Hello guys !
How are you , and how about Physics guys . Physics is interesting right . As long as I am having my final exam for account paper on this Friday I want to focus about Account first . No need to worry guys I will write about Physics when this exam finished . Stay tune with me okay .
I am summarizing a chapter that need me to memorize it . And I think it's better if I write it on Steemit as my additional notes because this is must be an interesting way to fight my laziness to read my notes.
What Is Account ?
- Is a system or activities of recording and summarizing business and financial transaction and reporting the result .
What Is Account Basic Activities ?
- Identifying economic event- purchasing asset , selling or buying
- Recording economic activities - Classify and summarize and it also called as Bookeeping .
- Communicate information of the economic event to users - Prepare the Financial Statement
For Your Information Accounting Including 3 Of Them Indentifying,Recording and Communicate .Meanwhile , Bookkeeping is Only Recording The Economics Event
Aim Of The Financial Reporting
- To provide financial info that presented in Financial Statement to the external and internal users .
Who is external and internal users ?
Internal Users:
- Owner
- Employees
- Internal Auditor
External Users:
- Investor
- Government
- Supplier
Qualitative characteristic of accounting information
- We are able to make correct decision and it should has specific characteristic
First of all is ,
- Relevance - information that can influance us to make a decision
- Faithful Representation - information that reflect the business entities and it must be free from error
- Compardibility - Can be compare with the year before with same industry business entity
- Verifiability - It must be verified although with any different resource it still provide similar information
- Timeliness - It based on due dates / reported timely
- Understandibality -- Accounting Information must be able to understand by the users and also need to include additional details
The building block of accounting
- An accountant must follow certain standard of accounting
- Ethical behavior must be in place to ensure the standard work
Ethics In Accounting
- System of moral principles
- Branch of philosophy
- Define what is good for society and individual
- The standard conduct by one's action are judge as right or wrong , honest or dishonest and fair or not fair
Efective financial report dependa on ethical behavior
What is GAAP
- GAAP is stand for Generally Accepted Accounting Principle it's common set of standard that develope by accounting profession to indicate how to report the economic events
- In Malaysia accounting standard body that responsible to issue standard is called Malaysia Financial Reporting Standard .
Measurement Principles
- Historical Cost Principle - Asset and liability measurement should be hand on actual price
- Objectivity Principles - Transaction must be recorded based on evidence or source document and trancsaction can be verified
- Full Disclosure Principles - Business entities mus disclose all info in the Financial Statement to enable user to make right decision .
- Revenue and Expense -Revenue should be recognized when earn and expanse should recognized when incur.
Assumption
- Monetary Unit Assumption - We only record transaction that can be measured in term of money .
- Going Concern - States that the business will continue in operation and has indefinite life
- Accrual Accounting - Transaction must be recognized when they in
- Neutrality - Accounting information must be free from biasness and it must reflect the picture of the entity
- Materiality - It will be material if it can affected the users decision of the Financial Statement
- Consistency - Business entity must use similar accounting treatment for the following year
- Periodicity - Financial Statement should be present at least anually
- Economic Entity - Owner and the business are two different entities . Accountant only record the business transaction and not the owner transaction except when the intoduce capital and owner withdraws asset for personal using .
So thats all for today , I hope you enjoy to read this content and wish me luck for my account paper on this Friday . Thanks !
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