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ACCOUNTING presentation

ACCOUNTING presentation . DONE BY: SOPHIA SANKAR MEGAN CODALLO TAYNA HARRIS MEGAN SMITH. SIGNIFICANTS AND LIMITATIONS OF ACCOUNTING INFORMATION. SIGNIFICANTS OF ACCOUNTING INFORMATION. The importance of accounting information is to facilitate planning and decision making . .

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ACCOUNTING presentation

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  1. ACCOUNTINGpresentation DONE BY: SOPHIA SANKAR MEGAN CODALLOTAYNA HARRISMEGAN SMITH

  2. SIGNIFICANTS AND LIMITATIONS OF ACCOUNTING INFORMATION

  3. SIGNIFICANTS OF ACCOUNTING INFORMATION The importance of accounting information is to facilitate planning and decision making.

  4. Evaluatingthe potential of the entity to earn profits • Calculating the risks involved • Deciding how resources are to be allocated Although the accounting process uses previous economic activity of an entity, the information is still useful in:

  5. THE LIMITATIONS OF ACCOUNTING Despite the usefulness of accounting there are some limitations:

  6. An accounting system can only record items that can be given a monetary value and so fails to give a complete picture of the business • The accounting process uses previous economic activities of the business to form the basis of accounting records • The account process cannot affect the mood of the business • Many items on the finical statement are the result of estimated eg. Provision for deprecation and doubtful debts

  7. Analyzing aggregated information is difficult • Preparation of the financial statements at a particular date may not reflect the trend for the year. • For example a firm may not experience low sales throughout the year but in the last month moth of the year there was a sale increse. • Accounting policies differ between firms and this makes comparison difficult

  8. USERS OF ACCOUNTING INFORMATION

  9. Classified into twocategories:- External Users-financial from outside the business which include bankers,customers or competitors. Internal Users- managerial accountants from inside the business including managers or employees. Accounting information include annual reports and tax reports.

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