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发布时间：2006-06-26 22:28     点击：

Chapter 3 accounting and accounting cycles

Accounting is the process of providing quantitative information about business entities to help users in making decisions regarding the allocation of economic resources.

The process of accounting consists of :

1. Identification----the observation of activity and the selection of particular events that are evidence of economic activities to an entity.

2. Measurement ----the quantification fo the events in monetary terms

3. Recording ----the keeping of a chronological diary of the measured events.

4. Communication ----the preparation and distribution of financial statements to users.

Financial accounting : involves the recording and presentation of factual transactions.

Managerial accounting :involves the use of financial information to interpret its implications for decision-making purposes.

Forms of business organizations:

Sole proprietorship: is owned and usually managed by one individual , partnership has more than one owner; limited company is a separate legal entity that is owned by many individuals, called shareholders, who are issued shares of capital as evidence of their ownership.

Account

An account is a business document used to record ad retain monetary information about a company’s transaction. The company’s full set of accounts are kept in a general ledger and accounts are sometimes called general ledger accounts.

Posting

It is the process of transferring the debit and credit information record in each journal entry to the proper accounts in the general ledger.

Accounting period

It is the period of time for which the net profit of a company is computed. An accounting period of less than one year is called interim period.

Revenue

It is derived from the charge to customers for goods or services provided, resulting in increase in assets or decrease in liabilities.

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