-Nearly every one practices accounting e.g. balancing our cheque book, preparing income tax return, paying your phone bill.
In the above examples you are working with accounting information
Accounting- Language of business. Widely used terms in business: Assets, Liabilities, Net Income, Earnings per Share etc.
It is the art of interpreting, measuring & recording, and communicating the results of economic activities.
To provide decision makers with information useful in making economic decisions.
Primary goal of this course:
To develop your understanding of accounting information and to some extent your abilities to use this information in making economic decisions. We will start by introducing basic concepts of financial accounting.
Types of Accounting Information:
i) Financial Accounting
ii) Management Accounting
iii) Tax Accounting
Financial Accounting: General purpose information. Information describing finacial resources (assets) and obligations (liabilities and owners equity) of an economic entity and results of its operations (revenue genrated & expenses incurred) during a period.
Information is primarly for outsiders (investors, creditors etc)
However, company’s managers need such information to run the company for eg bank balance, accounts receivable from customers.
Management Accounting: Involves the development and interpretation of accounting information intended to specifically aid management in running the business. The information as an example helps in setting company’s goals, evaluation of performance of departments/employees, deciding to introduce new line of product.
Tax Accounting: Preparation of Income Tax Returns, and Tax Planning. To a great extent tax returns are based on financial accounting information. However, information is often adjusted to conform to tax rules.
Tax Planning: Anticipating the tax effect of business transactions and structuring these...