Please enable JavaScript.
Coggle requires JavaScript to display documents.
Introduction to Accounting Concepts, Activity 13.3: Accounting and…
Introduction to Accounting Concepts
Performance Measures
Quantitative Measures (numbers, dollars, scores).
Qualitative Measures (scaled competencies like teamwork skills).
Efficiency and Effectiveness of employees, projects, and workplace structures.
Main Accounting Categories
Financial Accounting
Financial Statements (Balance Sheet, Income Statement, Cash Flow Statement).
External Stakeholders (Investors, Creditors, Regulatory Bodies).
Goals (Accountability, Transparency, Accurate reporting).
GAAP (Generally Accepted Accounting Principles).
Responsibilities of Financial Accountants (Recording transactions, preparing statements, summarising transactions, analyzing data).
Managerial Accounting (Cost Accounting)
Internal Stakeholders (Managers, Executives).
Focus (Departments, products, projects).
Goals (Planning, controlling, decision-making).
Helps Managers (Set budgets, evaluate performance, assess costs and benefits, maximize profitability).
Tax Accounting
Focus (Compliance with tax laws).
Tasks (Preparing and filing tax returns, calculating tax liabilities, identifying deductions, maximizing tax benefits).
Difference between Accounting and Bookkeeping
Overall Function (Bookkeeping keeps up-to-date records; Accounting uses these to determine a company's financial position).
Purpose (Bookkeeping maintains records of transactions; Accounting analyzes and advises).
Result (Bookkeeping provides data; Accounting prepares and analyzes financial statements).
Key Skills (Bookkeeping requires accuracy; Accounting involves complex financial analysis).
Typical Tasks (Bookkeeping: journal entries, payroll; Accounting: audits, tax planning).
Role of Ethics in Accounting
Integrity (Honesty and fairness in reporting).
Objectivity (Avoid biases and conflicts of interest).
Professional Competence and Due Care (Maintain skills and act diligently).
Confidentiality (Respect sensitive information).
Professional Behavior (Compliance with laws and avoiding discrediting conduct).
Main Users of Accounting Information
Internal Users
Management (Needs detailed financial data for decision-making).
Employees (Seek information on compensation, job security).
Internal Auditors (Evaluate effectiveness, compliance).
External Users
Investors (Assess profitability, stability).
Creditors (Evaluate creditworthiness).
Regulatory Agencies (Ensure compliance).
Customers (Financial stability of the company).
Analysts (Evaluate performance).
Tax Authorities (Tax assessment and compliance).
Basic Management Functions
Planning (Setting goals in advance).
Organising (Grouping tasks and designating resources).
Staffing (Selecting and placing employees).
Directing (Guiding and supervising efforts).
Controlling (Monitoring and making adjustments).
7.Unit of Measure in Accounting
Common Currency (All transactions recorded in a single currency for consistency)
Main Forms of Business
Sole Proprietorship: Single owner, unlimited personal liability.
Partnership: Owned by two or more people; includes General Partnership (all partners liable) and Limited Liability Partnership (some partners have limited liability).
Corporation: Separate legal entity; limited liability for owners but complex to establish.
Other Forms: Includes Cooperatives and Limited Liability Company (LLC) (combines aspects of partnerships and corporations).
Activity 13.3: Accounting and Concepts DIEGO URISTA CAMACHO