Editing Accounting
The edit can be undone. Please check the comparison below to verify that this is what you want to do, and then publish the changes below to finish undoing the edit.
Latest revision | Your text | ||
Line 1: | Line 1: | ||
{{accounting}} | |||
{{accounting}} | {{Q|'''[[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.|Wikipedia|[[w:accounting|accounting]]}} | ||
{{Q|'''Laskentatoimi''' on toimintaa, jonka tehtävänä on kuvata [[w:fi:rahaprosessi|rahaprosessi]]a, kerätä, rekisteröidä ja analysoida yrityksen tai muun organisaation toimintaa kuvaavia taloudellisia laskelmia.|Suomenkielinen Wikipedia|[[w:fi:Laskentatoimi|laskentatoimi]]}} | |||
:'''[[w: | == Definition of accounting and accountacy == | ||
: | ::'''[[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. | ||
:'''[[w: | ::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}} | {{bookkeeping}} | ||
== Accounting for a New Business 1 == | |||
= | === Terminology === | ||
== | |||
==== Double-entry bookkeeping, credit and debit ==== | |||
: In '''[[w:double-entry bookkeeping]]''' ( [[w:fi:Kahdenkertainen kirjanpito]] ) a minimum of '''2 [[w:ledger]] accounts''' ( [[w:fi:Reskontra]] ) are touched, one '''[[w:debit]]ed''' and another '''[[w:credit]]ed''' with every action recorded. ( [[w:fi:Debet ja kredit]] ) | |||
== | |||
: | |||
==== Balances and flow statements ==== | |||
( [[w:fi:XYZ]] ) | |||
:*For every '''[[w:fiscal year|fiscal year]]''' ( [[w:fi:Tilikausi]] )a business must produce a '''[[w:annual report]]''' which contains ( in [[w:Finland]] ) | :*For every '''[[w:fiscal year|fiscal year]]''' ( [[w:fi:Tilikausi]] )a business must produce a '''[[w:annual report]]''' which contains ( in [[w:Finland]] ) | ||
:** the annual '''[[w:financial statement]]''' ( [[w:fi:Tilinpäätös]] ) which contains naturally | :** the annual '''[[w:financial statement]]''' ( [[w:fi:Tilinpäätös]] ) which contains naturally | ||
Line 76: | Line 33: | ||
:** Textform description of businesses activities ( [[w:fi:toimintakertomus]] ) | :** Textform description of businesses activities ( [[w:fi:toimintakertomus]] ) | ||
== Income statement or profit and loss statement == | ===== Income statement or profit and loss statement ===== | ||
::<tt>Mnemonic:</tt> ''"The [[w:income statement]] describes the income possibilities of the [[w:entrepreneur]] with 100% of shares <u>not</u> the income of the business, that's called the [[w:top line]] and is only small part of the whole thing."'' | ::<tt>Mnemonic:</tt> ''"The [[w:income statement]] describes the income possibilities of the [[w:entrepreneur]] with 100% of shares <u>not</u> the income of the business, that's called the [[w:top line]] and is only small part of the whole thing."'' | ||
Line 87: | Line 44: | ||
:: <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]]''' | ||
===== Example for small scale import/export business income statement ===== | |||
: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 | ||
Line 103: | Line 63: | ||
:::== '''[[w:Net income]]''' | :::== '''[[w:Net income]]''' | ||
===== Balance sheet ===== | |||
::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 | |||
=== Accounting classes === | |||
==== Accounting class week 7 ==== | |||
:* '''[[w:Financial accountancy]]''' (or '''financial accounting''') is the field of [[w:accountancy]] concerned with the preparation of [[w:financial statements]] for decision makers, such as [[w:Shareholder|stockholder]]s, [[w:vendor (supply chain)|supplier]]s, [[w:bank]]s, employees, [[w:government agencies]], owners, and other stakeholders. Financial capital maintenance can be measured in either [[w:nominal monetary units]] or [[w:units of constant purchasing power]]. ( Wikipedia ) | |||
:* '''Management accounting''' or '''[[w:managerial accounting]]''' is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. ( Wikipedia ) | |||
:* '''[[w:Income statement]]''' (also referred to as '''profit and loss statement (P&L)''', '''revenue statement''', '''statement of financial performance''', '''earnings statement''', '''operating statement''' or '''statement of operations)'''is a company's '''[[w:financial statement]]''' that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as Net Profit or the "bottom line"). ( 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 ) | :* 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 ) | ||
Line 113: | Line 86: | ||
:::::* '''[[w:Liability|Liabilities]] == [[w:Current liabilities]] + [[w:non-current liabilities]]''' | :::::* '''[[w:Liability|Liabilities]] == [[w:Current liabilities]] + [[w:non-current liabilities]]''' | ||
:: | |||
:* '''[[w:Double-entry accounting]]''' ( or '''double-entry [[w:bookkeeping]] system''' ) is a set of rules for recording financial information in a [[w:financial accounting]] system in which <u>'''''every transaction'''''</u> or event <u>'''''changes at least two'''''</u> different nominal [[w:ledger]] <u>'''''accounts'''''</u>. | |||
---- | |||
==== Accounting class week 9 ==== | |||
:* Team quiz on new terminology ( [[w:Category:Accounting terminology]] ) | |||
:* '''[[w:Assets]]''' | |||
:* '''[[w:Liabilities]]''' | |||
:* '''[[w:Equity (finance)]]''' ( [[w:fi:Oma pääoma]] ) | |||
---- | ---- | ||
==== Accounting class week 10 ==== | |||
:*'''[[w:Accrual]]''' (''accumulation'') of something is, in [[w:finance]], the adding together of [[w:interest]] or different [[w:investments]] over a period of time. It holds specific meanings in [[w:accounting]], where it can refer to accounts on a [[w:balance sheet]] that represent liabilities and non-cash-based assets used in accrual-based accounting. These types of accounts include, among others, [[w:accounts payable]], [[w:accounts receivable]], [[w:Goodwill (accounting)|goodwill]], [[w:deferred tax]] [[w:liability (accounting)|liability]] and future interest expense. ( Wikipedia ) | |||
---- | ---- | ||
==== Accounting class week 11 ==== | |||
* '''[[w:VAT]] accounting''' ( [[w:fi:Arvonlisävero]] ) | |||
* [[w:VAT]] vs. [[w:sales tax]] ( not the same thing ) | |||
---- | |||
==== Accounting class week 12 ==== | |||
:Joint exam with [[#Business Math 1|Business Math 1]] | |||
lies to a single point in time of a business' calendar year. ( Wikipedia ) | |||
---- | |||
Course | == Accounting for a New Business 2 == | ||
Course consists of mostly '''[[w:Managerial accounting]]''' and '''[[w:cost accounting]]''' | |||
Topics covered: | Topics covered: | ||
Line 144: | Line 133: | ||
* Annual percentage rate of charge for [[w:loans]] and [[w:credits]] | * Annual percentage rate of charge for [[w:loans]] and [[w:credits]] | ||
== Accounting | ==== Accounting 2 class week 14 ==== | ||
Topics: Financial flows | |||
* '''[[w:cost-volume-profit analysis]]''' | * '''[[w:cost-volume-profit analysis]]''' | ||
Line 160: | Line 150: | ||
::Homework: ex. 4,5,6,7 | ::Homework: ex. 4,5,6,7 | ||
== Accounting | ==== Accounting 2 class week 15 ==== | ||
==== Accounting 2 class week 16 ==== | |||
* '''[[w:Pricing]]''' | * '''[[w:Pricing]]''' | ||
:: Long-run vs. short-run pricing approaches | :: Long-run vs. short-run pricing approaches | ||
Line 171: | Line 160: | ||
*'''[[w:Cost-plus pricing]]''' is a pricing method used by companies to maximize their rate of returns. ( Wikipedia ) | *'''[[w:Cost-plus pricing]]''' is a pricing method used by companies to maximize their rate of returns. ( Wikipedia ) | ||
== Accounting | ==== Accounting 2 class week 17 ==== | ||
* '''[[w:Operating leverage]]''' is a measure of how revenue growth translates into growth in '''[[w:operating income]]'''. '''[[w:Leverage (finance)|Leverage]]''', and of how risky (volatile) a company's operating income is. | * '''[[w:Operating leverage]]''' is a measure of how revenue growth translates into growth in '''[[w:operating income]]'''. '''[[w:Leverage (finance)|Leverage]]''', and of how risky (volatile) a company's operating income is. | ||
Line 181: | Line 169: | ||
* '''[[w:Return on investment]]''' ('''ROI''') is the concept of an [[w:investment]] of some resource yielding a benefit to the investor. As a performance measure, it is used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ( Wikipedia ) | * '''[[w:Return on investment]]''' ('''ROI''') is the concept of an [[w:investment]] of some resource yielding a benefit to the investor. As a performance measure, it is used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ( Wikipedia ) | ||
==== Accounting 2 class week 18 ==== | |||
== Accounting | |||
---- | ---- | ||
== Managerial Accounting == | |||
= Managerial Accounting = | |||
# lesson: '''Cost behaviour''' and '''[[w:cost object|cost object]]s | # lesson: '''Cost behaviour''' and '''[[w:cost object|cost object]]s | ||
# lesson: '''[[w:Job costing|Job costing]]''' and '''[[w:overheads|overheads]]''' | # lesson: '''[[w:Job costing|Job costing]]''' and '''[[w:overheads|overheads]]''' | ||
# lesson: '''[[w:Activity based costing|Activity based costing]]''' | |||
# lesson: '''[[w:Cost-volume-profit analysis|Cost-volume-profit analysis]]''' | # lesson: '''[[w:Cost-volume-profit analysis|Cost-volume-profit analysis]]''' | ||
# lesson: '''Master budgets''' and '''operational [[w:budget|budget]]s''' | # lesson: '''Master budgets''' and '''operational [[w:budget|budget]]s''' | ||
# lesson: NO LESSON | # lesson: NO LESSON | ||
# lesson: '''Short term business decisions''' | # lesson: '''Short term business decisions''' | ||
== | === Lesson 1 Cost behaviour and cost objects === | ||
* '''A [[w:Cost object|Cost object]]s''' is a tangible input for a product manufactured/service provided, like labor or material. ( Wikipedia ) | |||
* '''A [[w:Cost object|Cost object]]''' is a tangible input for a product manufactured/service provided, like labor or material. ( Wikipedia ) | |||
* '''[[w:Managerial accounting|Managerial accounting]]''' vs. '''[[w:financial accounting|financial accounting]]''' - differences and characteristics listed in hand-out | * '''[[w:Managerial accounting|Managerial accounting]]''' vs. '''[[w:financial accounting|financial accounting]]''' - differences and characteristics listed in hand-out | ||
Line 221: | Line 193: | ||
* '''[[w:Generally accepted accounting principles|Generally accepted accounting principles]]''' ('''GAAP''') refer to the standard framework of guidelines for [[w:financial accounting|financial accounting]] used in any given jurisdiction; generally known as '''accounting standards''' or [[w:standard accounting practice|standard accounting practice]]. These include the standards, conventions, and rules that accountants follow in recording and summarizing and in the preparation of [[w:financial statements|financial statements]]. ( Wikipedia ) | * '''[[w:Generally accepted accounting principles|Generally accepted accounting principles]]''' ('''GAAP''') refer to the standard framework of guidelines for [[w:financial accounting|financial accounting]] used in any given jurisdiction; generally known as '''accounting standards''' or [[w:standard accounting practice|standard accounting practice]]. These include the standards, conventions, and rules that accountants follow in recording and summarizing and in the preparation of [[w:financial statements|financial statements]]. ( Wikipedia ) | ||
* '''[[w:International Financial Reporting Standards|International Financial Reporting Standards]] | * '''[[w:International Financial Reporting Standards|International Financial Reporting Standards]] ([[w:IFRS|IFRS]]) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. ( Wikipedia ) | ||
* '''[[w:Inventory|Inventory]]''' or stock refers to the goods and materials that a business holds for the ultimate purpose of resale (or repair) | * '''[[w:Inventory|Inventory]]''' or stock refers to the goods and materials that a business holds for the ultimate purpose of resale (or repair) | ||
Line 229: | Line 201: | ||
* '''[[w:Working capital|Working capital]]''' or '''operating capital''' is a financial metric which represents [[w:Accounting liquidity|operating liquidity|]] available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital equals to current assets. Net working capital (NWC) is calculated as [[w:current assets|current assets]] minus [[w:current liabilities|current liabilities]]. ( Wikipedia ) | * '''[[w:Working capital|Working capital]]''' or '''operating capital''' is a financial metric which represents [[w:Accounting liquidity|operating liquidity|]] available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital equals to current assets. Net working capital (NWC) is calculated as [[w:current assets|current assets]] minus [[w:current liabilities|current liabilities]]. ( Wikipedia ) | ||
=== Lesson 2 [[w:Job costing|Job costing]] and [[w:overheads|overheads]] === | |||
* '''[[w:Job costing|Job costing]]''' involves the calculation of costs involved in a construction "job" or the manufacturing of goods done in discrete batches. These costs are recorded in ledger accounts throughout the life of the job or batch and are then summarized in the final trial balance before the preparing of the job cost or batch manufacturing statement. ( Wikipedia ) | * '''[[w:Job costing|Job costing]]''' involves the calculation of costs involved in a construction "job" or the manufacturing of goods done in discrete batches. These costs are recorded in ledger accounts throughout the life of the job or batch and are then summarized in the final trial balance before the preparing of the job cost or batch manufacturing statement. ( Wikipedia ) | ||
* An '''[[w:overhead|overhead]]''' or '''overhead expense''' refers to an ongoing [[w:expense|expense]] of operating a business; it is also known as an "operating expense". Examples include rent, gas, electricity, and labour burden. The term ''overhead'' is usually used when grouping expenses that are necessary to the continued functioning of the business but cannot be immediately associated with the products or services being offered (i.e., do not directly generate [[w:profit (accounting)|profit|]]s). ( Wikipedia ) | * An '''[[w:overhead|overhead]]''' or '''overhead expense''' refers to an ongoing [[w:expense|expense]] of operating a business; it is also known as an "operating expense". Examples include rent, gas, electricity, and labour burden. The term ''overhead'' is usually used when grouping expenses that are necessary to the continued functioning of the business but cannot be immediately associated with the products or services being offered (i.e., do not directly generate [[w:profit (accounting)|profit|]]s). ( Wikipedia ) | ||
=== Lesson 3 Activity based costing === | |||
== | |||
'''[[w:Activity based costing|Activity based costing]]''' ('''ABC''') is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more [[w:indirect costs|indirect costs]] ([[w:overhead (business)|overhead]]) into [[w:direct costs|direct costs]] compared to conventional costing. ( Wikipedia ) | '''[[w:Activity based costing|Activity based costing]]''' ('''ABC''') is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more [[w:indirect costs|indirect costs]] ([[w:overhead (business)|overhead]]) into [[w:direct costs|direct costs]] compared to conventional costing. ( Wikipedia ) | ||
:::CIMA (Chartered Institute of Management Accountants) defines ABC as | :::CIMA (Chartered Institute of Management Accountants) defines ABC as | ||
Line 293: | Line 213: | ||
::::Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs. ( Wikipedia ) | ::::Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs. ( Wikipedia ) | ||
=== Lesson 4 Cost-volume-profit analysis === | |||
'''[[w:Cost–volume–profit analysis|Cost–volume–profit analysis]]''' ('''CVP'''), in [[w:managerial economics|managerial economics]], is a form of [[w:cost accounting|cost accounting]]. It is a simplified model, useful for elementary instruction and for short-run decisions. ( Wikipedia ) | |||
=== Lesson 5 Master budgets and operational budgets === | |||
* A '''[[w:budget|budget]]''' is a quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. ( Wikipedia ) | |||
== | === Lesson 6 NO LESSON === | ||
=== Lesson 7 Short term business decisions === | |||
'''Short term business decisions''' | '''Short term business decisions''' | ||
Line 304: | Line 229: | ||
:::*'''''short-term''''' usually under 1 year. ( Wikipedia on [[w:Term (time)|Term]] ) | :::*'''''short-term''''' usually under 1 year. ( Wikipedia on [[w:Term (time)|Term]] ) | ||
---- | ---- | ||
= Further reading = | == Further reading == | ||
* | * [[Finance]] | ||
---- | ---- | ||
= Learn | == Learn in Wikipedia == | ||
:* '''[[w:Category:Accounting terminology]]''' | :* '''[[w:Category:Accounting terminology]]''' | ||
---- | |||
== Further learning == | |||
: '''[[w:analysis#Business|Business and investment analyses]]:''' | : '''[[w:analysis#Business|Business and investment analyses]]:''' | ||
Line 347: | Line 254: | ||
:build upon understanding of accounting and business math terminology and procedures. | :build upon understanding of accounting and business math terminology and procedures. | ||
= Navboxen = | = Navboxen = | ||
== Accounting software == | == Accounting software == | ||
Line 354: | Line 260: | ||
== Financial ratios navbox == | == Financial ratios navbox == | ||
{{Financial ratios}} | {{Financial ratios}} | ||