Accounting process ppt

ppt on accounting process and managerial accounting process costing ppt
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Dr.DouglasPatton,United States,Teacher
Published Date:26-07-2017
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CHAPTER 1 ACCOUNTING IN ACTION www.ThesisScientist.comILLUSTRATION 1-1 THE ACCOUNTING PROCESS Communication Identification Account Recording ing Reports Prepare accounting reports SOFTBYTE Annual Report Select economic events Record, classify, (transactions) and summarize Analyse and interpret www.ThesisScientist.com for usersILLUSTRATION 1-2 QUESTIONS ASKED BY INTERNAL USERS What is the cost of manufacturing Is cash sufficient to pay bills? each unit of product? Can we afford to give employees Which product line is the most www.ThesisScientist.com pay raises this year? profitable?ILLUSTRATION 1-3 QUESTIONS ASKED BY EXTERNAL USERS How does the company compare in size and profitability with its Is the company earning competitors? satisfactory income? What do we do if they catch us? Will the company be able to pay its debts as they come due? www.ThesisScientist.comBOOKKEEPING DISTINGUISHED FROM ACCOUNTING Accounting 1. Includes bookkeeping 2. Also includes much more Bookkeeping 1. Involves only the recording of economic events 2. Is just one part of accounting www.ThesisScientist.comTHE ACCOUNTING PROFESSION  Public accountants offer their expertise to the general public through the services they perform.  Private accountants are employees of individual companies and are involved in a number of activities, including cost and tax accounting, systems, and internal auditing.  Not-for-profit accounting includes reporting and control for government units, foundations, hospitals, labour unions, colleges/universities, and charities. www.ThesisScientist.comILLUSTRATION 1-4 ETHICS To Solve Ethical Dilemma Ethics 1. Recognize situation  Standards of conduct and ethical issues involved 2. Identify and analyse elements 3. Identify alternatives and weigh effects on stakeholdersGAAP Generally Accepted Accounting Principles  Primarily established by the Canadian Institute of Chartered Accountants Cost Principle  The cost principle dictates that assets are recorded at their cost.  Cost is the value exchanged at the time something is acquired.  Cost is used because it is both relevant and reliable. www.ThesisScientist.comASSUMPTIONS 1. Going Concern - assumes organization will continue into foreseeable future. 2. Monetary Unit - only transaction data that can be expressed in terms of money is included in the accounting records. 3. Economic Entity - includes any organization or unit in society. www.ThesisScientist.comBUSINESS ENTERPRISES  A business owned by one person is generally a proprietorship (owner’s equity).  A business owned by two or more persons associated as partners is a partnership (partners’ equity).  A business organized as a separate legal entity under corporation law and having ownership divided into transferable shares is called a corporation (shareholders’ equity). www.ThesisScientist.comILLUSTRATION 1-5 BASIC ACCOUNTING EQUATION The Basic Accounting Equation Assets = Liabilities + Owner’s Equity www.ThesisScientist.comASSETS AS A BUILDING BLOCK  Assets are resources owned by a business.  They are things of value used in carrying out such activities as production and exchange. www.ThesisScientist.comLIABILITIES AS A BUILDING BLOCK  Liabilities are claims against assets.  They are existing debts and obligations. www.ThesisScientist.comOWNER’S EQUITY AS A BUILDING BLOCK  Owner’s Equity is equal to total assets minus total liabilities.  Owner’s Equity represents the ownership claim on total assets.  Subdivisions of Owner’s Equity: 1. Capital 2. Drawings 3. Revenues 4. Expenses www.ThesisScientist.comINVESTMENTS BY OWNERS AS A BUILDING BLOCK Investments by owner are the assets put into the business by the owner. These investments in the business increase owner’s equity. www.ThesisScientist.comDRAWINGS AS A BUILDING BLOCK Drawings are withdrawals of cash or other assets by the owner for personal use. Drawings decrease total owner’s equity. www.ThesisScientist.comREVENUES AS A BUILDING BLOCK Revenues are the gross increases in owner’s equity resulting from business activities entered into for the purpose of earning income. Revenues may result from sale of merchandise, performance of services, rental of property, or lending of money. Revenues usually result in an increase in an asset. www.ThesisScientist.comEXPENSES AS A BUILDING BLOCK Expenses are the decreases in owner’s equity that result from operating the business. Expenses are the cost of assets consumed or services used in the process of earning revenue. Examples of expenses include utility expense, rent expense, and supplies expense. www.ThesisScientist.comILLUSTRATION 1-6 INCREASES AND DECREASES IN OWNER’S EQUITY INCREASES DECREASES Investments Withdrawals by Owner by Owner Owner’s Equity Revenues Expenses www.ThesisScientist.comTRANSACTION ANALYSIS Marc Doucet decides to open a computer programming service. BANK Softbyt e www.ThesisScientist.com

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