Trimis la data: 2010-02-14
Materia: Engleza
Nivel: Facultate
Pagini: 36
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Autor: Laura Stefan
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Accounting is the process of recording, classifying and summarising financial information collected by bookkeepers for analysis and interpretation. It provides guidance in making business decisions and provides useful economic information to interested parties and users who depend on these results.Bookkeeping is the detailed and accurate recordind of all transactions which take place in a business. It is necessary to record the date, nature and value (in money terms) of the transaction. Bookkeeping records provide the information from which financial accounts are prepared. Source documents arise as a result of transactions. It is the task of the bookkeeper to convert financial data gathered from source documents into useful economic information.
Accounting is concerned with the economic activities of a business. Accounting involves gathering information, processing it and reporting on it to management and other interested users. This information is used to evaluate past economic events, control current economic activities and make economic decisions and plans for the future.

Over the years, the accounting profession evolved without a defined set of guiding principles. Confusion often arose as different firms used veryind methods to correct similar problems. This made comparison of financial reports between companies and over time difficult, as information was interpreted in different ways by different people. For these reason, c conceptual framework, in the form of a number of concept statement, is being developed to provide a set of guiding principles for the accounting profession.

Accountants themselves have developed traditional ways of doing things. This is reflected in the Accounting Conventions, which are generally accepted accounting principles which have been used for many years. These conventions (or accepted practices) include those described below.
Accounting entity convention:For accounting purposes, the business of a sole trader or a partnership is regarded as a separate accounting entity; that is, a being in it's own right.

Only the transactions of the business or the partnership are recorded. The personal financial dealings of the owner/s are completely separate to, and distinct form, those of the business.Under the continuity of activity convention, the business is regarded as an ongoing entity that will continue to operate in the future.Under the historical cost convention, all transactions are recorded as they occur and at the monetary value at that time. Assets are recorded at their value (original cost) at the time of purchase.

This concept divides the accounting life of the business into periods of equal length, usually a year, but may be quarterly or even monthly. This makes comparisons with previos results easier, assits in determining profit or loss and allows for matching revenues earned with expenses incurred during the period.The most common reporting period is the financial year which could be the same with the calendaristic year.
Under the monetary convention, all transactions of the business are recorded in monetary terms. A transcation is the exchange of goods or services for money.

The Sales account is used to record credit sales of trading sock.During the course of the business, inventoryis depleted and replenished on a recurring basis as stock is sold and then replaced. Sales of trading stock are recorded in the Sales account as a revenue of the business.The business has also acquired an asset account, Accounts Receivable, in which details of transactions with trade debtors (persons or business to whom Metro Interiors sell trading goods on credit) are recorded.

This account is increased to reflect the increase in amounts owing by trade debtors.The Purchases account is used to record credit purchases of trading stock. Replacements or additions to trading stock are recorded in the Purchases account as an expense of the business.
The business has also required a liability account, Accounts Payable, in which details of transactions with trade creditors (persons or business from which Metro Interiors has purchased trading goods on credit) are recorded.
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