Accounting is an information system which identifies, records, analyzes interprets and communicates the economic data of the financial entity. Accounting contains three basic activities – it identifies, records, and communicates the economical era of a corporation to interested users. Consider a good look at these three activities.
Identifying Economic Events: Many events are happening every day in business. Many of them are affecting position in the business whereas, some don’t. Events affecting budget 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 business selects the economic events strongly related its business. Examples of economic events include the sale of snack chips PepsiCo, Providing of telephone services by AT & T, and payment of wages by Ford Motors Company. Types of non-economic events of precisely the same companies could be appointing a fresh manager by PepsiCo and departure of the trusted employee from AT & T.
Recording Economic Events: Each company like PepsiCo identifies economic events, it records those events so that you can give a good its financial activities. Recording is made up of keeping a systematic, chronological diary of events, measured in dollars and cents. Recording comes by way of a process called double entry accounting system. The system consists of recording, summarizing, checking mathematical accuracy and preparing statement of monetary position.
Communicating Consolidate Financial Data: Finally, PepsiCo communicates the collected information to interested users by using accounting reports. The commonest of such reports are called Fiscal reports. Parties interested into business’s financial information may be classified into three main categories. The your list are Internal, External and Government. To help make the reported financial information meaningful, PepsiCo reports the recorded data in a standardized way. It accumulates information resulting from similar transactions. For example, PepsiCo accumulates all sales transactions on the certain stretch of time and reports the information together amount in the company’s financial statements such data are said being reported in the aggregate. By presenting the recorded data from the aggregate, the accounting process simplifies numerous transactions and constitutes a number of activities understandable and meaningful.
More info about taxes see our site.
