FINANCIAL ACCOUNTING CONCEPTS; PROCEDURES AND CONCEPTS

ACCOUNTING - -Planning; Recording; Analyzing; Interpreting financial information. -PLANNING DECISIONS - -Financial information is used to determine future actions. Historical information provided by the accounting process serves as a basis for forecasting. -CONTROL - -Using financial information to evaluate the results of financial activities. -THE FUNCTION OF ACCOUNTING – -1. The value added to the net worth of a person/entity during a particular period. 2. The accumulated net worth of that person/entity -PROFIT ENTITIES - -Sole traders; Partnerships; Close Corporations; Companies -NON-PROFIT ENTITES - -Clubs; Charitable Organizations; Churches; Educational Institutions; Trusts -PUBLIC SECTOR - -The Government; Provinces; Departments; Boards and Commissions; Municipalities -USERS OF FINANCIAL INFORMATION – -1. Investors - Providers of capital. Concerned with the risk involved in their investment. Need information to decide whether to invest, hold, or withdraw funds. 2. Employees - Interested in entity's stability and profitability for benefits and job security. 3. Lenders - Use financial information to determine if loans can be paid back with interest. 4. Suppliers and other trade creditors - Use information for assurance that amounts owed are paid on time. 5. Customers - Need to know the state of the entity for reliability. 6. Government and their agencies - Use financial information for taxation, policies, and statistical purposes. 7. Public - Entities often contribute to the local economy by employing people and local structures: