Untitled Lesson

​1. ACCOUTING

Accouting is a systematic process of summaring, recording and verifying financial transaction with the aim of reporting to relevant stakeholders.

2.TRANSACTION

Transaction is a monetary activity. e.g., customer purchases goods on cash or credit from business.

3. ACCOUNTING EQUATION

Accountion equation is a tool that is used to analyse transaction and identify accounts that are involve in that particular transaction. There are 3 elements of an accounting equation.

​4. ACCOUNTING REPORTS
Accounting reports show the results of the business's financial performance for a specific period.

Examples of accounting reports

1. Income statement
2. Balance sheet
3. Statement of changes in equity
4. Cash flow statement
5. Auditors report
6. Directors report

​5. USERS OF ACCOUNTIN REPORTS

a. Investors
b. Employees
c. Suppliers
d. Lenders
e. Government departments
f. Customers
g. Public


6. ACCOUNTING PRINCIPLES

Accounting principles is the roles that we use to prepare accounting report.

​Examples of accounting principles

1. Double entry principle- for every debit entry, there must be a credit entry.
2. Entity principle- the business is viewed as a separate entity from the owner.
3. Historical cost principle- fixed assets are recorded at their cost price, not their carrying value.
4. Accrual principle- Activities are reported in the relevant financial year.
5. Matching principle- Income must be matched with the expenses for that financial period.