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Accounting Information System

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Accounting Information System Major Accounting Bodies American Institute of Certified Public Accountants Financial Accounting Standards Board Government Accounting ... – PowerPoint PPT presentation

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Title: Accounting Information System


1
Accounting Information System
2
Major Accounting Bodies
  • American Institute of Certified Public
    Accountants
  • Financial Accounting Standards Board
  • Government Accounting Standards Board
  • Securities and Exchange Commission

3
Ethics
  • The process that individuals use

4
Ethics
  • The process that individuals use to evaluate
    their conduct

5
Ethics
  • The process that individuals use to evaluate
    their conduct in light of moral principles and
    values

6
Assets
  • Anything of value held by an organization
  • Assets have

7
Assets
  • Anything of value held by an organization
  • Assets have
  • Potential usefulness

8
Assets
  • Anything of value held by an organization
  • Assets have
  • Potential usefulness
  • Future usefulness

9
Assets
  • Anything of value held by an organization
  • Assets have
  • Potential usefulness
  • Future usefulness
  • Economic Value

10
Assets
  • Cost principle
  • Going-concern concept
  • Objectivity principle
  • Stable dollar concept

11
Equities
  • Claims against the total assets of an
    organization
  • Liabilities
  • Claims of nonowners
  • Owner's Equity
  • Claims of owners

12
Retained Earnings
  • Cumulative total of net income, net loss, and
    dividends since start of business

13
Revenues
  • Inflows of assets that result from performing
    services or selling goods
  • Revenues are realized when
  • the service is performed or

14
Revenues
  • Inflows of assets that result from performing
    services or selling goods
  • Revenues are realized when
  • the service is performed or
  • the goods are delivered

15
Expenses
  • Outflows of assets or incurrence of liabilities
    while earning revenues
  • A business incurrs expenses to earn revenues

16
The Accounting Equation
  • Things of Value Claims
  • Assets Equities
  • Assets Liabilities Owner's Equity
  • Assets - Liabilities Net Assets

17
Analyzing Transactions
  • Use accounting equation
  • Is there a change in assets?
  • Which asset?
  • How much was the change?
  • Is there another change in assets?

18
Analyzing Transactions
  • Is there a change in liabilities?
  • Which liability?
  • How much was the change?
  • Is there another change in liabilities?
  • Is there a change in owners equity?
  • How much was the change?

19
Four Basic Financial Statements
  • Income Statement
  • Statement of Owners Equity
  • Classified Balance Sheet
  • Statement of Cash Flows

20
Income Statement
  • Reports changes in owners equity from operating
    activities
  • Revenues - Expenses Net Income(Loss)

21
Statement of Owners Equity
  • Changes in owners interest in assets
  • Issuances of new stock
  • Retained earnings
  • Net income or loss
  • Dividends

22
Classified Balance Sheet
  • Classification - arrangement of financial
    statement items into groupings that have common
    basis
  • Assets
  • Current
  • Property, plant, and equipment

23
Classified Balance Sheet
  • Liabilities
  • Current
  • Long-tern
  • Owners Equity
  • Common stock
  • Retained earnings

24
Statement of Cash Flows
  • Reports cash flows during period
  • Categories of activities
  • Operating activities
  • Investing activities
  • Financing activities

25
Analyzing Information
26
Balance Sheet Analysis
  • Are total assets higher or lower?
  • What is percent change in total assets?
  • Is the percent of total liabilities to total
    liabilities plus owners equity increasing or
    decreasing?

27
Income Statement Analysis
  • Are revenues higher or lower?
  • What is the precentage change in total revenues?
  • Is the percentage of total expenses to total
    revenues increasing or decreasing?

28
Integrative Analysis
  • Is the business operating efficiently by using
    the least amount of asset investment to generate
    a given level of total revenues?
  • Calculate Total Asset Turnover
  • Total revenues
  • divided by
  • Average total assets

29
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