The Concept of Accounting

Accounting can be an information system which identifies, records, analyzes interprets and communicates auto data of a financial entity. Accounting consists of three basic activities – it identifies, records, and communicates the economic era of an organization to interested users. Let us take a good look at these 3 activities.

Identifying Economic Events: Many events are happening every day in a business. A lot of them are affecting budget from the business whereas, some don’t. Events affecting financial position of an business i.e. Assets=Liability+ Owner’s Equity, are classified as Economic events and said to be recorded in accounting system. To distinguish economic events; a company selects the economical events strongly related its business. Types of economic events are the sale of snack chips PepsiCo, Providing of telephone services by AT & T, and payment of wages by Ford Motors Company. Samples of non-economic era of the identical companies might be appointing a fresh manager by PepsiCo and departure of the trusted employee from AT & T.

Recording Economic Events: After a company like PepsiCo identifies economic events, it records those events as a way to give you a good its financial activities. Recording is made up of keeping a systematic, chronological diary of events, measured in dollars and cents. Recording comes through a process called double entry accounting system. It is made up of recording, summarizing, checking mathematical accuracy and preparing statement of economic position.

Communicating Consolidate Financial Data: Finally, PepsiCo communicates the collected information to interested users by way of accounting reports. The most frequent of those reports are called Fiscal reports. Parties interested into business’s financial information might be classified into three main categories. The your list are Internal, External and Government. To really make the reported financial information meaningful, PepsiCo reports the recorded data in the standardized way. It accumulates information caused by similar transactions. For instance, PepsiCo accumulates all sales transactions on the certain time period and reports the data jointly amount in the company’s fiscal reports such data are said to get reported within the aggregate. By presenting the recorded data inside the aggregate, the accounting process simplifies numerous transactions and produces a series of activities understandable and meaningful.

For details about accounting please visit web portal: look at more info.

Leave a Reply