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Accounting Notes

In: Business and Management

Submitted By taniarewun
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Four basic financial statements: * Balance Sheet * Income Statement * Statement of Retained Earnings * Statement of Cash Flows

Players: * Investors – trading shares – get dividends * Creditors – trading bonds – get interest rate; risk is less than if you´re an investor * Managers

Financial accounting – provides info for managers and people outside the firm.
Managerial accounting – provides confidential info for internal decision-makers (“private” or internal accounting).

GAAP – Generally Accepted Accounting Principles.
Most countries are converging to US GAAP or IFRS as a generally accepted standards.
Private companies do not file IFRS.

Qualities of accounting * Relevant * Reliable * Consistent (over time) * Comparable (across companies)

Concepts of accounting 1. Accounting entity – хозяйствующий субъект 2. Going concern / Continuity – непрерывность – should be assumed that the business will continue to exist and bring economic benefits 3. Stable monetary unit – usually it is the currency. It is assumed that it has the same purchasing power throughout the time. 4. Time period 5. Concervatism / Prudence – расчетливость, практичность 6. Materiality

Principles of accounting 1. Reliability 2. Historical Cost Basis – assets and rights of the Company are accounted for at their historical or production cost 3. Revenue – the company should establish rules when the revenue must be recognized and subsequently recorded. In accrual accounting revenue is recognized when the products are already delivered. 4. Matching – its important to link the income of the period with the costs incurred for that income. 5. Consistency 6. Disclosure – states that the company should present enough information to form an opinion about its performance.

Accounting assumptions *...

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