Bookkeeping & Accounting Flashcards
What is Bookkeeping ?
The process of recording financial transactions in a systematic way
What is Accounting ?
The process of measuring, analysing, interpreting & commicating {M.A.I.C} financial information so that the users of such information can make informed decisions
What are 3 purposes of Bookeeping & Accounting ?
To ascertain the value of Assets & Liabilities
To ascertain the profitability of the business
To provide financial information for the various users of financial statements
Who are 6 users of Accounting information ?
Owners / Shareholders
Managers
Employees
Government
Investors
Creditors
{O.M.E.G.I.C}
What do Owners used Accounting information for ?
To know how well their investment is performing & if the business can pay dividents
What do Managers use Accounting information for ?
To make decisions about the operations of the business & to evaluate the performance of the business
What do Employees used Accounting information for ?
To determine whether their jobs are secure
What do Government used Accounting information for ?
To determine the amount of taxes the business must pay
What do Creditors used Accounting information for ?
To determine the ability of the business to repay the depts
What do Investors use Accounting information for ?
To determine whether investing in the business is a worthwhile opportunity
What is The Accounting Cycle ?
A sequence of producers to record & analyse business transactions during an Accounting Period
What are the Steps of The Accounting Cycle ?
- Journalise
- Post to ledger
- Prepare
- Make adjustment entries
- Prepare final accounts / financial statements
What is Journalise ?
Record transactions in daybooks
What is Post to Ledger ?
Journal entries are transfered to Ledger accounts
What is Prepare ?
Unadjust trial balance
