Accounting consists of three basic activities
identification / recording / communication
Internal Users
Finance/ Marketing / Management/ Human Resources
External Users
Investors/ Creditors/ Investors
Monetary unit assumption
requires that companies include in the accounting records only transaction data that can be expressed in terms of money
Economic entity assumption
requires that activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities
forms of business ownership
- Proprietorship : owned by one person/ owner is often manager or operator/ Owner receives any profits, suffers any losses, and is personally liable for all debts
- Partnership : Owned by two or more persons/ often reteil and service-type businesses/ Generally unlimited personal liability/ Partnership agreement
- Corporation : Ownership divided into shares/ separate legal entity organised under corporation law/ limited liability
income statement
report the profitability of the company’s operations over a specific period of time
retained earnings statement
report the changes in retained earnings for a specific period of time
statement of financial position
reports the assets, liabilities, and equity at a specific date
statement of cash flow
information on the cash receipts and payments for a specific period of time
comprehensive income statement
other comprehensive income items are not part of net income
IFRS is considered to be more principles-based and less rules-based than GAAP
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