Accounting
Chapter 1 Mindmap
What is Accounting?
Gathering Financial Information
Preparing/Collecting Records
Rearranging, summarizing, and classifying
Preparing Financial Reports
An Information System
Uses of Accounting
Accounting in Daily Life
Having accounting knowledge can prove useful in daily life, as it can help when dealing with personal business affairs like personal budgeting, personal financial records, and preparing income tax return. It also allows you to take any business opportunities
Owning your own business
When creating your own business, a business owner has to deal with banking, keeping track of accounts payable and recievable, keeping accounting records for the government, making income tax statements, and possible preparing payroll and payroll deductions.
Accounting as a Profession
There used to be 3 jobs you could get as a professional accountant, however it is now merged as one: Chartered Professional Accountant (CPA).
Public Accountant - Works for the general public (anyone who pays them), doing an important task called Auditing. An audit is the testing of records and procedures of a business so that they can express their opinions on their financial statements.
Management/Institutional Accountant - Works for large companies, the government, banks, universities, etc.
When becoming a professional accountant, there are entry-level and high-level positions. People filling these spots can have little to no training or multiple years of experience. Accountants get training from high school, college or university, and gather on-the-job experience to be prepared.
Roles In Accounting
The Accountant Clerk/Book Keeper
The work of an Accountant Clerk is known as bookkeeping, including ensuring transactions are properly recorded, recording account entries in books of account, making many types of payroll records, and carrying out all bank transactions. Accountant clerk's are usually more entry level accountants.
Accountant
Requires more education and experience, making sure the correct data is put into the accounting system, analyzing financial statements and making reports for management.
Characteristics of Business
Types Of Business
The Service Business
Sells a service to people
(e.g. salon, car wash)
The Merchandising Business
Buys and Resells goods at a
higher price (e.g. supermarkets)
Manufacturing and Producing Business
Manufacturing: Buys raw materials and
converts them into products (e.g. car companies)
Producing: Collect and sell raw materials
(e.g. farms, mining)
The Non-Profit Organization
Carry out social needs without
trying to collect a profit
Forms of Business Ownership
Sole Propietorship
Single owner of the business
Partnership
Two or more people own the business
Corporation
Owned by Shareholders
The Nature of Accounting
Categories of Accounting Work
Routine Daily Activity
Activities that occur the same way every day (Processing bills, preparing cheques, daily banking, etc.)
Periodic Accounting Activities
Activities that occur at regular intervals (weekly, biweekly, monthly)
Miscellaneous Activities
Activities that occur at unpredicted times (accounting employee resigns, concerns over bank loan size, etc.)
The Accounting Cycle
Inner Ring - Activies Done Annually
Outer Circle - Ongoing intermitten activities
Classifying different financial data, rearranging the data for financial analysis, and summarizing the data in a neat, readable way.
Gathering any financial information about the activity of the business
To help management make decisions and serve the needs of bankers/investors outside of the business.
Uses records to provide evidence of purchases