) Money Measurement: Financial accounting is concerned only with items, which can be quantified and expressed in monetary terms. The business assets to which a monetary value cannot reasonably be attributed (e.g. skills of the workforce) are normally ignored in the financial statements, even though those assets might be of great worth to the business concerned. b) The following points highlight the significance of money measurement concept: This concept guides accountants what to record and what not to record ,It helps in recording business transactions uniformly ,If all the business transactions are expressed in monetary terms, it will be easy to understand the accounts prepared by the business enterprise ,It facilitates comparison of business performance of two different periods of the same firm or of the two different firms for the same period. c) Financial statement: As per the MMC, company can record only the transactions which are in terms of money value. Employees information can not be reflected in the balance sheet. However, those employees salaries can be included as expenses In profit and loss …show more content…
a) separate determination and precedence concept: b) c) Financial statement: The Company cannot set off the losses 400 against the profit 6000. As per the prudence concept ,anticipated profits and sales should not be considered for financial statement. However predicted losses one be considered and make provisions for those future losses. 7. Consistency concept a) There are several methods available in recording items in the accounts. Once one method has been selected, it should be used in the next period and thereafter. b) E.g. if the straight-line method is used for depreciation in year one, it should be used in year two and so on. If the business decides to change to reducing balance method, the effects on the account must be disclosed. This concept is applied to prevent mis-representation of the information obtained from the accounts must be disclosed. 8. Business Entity concept a) Business is separate and distinct from its owner. For accounting purpose, the business exists in its own right. Transactions affecting the business are recorded from the viewpoint of the business, and in the books of the business. They are not to be mixed up with the private affair of the
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
Accrual accounting is a system of accounting that is based on the accrual principal accounting. This principal requires revenue to be recognized and recorded when earned. Expenses are to be recorded when they occur. The accrual basis of accounting is used by most companies. Very small businesses and individuals use cash basis accounting.
The records shall contain all assets, income, expenses liabilities, and all business transactions. Our company is committed to an independent, robust internal and external audit process. • Conclusion The company seeks to be a perfect company.
The second step is entering the transactions of the period in appropriate journals. This step consists of taking the journal entries, assigning each to an asset, liability, equity, expense or revenue account(s) to debit and credit. This can be done by almost anyone. I have had jobs where the bookkeeper does the journal entries and figures out which accounts are affected. I have also had jobs where anyone from a receptionist to a staff accountant does this step. If the person doing the journal entries does not have a background in accounting, or is unfamiliar with which accounts are affected, the person submitting the source documents will write down which accounts should be debited and which should be credited. This practice makes doing the journal entries little more than data entry, which can be done by nearly every employee.
Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external users such as stock holders, creditors, regulating authority and others. (Garrison, Noreen, & Brewer, 2010) On the other hand Managerial accounting is concern with providing information that deals with the internal viability of the organization and is tailored to meet the needs of an individual organization. (Albrecht, Stice, Stice, & Skousen, 2002)
Financial accounting is the analysis, classification, and recording of financial transactions and reporting such information to respective users especially external users who use the information to make decisions about their engagements with the entity. In financial accounting general purpose financial statements are used for external reporting. The public by standards imposes the development of the statements through respective national professional bodies, International Accounting Standards Board and respective company Acts for various nations.
This example is how I will manage recording or analysing my profit and loss figures. On the next page it shows us how figures would compromise if they were high and low. METHOD/AMMOUNTS List of Items £ Stock Purchases During the Period 90,000 Miscellaneous Expenses 1,900 Interest Expenses 3,000 Sales 174,000 Rent from Sub-Letting Part of Workshop 400 Provision for Income Tax 3,275 Opening Stock ...
When I record the transactions of the company in the UBS system, it required both debit effect and credit effect of the transactions, the total debits must be equal to the total credits. Besides that, the theory of money measurement also apply in the workplace. We record all the economic events and transactions of the client companies in monetary unit which is Ringgit Malaysia. Sometimes, the client companies having some investments in foreign countries and the amount is in foreign currency, we need to convert it into Ringgit Malaysia before we key into the UBS system. In addition, the assumption of business entity also apply during my undergone internship. For example, we need to ask the client when they bought non-current assets such as television or sofa because we need to know that television or sofa is for their company use or for their personal use. If the television or sofa is for their personal use, we cannot record it into the non-current asset account and we need to credit from the company’s capital. Furthermore, I also apply the theory of consistency in the workplace. For instance, we need to use the same accounting principles from one period to the nest for the company’s
Accounting is the pillar of every company to measure its growth, loss, revenue , capital, its really specify the real terms in foam of figures and sometimes in tables, in accounting there are certain rules are obtained to make more accuracy while playing with figures.
In the above cited the accounting of business is use to record and measure the size of the business, in terms of gains and loss on monthly, quarterly Semi- Annual and Annual basis. Use of the accounting in business, gives a clear review of net income, helps to plan budget of the business accordingly.
Accounting dates back as far as first centuries, is the language of business. As everything has gone through many changes, accounting has also changed many times through out the centuries. It went from the use of abacus to the most advanced softwares, and computers. With these drastic improvements nowadays accounting, financial accounting and management are facing big challenges. From the presentation of the reports to communication to the users, investors, and owners, the accounting field has gained totally a new shape from two decades ago. Today with the dynamic change in every aspect of life, the accounting field has to act fast and be able to adapt these new changes and challenges in order to survive.
The Financial Accounting Standards Boards (FASB) defined conceptual framework as a consistent of underlying concepts and the ideas that describe the nature and general purpose of financial reporting which may lead to consistent standard in accounting (Deegan 2010). The role of the conceptual framework is to ensure that financial statements in accounting are free from bias and to provide useful information that is useful for user’s decision making. The standard-setting board also formulated a range of perceptions and theories related to accounting to trigger the objectives of financial reporting. The standard-setting board keeps issuing the conceptual framework over time to ensure that the conceptual framework’s objectives are improving to provide useful financial information. The innovative work on conceptual framework was embraced in the United States by the FASB in the early 1970s. The FASB accomplished disappointment in attempting to generate a standard that at the outset might not appear to present, especially testing theoretical issues. Regardless, while attempting to achieve concession on Statement of Financial Accounting Standard, tending to the theoretical issues produced critical matter for the board members. In this manner, throughout the outset the FASB understood the requirement for an obvious conceptual framework. Based on Hines’s argument, the conceptual framework is mean to provide the ability to increase self-regulate of a profession in order to neutralizing government interference from arising. Whether this argument has been accepted or not will be discussed in more detail with supported evidence to clarify the main point about Hines’s argument. Further details about this argument will discuss below.
Equity in business means an owner cannot own 100% of the business shares ownership with others and accounting for business should be separate from all personal affairs of its own. This means the person(owner) should not place any personal assets to the business balance sheet. For e.g.Expenditure of car should not be written on the balance sheet.
Accounting is so important in our modern society. It serves a variety range of place in our society. It serves a variety range of place in our soceity, from school to hospital, from business firm to government agencies. It's also the main force in regulation of taxation and industrial activity. It serves a great aspects on the development of mass-production systems, any way, it's a very important term in our modern soceity.
The following essay aims to analyse in depth a computerised accounting system and its aspects such as its history, what technologies is based on, and how it has developed since its beginning. Other aspects such as the current state of the system and the interactions with other systems and the future of the system will also be covered in this paper.