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Accounting and Financial Statements - Coggle Diagram
Accounting and Financial Statements
Fundamentals of Accounting and the Financial Information System
Concept and Purpose
Recording transactions
Controlling resources
Generating financial information
Facilitating decision-making
Importance
Financial control
Planning
Decision-making
Users of Financial Information
Internal → managers, owners
External → banks, investors, suppliers, government
Accounting Principles
Business entity
Accrual basis
Consistency
Prudence
Going concern
Financial Information System
Input → data and documents
Processing → recording and classification
Output → financial information
Accounting EquationAssets = Liabilities + Equity
The Accounting Cycle and Recording of Transactions
Identification of transactions
Documentation
Invoices
Receipts
Supporting documents
General Journal
Debit
Credit
General Ledger
Trial Balance
Accounting Adjustments
Closing Entries
Financial Statements
Financial Statements.
Balance Sheet / Statement of Financial Position
Assets
Liabilities
Equity
Income Statement
Revenue
Costs
Expenses
Profit or Loss
Statement of Changes in Equity
Capital
Profits
Dividends
Changes in equity
Statement of Cash Flows
Operating activities
Investing activities
Financing activities
Notes to the Financial Statements
Supplementary information
Accounting policies
Explanations of figures
Analysis and Interpretation of Financial Statements.
Objectives
Evaluate results
Identify problems
Support decision-making
Horizontal Analysis
Compares different periods
Identifies increases and decreases
Vertical Analysis
Determines the percentage contribution of each item
Financial Ratios
Liquidity → ability to meet obligations
Debt/Leverage → level of debt
Profitability → ability to generate profits
Activity → efficiency in the use of resources
Interpretation
Strengths
Weaknesses
Trends
Risks
Decision-Making→ Based on the information obtained
Cost Accounting and Financial Management.
Cost Elements
Raw materials
Labor
Manufacturing overhead
Cost Classification
Fixed
Variable
Direct
Indirect
Production Costs
Materials
Labor
Manufacturing overhead
Break-Even Point→ Level where revenue = costs
Budget
Planning
Control
Projection
Financial Management
Resource management
Expense control
Financial planning
Investment evaluation
Accounting Application in Organizational Contexts
Accounting in Organizations
Private companies
Public institutions
Nonprofit organizations
Decision-Making
Planning
Control
Investment
Financing
Internal Control
Asset protection
Error prevention
Compliance with procedures
Transparency
Budgeting and Planning
Revenue
Expenses
Resources
Financial Accountability
Transparency
Accountability
Efficient use of resources
Importance for Management→ Allows organizations to control + evaluate + plan + decide