Principles of Accounting PDF

 is a Accounting Identifies system that Records information Relevant Communicates that is Reliable to help users make Comparable...

 is a Accounting Identifies system that Records information Relevant Communicates that is Reliable to help users make Comparable better decisions. An information system that provides reports to stakeholders about the economic activities and condition of a business. Identifying Recording Business Business Activities Activities Communicating Business Activities  Branches of Accounting Auditing Taxation Forensic Accounting Financial Cost and Management Public Sector Accounting Accounting Accounting Balance Sheet Income Statement Statement of Cash Flows  External Users Internal Users Managers Sales Staff Lenders Consumer Groups Officers Budget Officers Shareholders External Auditors Internal Auditors Controllers Governments Customers Financial accounting practice is governed by concepts and rules known as generally accepted accounting principles (GAAP). Relevant Information Affects the decision of its users. Reliable Information Is trusted by users. Comparable Is helpful in contrasting Information organizations. Malaysian Accounting Standards Board (MASB) is the semi-govt. group that sets both broad and specific principles. The Securities Commission of Bursa Malaysia is the government group that establishes reporting requirements for companies that issue shares to the public.  Objectivity Principle Accounting information is supported by independent, unbiased evidence.  Cost Principle Accounting information is based on actual cost.  Now Future Going-Concern Principle Reflects assumption that the business will continue operating instead of being closed or sold.  Monetary Unit Principle Express transactions and events in monetary, or money, units.  Revenue Recognition Principle 1. Recognize revenue when it is earned. 2. Proceeds need not be in cash. 3. Measure revenue by cash received plus cash value of items received.  Business Entity Principle A business is accounted for separately from other business entities, including its owner.  Sole Partnership Corporation Proprietorship Assets = Liabilities + Equity Liabilities Assets & Equity  Current Fixed Cash Vehicles Resources Accounts owned or Land Receivable controlled by a company Notes Buildings Receivable Store Equipment Supplies  Short term Long term Accounts Bank Payable Loan Creditors’ Expenses claims on Bond Accrued assets Income prepayments Debenture Contributed Retained Capital Earnings Owner’s claim on assets Dividends