5 main activities in accounting
- Gathering financial info
- Preparing and collecting personal records
- Rearranging, summarizing, and classifying financial info into a more usable form
- Preparing information reports and summaries to help management reach decisions, serve the needs of groups outside the business, and measure profitability
- Establishing controls to promote accuracy and honesty among employees
4 types of business
- Service
- Merchandising
- Manufacturing
- Non-profit
3 forms of business ownership
- Sole proprietor
- Partnership
- Corporation
Routine daily activities (3)
- Paying bills
- Daily banking
- Recording transactions
Periodic accounting activities (+ examples)
Occur at regulars intervals (pay cheques, financial reports- quarterly, income tax returns- annually)
2 examples of miscellaneous activities
- employee resignation
- bankruptcy
Accounting cycle (outer ring)
- Transactions occur
- Transactions recorded in journal
- Journal entries posted to ledger accounts
- Trial balance + interim financial statements prepared
Accounting cycle (inner ring)
- Worksheet prepared
- Formal financial statements prepared
- Ledger accounts adjusted + closed
- Post-closing trial balance prepared
Inner circle tasks are done once a year, typically based on outer ring activities
Accountant
Maintains and develops accounting systems
Interprets data and prepares reports
Supervises the work of accounting employees
Participates in management decisions
Accounting
Process of gathering and preparing financial information about a business or other organization in a form that provides accurate and useful records and enables decisions to be made
Accounting clerk
Ensures that transactions are properly recorded and the supporting documents are present and correct
Accounting cycle define
Total set of accounting procedures that must be carried out during each fiscal period
Audit
An examination of the accounting records and internal controls of a business in order to be able to be able to express an opinion about the business’s financial position and results of operation
Fiscal period
Period of time over which earnings are measured
Manufacturing business
Business that buys raw materials and converts it into new products, selling it to earn a profit
Merchandising business
Business that buys goods and resells them to turn a profit
Non-profit organization
An organization that carries out social or charity work and is not run for profit
Partnership
A form of business in which two or more people share the ownership and operation of a business
Producing business
A business which produces materials directly from natural resources
Public accountant
An accountant who offers services professionally to the general public
Service business
A business that sells a service, not a product
Sole proprietorship
A business enterprise, the equity of which entirely belongs to one person
