Introduction To Accounting

Question 0

Explain 6 objectives of accounting

Answer 0

• use acc rules & concepts to analyse case studies & real business events
• interpret & evaluate Acc statements, systems & reports
• providing a means of developing a crytical & analytical approach to quantative problems
• Use acc to assist in decision making
• Apply numeric skills required for acc
• describing impact of comp on acc

Question 1

Explain Accounting

Answer 1

Acc is concerned with recording of data, classification & summary of data, communicating what has been learned from data.

Question 2

Explain the importance of acc info to internal users

Answer 2

Owner: wants to see whether his investment made a profit/loss
Employees: are working for the business and have a direct interest in the financial affairs

Question 3

Explain the importance of acc info to external users:

Answer 3

-bank and financial institutions: they want to see if the business are able to repay the loan and whether the interest can be paid
-potential investors & prospective buyers: want to see if the investments will be worthwhile and will be interested in the progress that the business made & whether they made a profit
-the GRN: need bank statements to calculate taxes
-customers and suppliers: want to ensure whether the business is solvent prior to entering a trading relationship
Local community: concerned about the effects
Business competitors: measures own performance against rivals
Economic analysts: attempt to establish trends by analysis of a particular business’ results
Members of the general public: require info relating to env, ecological & other attitudes revealed in reports of business

Question 4

Name the diff branches of acc

Answer 4

• Cost & management acc: Provision of info to interested parties inside the business, especially to managers, to help with decision making, planning and management & control
• financial acc: prov of info to interested parties outside business. Parties like prospective buyers, bank, future partners
• auditing: Determines whether recorded info is a true reflection ofnthe business transactions. Be done internally that is when the business contracts on outside company to do it