GLENCOE ACCOUNTING AND MRS. NICHOLS Accounting – the language of Business.
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Transcript of GLENCOE ACCOUNTING AND MRS. NICHOLS Accounting – the language of Business.
![Page 1: GLENCOE ACCOUNTING AND MRS. NICHOLS Accounting – the language of Business.](https://reader030.fdocuments.in/reader030/viewer/2022032606/56649e865503460f94b8a0e3/html5/thumbnails/1.jpg)
GLENCOE ACCOUNTINGAND
MRS. NICHOLS
Accounting – the language of Business
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Key Terms
Accounting Systems Manual Accounting Systems Computerized Accounting
SystemsAccounting Standards
GAAP “gap” IAS
Financial Reports Financial Accounting Management Accounting
Accounting Assumptions Business Entity Accounting Period Going Concern
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Objective
You will have an understanding of the computerized accounting system and how the information processed is used to make business decisions.
Decisions like a popular band deciding where to play, the cost of their tour, how profitable their music has been or how much the ticket prices should be?
These decisions are probably made by a financial team!
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Accounting Systems
Collect
Document
Report
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Source Documents – Transactions
1st step to Financial Reporting
Input
Checks
Invoices
Sales slips
Receipts
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Tasks
Processing
Analyzing
Classifying
Recording
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Financial and Management Accounting Reports
Outputs
•Financial condition
•Results of operations
•Investments by and distributions to owners
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System – Financial Accounting
Outsiders looking in (external reportin)
Investors
Loaning Institutions or Individuals
Local, State and Federal Government
Employees, Unions, Consumers
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System – Management Accounting
INTERNAL REPORTING The day-to-day
decision makers. Purchasing Hiring Production Payments Sales Collections
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Financial Accounting Reports
Management Accounting Reports
1
2
3
1
2
3
Uses of Accounting ReportsList three ways each type is used.
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Accounting Assumptions
Something taken for granted as true What are some assumptions you make daily?
When you go to a movie? Go to a restaurant? Enter school? Wake up in the morning?
Each business needs to set up systems (methods to track transactions)
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Accounting Assumptions #1
Business Entity Separate legal entity
from the owners personal finances.
Accounting reports, and records are maintained separately. The most difficult to
separate is farming and ranching, why?
Personal
Business
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Accounting Assumption #2
Accounting Period Life of a business is
divided into sections of time. One Month Quarterly (every 3
months) One Year
Reports are printed for each period and compared to make decisions.
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Accounting Assumption #3
Going Concern Assume the business
will continue to operate unless it is clear it cannot survive.
Many fail in first 5 years
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Accounting Assumptions
#1 Business Entity
#2 Accounting Period
#3 Going Concern
Suppose you work for a company called Greenwood Sky Divers as a sky-diving instructor. Since you have your pilot’s license, you also give flying lessons on the side. You and the owner of Greenwood Sky Divers both belong to a local club, the Greenwood Eagles, whose members get together for sky dives on the weekends. G.S.D is a sole proprietorship that has been in business for six years. The owner of the company regularly reviews the financial reports, prepared by the accountant and compares them from year to year.