Transcript What is Accounting

What is Accounting ?
Purpose, Importance &
Relation to Business
Purpose, Importance & Relation to
Business
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Purpose, Importance & Relation to
Business
1- What is Accounting and what is its purpose?
2- Why is Accounting Importance ?
3-How dose Accounting Relate to Business ?
1- What is Accounting and what is its
purpose?
2- Why is Accounting Importance ?
3-How dose Accounting Relate to
Business ?
1- What is Accounting and what is its
purpose?
2- Why is Accounting Importance ?
3-How dose Accounting Relate to
Business ?
What is Accounting ?
Accounting
it is the act of collecting ,organizing , and
interpreting financial data
What is Accounting ?
A
L
O
E
What is Accounting ?
A ssets
L iabilities
O wner
E quity
What is Accounting ?
Accounting Equation
Assets = Liabilities + owner’s Equity
What is Accounting ?
Assets
Items that are owned ,have value, and can be
turned into cash
What is Accounting ?
Liabilities
What is owed
What is Accounting ?
Owners Equity
Is the amount of money that a person has
invested into an organization
Accounting Equation
Assets = Liabilities + owner’s Equity
Accounting Equation
Assets
Liabilities
Owner Equity
$30,000
25,000
15,000
$50,000
$20,000
$70,000 = $50,000 + $20,000
Purpose
1- What is Accounting and what is its purpose?
The main reason is to be able to produce financial
statements. In order to produce the financial
statements
Purpose
Accounting Cycle
12 months to complete
Importance
2- Why is Accounting Importance ?
Importance
Where did my money gone ?????
Financial Statements
Income Statement
tells as how much money was mead
or lost in a given time period
Financial Statements
Retained earning s
statement
How much money that was made was
reinvested into the company
Financial Statements
Balance sheet
The financial statement that lists all the assets ,
liabilities, and owner’s equity
of the company
Financial Statements
Statement of cash flows
Tells how much money came in and was paid
out in a specific time period
Relation to Business
3-How dose Accounting Relate to Business ?
Accounting lets the company know :
1-how much money it makes .
2- How Much Money its spends.
3- what its assets are worth.
4- how much money does the company need to borrow to expend
5- report accurate numbers to the CRA
Summery
IN Summery .
 What accounting actually is ? ” it is the act of collecting, organizing,
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and interpreting financial data”
ALOE. “is the acronym for the terms used in the basic accounting
equation - assets, liabilities, and owner's equity”.
Assets are what you own.
Liabilities are what you owe.
Owner's Equity is what you have personally invested in a company.
A= L+OE
Summery
 -What is the purpose of accounting?
“which is ultimately to produce the financial
statements of a company”.
 Income statement tells how much money a company made.
 Statement of retained earnings tells how much of the money that was made
was reinvested in the company.
 Balance sheet lists all assets, liabilities, and owner's equity accounts and tells
the balance of each account.
 Statement of cash flows tells the inflow and outflow of a company's cash for a
given time period.'
Summery
 -How accounting relates to business?
 the most important reasons is so that a company can
know how much money they're making, where it's coming
from, and where it's being spent.
 government requires reporting financial data to the CRA
for tax purposes.
 The last important reason , investors and creditors relied
heavily on these statements to tell them whether the
company is operating efficiently or not .
Got It ??????
Now for my final question: do you know the answers
to these three questions ?