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Accounting: Difference between revisions
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{{accounting}} | {{accounting}} | ||
'''[[w:Accounting|Accounting]]''' ( verb ) or '''accountancy''' ( noun ) is the process of communicating [[w:financial information|financial information]] about a [[w:business entity]] to users such as [[w:shareholders|shareholders]] and [[w:manager|manager]]s. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of [[w:management|management]]; the art lies in selecting the information that is relevant to the user and is reliable. ( Wikipedia ) | |||
::'''[[w:fi:Laskentatoimi]]''' on toimintaa, jonka tehtävänä on kuvata [[w:fi:rahaprosessi|rahaprosessi]]a, kerätä, rekisteröidä ja analysoida yrityksen tai muun organisaation toimintaa kuvaavia taloudellisia laskelmia. ( Finnish Wikipedia ) | |||
The principles of accountancy are applied to business entities in three divisions of practical art, named | |||
# '''accounting''' ( [[w:fi:laskentatoimi]] ) which is classically split to ( [[w:Financial accountancy|financial]] and [[w:Managerial accounting|managerial]] accounting ) | |||
#'''[[w:bookkeeping|bookkeeping]]''' ( [[w:fi:kirjanpito]] ) and | |||
#'''[[w:auditing|auditing]]''' ( [[w:fi:auditointi]], mahd. [[w:fi:tilintarkastus]] ). ( Wikipedia ) | |||
* '''Bookkeeping''', in [[w:business|business]], is the recording of financial transactions, and is part of the process of accounting. | |||
::: Transactions include purchases, sales, receipts and payments by an individual or organization. ( Wikipedia ) | |||
{{bookkeeping}} | {{bookkeeping}} | ||
== Accounting for a New Business 1 == | == Accounting for a New Business 1 == | ||
=== Accounting classes === | === Accounting classes === | ||
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:: <tt> minus outgoing </tt> '''[[w:expenses]]''' | :: <tt> minus outgoing </tt> '''[[w:expenses]]''' | ||
:: <tt> equals </tt> '''[[w:net income]]''' == '''The [[w:bottom line]]''' == '''[[w:net profit]]''' == [[w:net earnings]]''' | :: <tt> equals </tt> '''[[w:net income]]''' == '''The [[w:bottom line]]''' == '''[[w:net profit]]''' == [[w:net earnings]]''' | ||
:an example of an income statement for a really small business involved in international trade | :an example of an income statement for a really small business involved in international trade | ||
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==== Balance sheet ==== | |||
:* A '''[[w:Balance sheet]]''' or '''statement of financial position''' ( in [[w:financial accounting]] ) is a summary of the financial balances of a [[w:sole proprietorship]], a [[w:Partnership|business partnership]], a [[w:corporation]] or other business organization, such as an [[w:Limited liability company|LLC]] or an [[w:LLP]]. [[w:Asset]]s, [[w:liability (financial accounting)|liabilities]] and [[w:ownership equity]] are listed as of a specific date, such as the end of its [[w:financial year]]. A balance sheet is often described as a ''"snapshot of a company's financial condition"''. ( Wikipedia ) | :* A '''[[w:Balance sheet]]''' or '''statement of financial position''' ( in [[w:financial accounting]] ) is a summary of the financial balances of a [[w:sole proprietorship]], a [[w:Partnership|business partnership]], a [[w:corporation]] or other business organization, such as an [[w:Limited liability company|LLC]] or an [[w:LLP]]. [[w:Asset]]s, [[w:liability (financial accounting)|liabilities]] and [[w:ownership equity]] are listed as of a specific date, such as the end of its [[w:financial year]]. A balance sheet is often described as a ''"snapshot of a company's financial condition"''. ( Wikipedia ) | ||
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:::::* '''[[w:Liability|Liabilities]] == [[w:Current liabilities]] + [[w:non-current liabilities]]''' | :::::* '''[[w:Liability|Liabilities]] == [[w:Current liabilities]] + [[w:non-current liabilities]]''' | ||
::To understand what's going on with a [[w:business]] in addition to having an [[w:income statement]] one must also have knowledge of where the capital is, what is it's cost and it's payoff i.e. the <u>'''''[[w:Balance sheet]]'''''</u>, then you can calculate all sorts of fun [[w:metrics]] like [[w:Return on equity]] and [[w:return on investment]] etc. | |||
In [[w:financial accounting]], a '''[[w:balance sheet]]''' or '''statement of financial position''' is a summary of the financial balances of a [[w:sole proprietorship]], a [[w:Partnership|business partnership]], a [[w:corporation]] or other business organization, such as an [[w:Limited liability company|LLC]] or an [[w:LLP]]. '''[[w:Asset]]s, [[w:liability (financial accounting)|liabilities]]''' and '''[[w:ownership equity]]''' are listed as of a specific date, such as the end of its [[w:financial year]]. A balance sheet is often described as a "snapshot of a company's financial condition". Of the four basic [[w:financial statements]], the balance sheet is the only statement which app | |||
=== Balances and flow statements === | === Balances and flow statements === | ||