This document discusses accounting and financial statements. It provides information on the five main functions of an accounting information system: collecting and storing data, processing data, managing data, controlling data, and providing information. It also discusses the four qualitative characteristics of useful accounting information: understandability, relevance, reliability, and comparability. Finally, it describes the key components of four common financial statements: the statement of financial position, income statement, cash flow statement, and statement of changes in equity.
This document discusses accounting and financial statements. It provides information on the five main functions of an accounting information system: collecting and storing data, processing data, managing data, controlling data, and providing information. It also discusses the four qualitative characteristics of useful accounting information: understandability, relevance, reliability, and comparability. Finally, it describes the key components of four common financial statements: the statement of financial position, income statement, cash flow statement, and statement of changes in equity.
This document discusses accounting and financial statements. It provides information on the five main functions of an accounting information system: collecting and storing data, processing data, managing data, controlling data, and providing information. It also discusses the four qualitative characteristics of useful accounting information: understandability, relevance, reliability, and comparability. Finally, it describes the key components of four common financial statements: the statement of financial position, income statement, cash flow statement, and statement of changes in equity.
This document discusses accounting and financial statements. It provides information on the five main functions of an accounting information system: collecting and storing data, processing data, managing data, controlling data, and providing information. It also discusses the four qualitative characteristics of useful accounting information: understandability, relevance, reliability, and comparability. Finally, it describes the key components of four common financial statements: the statement of financial position, income statement, cash flow statement, and statement of changes in equity.
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Group 11
Mita Laras wati
Accounting is the process of recording, classifying, summary, reporting, and analyzing financial data of an Organization or Company. Each accounting information system will implement the five main functions are: a. Collect and store data from all company activities and transactions b. Processing data into useful information management. c. Manage the existing data into groups that have been set by the company. d. Controlling enough data control so that assets of an organization or company are maintained. The information producer provides enough information for the management to do the planning, execute the planning and control the activity. Accounting Information (Financial Statements) can be useful to the wearer if it is prepared and reported objectively. For accounting information is objective it must meet the qualitative characteristics, which is the characteristic that makes the information in the financial statements useful for the users. There are four characteristics of Accounting: 1. Understandable 2. Relevant 3. Reliability (reliable) 4. Can be compared There are several types of accounting that range from auditing to the preparation of tax returns. Accountants tend to specialize in one of these fields, which leads to the different career tracks noted below : 1. Financial accounting. This field is concerned with the aggregation of financial information into external reports. Financial accounting requires detailed knowledge of the accounting framework used by the reader of a company's financial statements, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). 2. Public accounting. This field investigates the financial statements and supporting accounting systems of client companies, to provide assurance that the financial statements assembled by clients fairly present their financial results and position. This field requires excellent knowledge of the relevant accounting framework, as well as an inquiring personality that can delve into client systems as needed. The career track here is to progress through various audit staff positions to become an audit partner. 3. Government accounting. This field uses a unique accounting framework to create and manage funds, from which cash is disbursed to pay for a number of expenditures related to the provision of services by a government entity. Government accounting requires such a different skill set that accountants tend to specialize within this area for their entire careers. 4. Forensic accounting. This field involves the reconstruction of financial information when a complete set of financial records is not available. This skill set can be used to reconstruct the records of a destroyed business, to reconstruct fraudulent records, to convert cash-basis accounting records to accrual basis, and so forth. This career tends to attract auditors. It is usually a consulting position, since few businesses require the services of a full- time forensic accountant. Those in this field are more likely to be involved in the insurance industry, legal support, or within a specialty practice of an audit firm. 5. Management accounting. This field is concerned with the process of accumulating accounting information for internal operational reporting. It includes such areas as cost accounting and target costing. A career track in this area can eventually lead to the controller position, or can diverge into a number of specialty positions, such as cost accountant, billing clerk, payables clerk, and payroll clerk. 6. Tax accounting. This field is concerned with the proper compliance with tax regulations, tax filings, and tax planning to reduce a company's tax burden in the future. There are multiple tax specialties, tracking toward the tax manager position. 7. Internal auditing. This field is concerned with the examination of a company's systems and transactions to spot control weaknesses, fraud, waste, and mismanagement, and the reporting of these findings to management. The career track progresses from various internal auditor positions to the manager of internal audit. There are specialties available, such as the information systems auditor and the environmental auditor. The Financial Statement is a list of the final summary of financial transactions showing all the company's operational activities and their consequences. These financial statements consist of Balance Sheet, Income Statement, Capital Change Report. The most important in accounting statements of ownership liability are the Balance Sheet and Income statement. This report is very important, but no less useful one more report called the capital statement. 1. Income statement (Statement of Profit / Loss) It is a summary of revenues and expenses (costs) from a single entity for a specified period of time, eg one month or one year. • Revenues are grouped by: - operating income is revenue derived from business activities. - - non-operating income is income that is not from the core of its business. • Expenses (costs) are grouped by: - - operating costs - - non-operational costs 2. Balance sheet (Balance Sheet) A list containing the assets (assets), liabilities and capital of an entity at a given time generally closed on the last day of each month. - Assets are grouped according to the dimensions or timing of current assets and non- current assets. Assets may be classified as well as tangible assets, Intangible Assets, and Other Assets - Liabilities consist of current liabilities and non-current liabilities. - Capital 3. Capital statement (Change of Capital Statement) Contains a summary of changes in capital of a single entity within a given timeframe, for example, a month or a year. The capital change report describes the change in owner's capital which contains initial capital, net profit / loss, prive. Other reports are often called funds statements that are called Statement of changes in Financial position which are also useful for the benefit of the company. This report is important so that in recent years it tends to be presented as part of the Financial Statement. All presentation of financial statements should clearly illustrate: - Name of owner / company. - The name of the report. - Date or period. 1. Statement of Financial Position Statement of Financial Position, also known as the Balance Sheet, presents the financial position of an entity at a given date. It is comprised of the following three elements: Assets: Something a business owns or controls (e.g. cash, inventory, plant and machinery, etc) Liabilities: Something a business owes to someone (e.g. creditors, bank loans, etc) Equity: What the business owes to its owners. This represents the amount of capital that remains in the business after its assets are used to pay off its outstanding liabilities. Equity therefore represents the difference between the assets and liabilities. 2. Income Statement Income Statement, also known as the Profit and Loss Statement, reports the company's financial performance in terms of net profit or loss over a specified period. Income Statement is composed of the following two elements: a. Income: What the business has earned over a period (e.g. sales revenue, dividend income, etc) b. Expense: The cost incurred by the business over a period (e.g. salaries and wages, depreciation, rental charges, etc) c Net profit or loss is arrived by deducting expenses from income.
3. Cash Flow Statement
Cash Flow Statement, presents the movement in cash and bank balances over a period. The movement in cash flows is classified into the following segments: a. Operating Activities: Represents the cash flow from primary activities of a business. b. Investing Activities: Represents cash flow from the purchase and sale of assets other than inventories (e.g. purchase of a factory plant) c. Financing Activities: Represents cash flow generated or spent on raising and repaying share capital and debt together with the payments of interest and dividends. 4. Statement of Changes in Equity Statement of Changes in Equity, also known as the Statement of Retained Earnings, details the movement in owners' equity over a period. The movement in owners' equity is derived from the following components: a. Net Profit or loss during the period as reported in the income statement b. Share capital issued or repaid during the period c. Dividend payments d. Gains or losses recognized directly in equity (e.g. revaluation surpluses) e. Effects of a change in accounting policy or correction of accounting error
"The Language of Business: How Accounting Tells Your Story" "A Comprehensive Guide to Understanding, Interpreting, and Leveraging Financial Statements for Personal and Professional Success"