-
Summarising Events
- Decide on the purpose the summary is to serve.
- Select the aspects of each event which are related to that purpose.
- Prepare a summary.
-
Transactional Analysis
Systematic technique used to classify, analyse and summarise a large number of transactions, presented in the form of the basic financial statements.
-
Elements of Financial Statement
- Assets
- Liabilities
- Owner's Equity
- Income
- Expenses
-
Assets
Resources owned or controlled by the entity for the purpose of providing economic benefits to that entity in the future.
-
Equity
Amounts that are owed by the business.
-
Liabilities
Represent future obligations or sacrifices and are usually settled using cash (to parties outside the business).
-
Owner's Equity
Represents the owner/s claim or net worth in the assets of the entity.
-
Accounting Equation
Assets = Liabilities + Owner's Equity
-
Value In Use
The value an item has for being used to generate other resources which have either some value in exchange or some value in use.
-
Value In Exchange
The value an item has in exchange for cash, another resource or for the cancellation of a debt.
-
Liquidity
The ability of an entity to convert assets into cash.
-
Accounting Entity Aspect
For accounting purposes, the viewpoint taken is always that of the entity being accounted for.
-
Matching Process (Principle)
The method of allocating a long-term expense over the period of its life.
-
Depreciation
The systematic allocation of the depreciable amount of an asset over its useful life.
-
Reliability
The information should faithfully represent, without bias or undue error, the transactions and events of the business.
-
Relevance
Helps the users to form opinions about past, present or future events, and/or it confirms or corrects their previous judgements about their decisions.
-
Economic Resources Assumption
Accountants are concerned with placing an economic value on the resources controlled by the entity.
-
Money Measurement Assumption
Suggests that accounting transactions will be expressed in monetary terms, in the unit of monetary measurement for the country in which the business is located.
-
Accounting Period Assumption
The life of an entity can be broken into periods for the purpose of providing timely information on the entity's performance and financial position.
-
Continuity Assumption (Going-Concern)
In the absence of evidence to the contrary, the entity is assumed to continue to operate for the foreseeable future.
-
Capital Maintenance Assumption
Profit can be recognised only after the value of the owner's equity at the beginning of the period has been maintained.
-
Faithful Representation Assumption
A strength of the historical cost accounting system.
-
Verifiability Assumption
Essentially similar measure's or conclusions would be reached if two or more qualified persons examined the same data.
-
Conservatism Assumption
Implies that when faced with uncertainty in dealing with transactions, accountants will generally take the more cautious approach.
|
|