9780273718208_pp01

advertisement
Slide 1.1
Definition of accounting
The process of identifying, measuring, and
communicating economic information to permit
informed judgements and decisions by users of the
information.
Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008
Slide 1.2
History of accounting
Seven key ingredients were required for the
development of a formal system of accounting:
•
•
•
•
•
•
•
Private property
Capital
Commerce
Credit
Writing
Money
Arithmetic.
Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008
Slide 1.3
The objectives of accounting
Accounting has many objectives, including letting
people and organisations know:
•
•
•
•
•
•
•
•
if they are making a profit or a loss;
what their business is worth;
what a transaction was worth to them;
how much cash they have;
how wealthy they are;
how much they are owed;
how much they owe someone else;
the necessary information so that they can keep a
financial check on the things they do.
Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008
Slide 1.4
Users of accounting information
Possible users of accounting information include:
•
•
•
•
•
•
•
Managers
Owner(s) of the business
A prospective buyer
The bank
Tax inspectors
A prospective partner
Investors.
Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008
Slide 1.5
The accounting equation
Assets = Capital + Liabilities
Alternatively
Resources: what they are = Resources: who supplied them
Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008
Slide 1.6
The accounting equation rearranged
The equation can be rearranged so as to enable
the calculation of missing figures:
Assets = Capital + Liabilities
Capital = Assets – Liabilities
Liabilities = Assets – Capital
Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008
Download