What is Accounting?

An Information System
1. Identifies
2. Records
3. Communicates
Identifying economic events involves
1. Selecting economic activities relevant to a particular entity
2. Examples of economic events
  1. Sale of running shoes & sporting attire @ Nike
  2. Payment of wages by Ford Motor Company
  3. Collection of ticket sales and payment of expenses by major sporting clubs
Economic events are recorded to
1. Provide a history of the entity's financial activities
2. And involves
  1. Keeping a systematic, chronological diary of events, measured in dollars and cents
  2. Economic events are also classified and summarised
Financial information is communicated through
1. Accounting Reports
  1. Financial Statements or Financial reports
  2. Information resulting from similar transactions is accumulated and totalled
Reporting of recorded data is done in a standardised way
A vital element in communicating economic events is the accountant’s ability to analyse and interpret the reported information.
1. ANalysis involves
  1. Ratios
  2. Percentages
  3. Graphs
  4. Charts
  5. To Highlight significant financial trends and relationships
2. Interpretation involves explaining
  1. Uses
  2. meaning
  3. limitations
  4. Of reported data

Resource summary

	Created by Taasha Goldbach almost 5 years ago