Acoounting.docx - Accounting is a service activity Its...

This preview shows page 1 - 3 out of 8 pages.

Accounting is a service activity. Its function is to provide quantitative information primarily financial in nature, about entitles, that is intended to be useful in making economic decision. - Accounting Standard Council (ASC ) Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money transaction and events which are in part at least of a financial character and interpreting the result. - American of Certified Public Accountant (AICPA) Accounting is a process of identifying, measuring and communication economic information to permit informed judgment and decision by users of the information. – American Accounting Association (AAA) Financial Statements 1. Statement of Financial Position (Balance Sheet) - Often called the balance sheet, is a financial statement that reports the assets, liabilities, and equity of a company on a given date. In other words, it lists the resources, obligations, and ownership details of a company on a specific day. 2. Statement of Comprehensive Income (Income statement) -The Statement of Comprehensive Income provides a summary of a company’s net assets (those obtained from sources other those of the business owner) over a given period of time. In other words, the statement highlights the adjustments on equity during a given timeframe. 3. Statement of Changes in Equity -The statement of changes in equity shows the change in an owner's or shareholder's equity throughout an accounting period. Also called the statement of retained earnings, or statement of owner's equity, it details the movement of reserves that make up the shareholder's equity. 4. Statement of Cash Flows -In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. Cash flow from investing : ($1,000) Cash flow from financing : ($2,000) Cash flow from operations : $4,000 Net cash flow : $1,000 5. Summary of Significant Accounting Policies and other Explanatory Notes (Notes to Financial Statements) -The summary of significant accounting policies is a section of the footnotes that accompany an entity's financial statements, describing the key policies being followed by the accounting department. This summary is usually placed at or near the beginning of the footnotes. The policy summary is mandated by the applicable
Image of page 1
accounting framework (such as GAAP or IFRS). These frameworks require an entity to disclose its most important policies, the appropriateness of those policies, and how they impact the reported financial position of the entity. Users of accounting information External users Not directly involved in running the organization and have limited access to its accounting information Financial Accounting Internal Users Directly manage and operate the organization Managerial Accounting External Users Internal Users Lenders or creditors Shareholders or investors
Image of page 2
Image of page 3

You've reached the end of your free preview.

Want to read all 8 pages?

  • Fall '19

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes