Professional Documents
Culture Documents
TO
1 ACCOUNTING
Records
Records
information
Relevant
Relevant Communicates
Communicates
that is
Reliable
Reliable
to
tohelp
helpusers
usersmake
make
Comparable better
betterdecisions.
decisions.
Comparable
Ropidah, Haslinda, Aryati, Liana The McGraw-Hill Companies, Inc., 2005
Definition of Accounting (continues..)
Summarising
Classifying Recording Accounting
Reports
Prepare
accounting
reports
Sorting out Transactions SOFTBYTE
accounting are recorded Annual Report
transactions into in the books
orderly and of business
meaningful
categories
Analyze and
interpret
Ropidah, Haslinda, Aryati, Liana for users
The McGraw-Hill Companies, Inc., 2005
Bookkeeping
Bookkeeping Definition
Definition
Classifying Recording
Bookkeeping is
the process of
Summarising
External Users
Internal Users
i a l
a nc ts
Fin epor
R
Emplo
yees
Relevant
Relevant Affects
Affectsthethedecision
decisionof
of
Information
Information its
itsusers.
users.
Reliable
Reliable Information
Information Is
Istrusted
trustedby
by
users.
users.
Comparable
Comparable Is
Ishelpful
helpfulin
incontrasting
contrasting
Information
Information organizations.
organizations.
Ropidah, Haslinda, Aryati, Liana The McGraw-Hill Companies, Inc., 2005
Setting
Setting Accounting
Accounting Principles
Principles
Financial
FinancialAccounting
Accounting
Standards
StandardsBoard
Board is
isthe
the private
private
group
groupthat
that sets
setsboth
bothbroad
broad and
and
specific
specific principles.
principles.
The
TheSecurities
Securities Commission
Commission is isthe
the government
government
group
groupthat
thatestablishes
establishesreporting
reporting requirements
requirements
for
forcompanies
companies that
thatissue
issueshare
sharetotothe
thepublic.
public.
Consistency
Now Future
Separate Entity Going-Concern Principle
The business is accounted for Reflects assumption that the
separately from other business business will continue operating
entities, including its owner instead of being closed or sold
Objectivity
Each transaction must be recorded
Historical Cost
based on objective evidence or
Accounting information is based
verified and unbiased information
on actual cost.
Full Disclosure
Matching of Revenue & Expenses
Report enough information for
All expenses incurred to generate
users to make knowledgeable
revenue must be reported within
decisions about the company
the period in which the revenue is
reported
Ropidah, Haslinda, Aryati, Liana The McGraw-Hill Companies, Inc., 2005
Accounting
Accounting Principles
Principles
Consistency
The same accounting period will be used from one accounting
period to another accounting period.
Example : Depreciation
Materiality
Conservatism
Accountants are required to
Income and assets be reported at
accurately account for significant
their lowest reasonable amounts (i.e.
items and transactions
minimizing the assets and
understating the income)
RELEVANCE RELIABILITY
1. Predictive value 1. Verifiable
2. Feedback value 2. Faithful representation
3. Timely 3. Neutral
COMPARABILITY CONSISTENCY
7. Product costs issue reports only at the end issue reports at any time
of a reporting period. and with any degree of
frequency, depending
upon management's
need for the information.
Ropidah, Haslinda, Aryati, Liana The McGraw-Hill Companies, Inc., 2005
Differences
Differences between
between Financial
Financial and
and Cost
Cost
Accounting
Accounting
CHARACTERISTICS FINANCIAL ACCOUNTING COST ACCOUNTING
8. Time horizon only concerned with Cost accounting does this
reporting the results of too, but also can be
reporting periods that have involved in a variety of
already been completed. projections for future
periods.
Proprietorship
Proprietorship Partnership
Partnership Corporation
Corporation
Characteristics
Characteristics Proprietorship
Proprietorship Partnership
Partnership Corporation
Corporation
Business
Businessentity
entity yes
yes yes
yes yes
yes
Legal
Legal entity
entity no
no no
no yes
yes
Limited
Limited liability
liability no
no* no
no* yes
yes
Unlimited
Unlimited life
life no
no no
no yes
yes
Business
Businesstaxed
taxed no
no no
no yes
yes
One
One owner
owner allowed
allowed yes
yes no
no yes
yes
**Proprietorships
Proprietorshipsandandpartnerships
partnershipsthat
thatare
areset
set up
upas
asLLCs
LLCs
provide
providelimited
limitedliability.
liability.