Accounting Fundamentals

Accounting

A way of recording, analysing and summarising the transactions of an entity

Role of an accountant

To measure revenue and expenditure and sometimes profit

Three types of profit focused business entity

Sole traders, partnerships, limited liability companies

Sole traders

People who work for themselves

Partnerships

Two or more people agree to share the risks and rewards of a business together

Limited liability companies

Incorporated to take advantage of limited liability for owners. Owners only responsible for amount to be paid for their shares

IFRS Conceptual Framework para 1.2

The objective of financial reporting is to provide information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions relating to providing resources to the entity