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WHAT IS ACCOUNTING?

WHAT IS ACCOUNTING?. Accounting is a system of dealing with financial information that provides data for decision making. What information would you want your accounting records to provide as an owner? . Profit? Capital? Expenses? Payroll? Revenue? Taxation Projections?.

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WHAT IS ACCOUNTING?

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  1. WHAT IS ACCOUNTING?

  2. Accounting is a system of dealing with financial information that provides data for decision making

  3. What information would you want your accounting records to provide as an owner? Profit? Capital? Expenses? Payroll? Revenue? Taxation Projections?

  4. What information might other people or organizations be interested in? Government- Tax Purposes Investors- are they making good choices? Banks/ Financial Institutes- providing loans

  5. 5 main activities involved in accounting: • Gathering Financial Information • About the activities of a business or other organization, ie. Profit, debt payments, sales 2. Preparing & Collecting Permanent Records • Records provide evidence (source documents) or purchase, proof of payment, details of payroll and so on • They also serve as the basis for dealing with other companies

  6. 3. Rearranging, Summarizing and Classifying (journalizing) financial information into a more usable form 4. Preparing Information Reports and Summaries for.. • To help management reach decisions • To serve the needs of groups outside the business, ie. Bankers and investors • To measure the profitability of the business 5) Establishing controls to promote Accuracy and honesty among employees

  7. By enabling financial information to be gathered and prepared, a good accounting system provides the answers to many questions. • Can we finance a business expansion? • Do we have enough money to meet our needs? • Are our customers paying their bills on time?

  8. Types of Businesses: 1. Service Business • Sells a service, it does not make or sell a product Examples? 2. Merchandising Business • Buys goods and resells them at a higher price for a profit Examples?

  9. 3. Manufacturing Business • Buys raw materials, converts them into a new product and sells these products to earn a profit Examples? 4. Non-Profit Organization • Carriers on activities to meet social needs and not for a financial profit Examples?

  10. Forms of Business Ownership: 1. Sole Proprietorship • A business owned by an individual Examples? 2. Partnership • A business owned by more than one individual Examples? 3. Corporation • Various individuals own shares of a business Examples?

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