Accounting -an Introduction — Flashcards

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The main purpose of accounting is to record, classify, summarize, analyze, and communicate financial transactions to help users make informed economic decisions. It helps determine profit or loss, fin…

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Book-keeping is the art of recording financial transactions in a systematic and permanent manner. It focuses only on the recording aspect of transactions, such as sales, purchases, receipts, and payme…

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Book-keeping involves only recording transactions, while accounting includes recording, classifying, summarizing, analyzing, and communicating financial information. Accounting begins where book-keepi…

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The five main branches are: (1) Financial Accounting – records financial transactions and prepares financial statements; (2) Cost Accounting – determines product costs; (3) Management Accounting – sup…

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Financial accounting helps in ascertaining profit or loss, showing the financial position via Balance Sheet, fulfilling legal obligations (like tax filing), helping in decision-making, and providing i…

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The main objectives are: (1) To maintain systematic records of transactions; (2) To determine profit or loss; (3) To show financial position; (4) To provide information to users; and (5) To meet legal…

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1. Provides financial information about profit and financial position. 2. Helps management in planning and decision-making. 3. Replaces memory by maintaining permanent records. 4. Helps in tax assessm…

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1. Only monetary transactions are recorded; non-financial events like employee loyalty are ignored. 2. Fixed assets are shown at cost, not market value. 3. Based on estimates (e.g., asset life). 4. Pr…