Accounting

Accounting

1. Bookkeeping

   • Involves recording of business transactions

2. Accounting

   • Process of recording,summarizing,analysing,interpreting and communicating the financial information of an organisation

3. Stakeholders

   • Bank
     • Interested in firm's profit
       • Decide of they should grant loan to firm
   • Customers
     • Interested in firm's profit
       • To know if there is after-sale support
   • Employees
     • Interested in firm's profit & cash flow
       • To know if the firm is able to pay their salaries promptly, the amount of bonus, career prospects

4. Majar roles in business

   • Stewardship
   • Decision-making

5. Professional ethics

   • Objectivity
     • Be unbiased
     • Not influenced by personal feelings, gains
   • Integrity
     • Straightforward & honest

6. Sole proprietorship

   • manage business by himself, may hire pro to help
     • Advantages
       • Owner has full control
       • Owner enjoys all profits
     • Disadvantages
       • Owner loses all
       • If buss fails, he has to pay all the debts
     • Example : Hawker

7. Company

   • Min 1 owner
   • Public company/ Private company
   • Disadvantage
     • Control is diluted
     • Profits are shared among shareholders

8. Elements of accounting

   • Assets
     • Resources OWNED by business to carry out its activities
     • Non-current asset
       • Intention to be used in business to generate income
     • Inventory
       • Intention of resale
   • Liability
     • Amount OWED by business to other business or individuals (debt)
   • Equity
     • Amount CONTRIBUTED by the owner and PROFIT made by the business
   • Income
     • Amount EARNED from selling goods or providing services
   • Expense
     • INCURRED by business to earn income
     • Benefits last shorter than assets

9. Equation

   • A = L + E
     • Asset = Liability + Equity