Accounts eoy

Stakeholders

Those who have an intrest in a business

Internal stake holders

owner, manager, employees

External stakeholders

Customers, the bank, potential investors, government and tax authorities, competitoers, local community

What are the Ethical principles

Integrity, objectivity, confidentiality, Professional competence and due care

Integrity (ethical principle)

being straightforward and honest in professional and business relationships

Objectivity (ethical principle)

Avoid bias, conflict of interest and the undone influence of others when making professional judgements

Confidentiality (ethical principle)

Avoid the disclosure of information to others without permission

Not using a client’s information to you r advantage.

Professional competence and due care

They must stay abreast with relevant laws and regulations. Practicing due care mean when they have expertise in an area.

Accounting concepts and conventions (definition)

a set of rules which ensures accounting statements are prepared in the same way no mattter the situation.

Historical Cost concept

price of an asset, liability, or equity at which it was purchased or acquired for the first time

Money measurement concept

a business should only record an accounting transaction if it can be expressed in terms of money.

Business entity concept

The affairs of a business are to be treated as seprate from the personal activities of its owner.

Dual aspect concept

requires every transaction to be recorded in two accounts

going concern

Implies that the business will continue to operate for the foreseeable future

Realization

the profits can only be taken into account when it's certain it will be earned

Accrual concept

requires transactions to be recorded in the time period in which they occur, regardless of when the actual cash flows for the transaction are received.

Conservatism (prudence) - convention

revenues should be recorded only if their occurrence is certain, but all expenses, even those with a remote chance of incurrence, are to be recognized

consistency - convention

The accountant is expected to follow a method selected over a period of time

materiality - convention

Determines whether the omission or misstatement of information in a financial report would impact a reasonable user's decision making

Accounting equation

Assest= liability+ capital

Accounting cycle definition

The sequence of events and processes used to create the financial records of a business

stages in the accounting cycle

Stage 1: collects source documents

Stage two: List the key details from source documents in books of original entry

Stage three: poster information in ledger accounts

Stage four: prepare child balance to check the accuracy

Stage five: prepare end of your financial statements

features of technology

main: Automatic processing, integration of function, management information

Special: inventory control, payroll, credit control, management reports

Sole trader

business where one individual owns and controls the business

partnership

where two or more individuals own the business, they jointly control the business and shares the profits.

Limited liability companies

businesses owned by shareholders who each contribute to the funds needed to establish and run the business. shareholders’ responsibilities for the debts of the company is limited to the amount they invest..

co-operatives

organizations formed and controlled by the members. they are run to provide their members with goods and services rather than profits.

Benefits of technology in accounts

greater speed

greater accuracy

Reduction in staffing cost

More information available

improved accessability

Disadvantage of technology

Training cost

capital cost

risk of data lost

period of transition

maintenance and support costs

Source documents for return inwards and outwards

credit note, debit note respectively