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(1) WHAT IS ACCOUNTING?

(1) WHAT IS ACCOUNTING?. Accounting is the process of : (1) _________________ and identifying data, (2) _________________ and posting data, (3) __________________ and summarizing data, and (4) __________________ the financial information for the decision making. collecting. recording.

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(1) WHAT IS ACCOUNTING?

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  1. (1) WHAT IS ACCOUNTING? • Accounting is the process of : • (1)_________________ and identifying data, • (2)_________________ and posting data, • (3)__________________ and summarizing data, and • (4)__________________ the financial information for the decision making . collecting recording classifying interpreting

  2. (2) WHAT IS BOOK-KEEPING? • Book-keeping is only a part of accounting . This is about recording the details of business events and transactions in the books of accounts

  3. (3) USERS OF FINANCIAL INFORMATION • (1)Owner(s) • (2)__________ • (3)__________ • (4)__________ • (5)___________ • (6)___________ • (7)Prospective Buyers • (8)Prospective Partners Suppliers IRD Customers The Government, e.g. Inland Revenue Department 稅務局 Banks Employees

  4. (4)TYPES OF OWNERSHIP • (1) Sole traders (Sole proprietorships) • (2) Partnerships • (3) Limited Companies • (4)Non-trading organization

  5. (5) 5 IMPORTANT ELEMENTS IN ACCOUNTING • (a) Assets (資產 ) • (b) Liabilities (負債 ) • (c) Capital (資本 ) • (d) Revenue (收入 ) • (e) Expenses (費用支出 )

  6. (a) Assets • -Assets are resources owned by a business. • -They are expected to benefit the business in future.

  7. _______ Assets • -Land & Building • -Plant & Machinery • -Motor Vans • -Furniture & Fitting Fixed

  8. ________ Assets • -Stock for resale • -Trade Debtors • -Cash at bank • -Cash in hand Current

  9. (b) Liabilities • - Usually someone other than the owner has supplied some of the assets. • - Liabilities is the name given to the amount owing to these people for these assets.

  10. ___________Liabilities • -Long Term loans • -Any liability longer than one year • ____________ Liabilities • -Trade Creditors • -Bank Overdraft Long Term Current

  11. (c)Capital • The amount of the resources supplied by the owneris called capital.

  12. Assets Liabilities (1) Cash at bank (2) Buildings (3) Loan (4) Trade Creditors (5) Office equipments (6) Bank Overdraft (7) Trade Debtors (8) Stock of goods (9) Premises (10) Lorries Exercise 1.2 Identify the following items as the category of Assets and Liabilities.

  13. Exercise 1.2 Identify the following items as the category of Assets and Liabilities. Assets Liabilities (1) Land (2) Machinery (3) Debt owed by Ken (4) Desks in office (5) Cash in hand (6) Fixtures (7) Computers *(8) Accrued expenses *(9) Prepaid expenses *(10) Debt owing to Mr. Luk

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