Accounting
has been defined as , by Professor of Accounting at the University of
Michigan William A Paton as having one basic function . "To facilitate the administration of economic activity This function
has two closely related phases 1 ) measuring and storing economic data
and 2 ) communicating the results of this process to interested
parties."
For example, the accounting of the company to periodically measure the profit and loss for a month, a quarter or a fiscal year and publish these results in a declaration of loss is called a statement of revenues and profits . These statements include elements such as accounts receivable ( what is owed to the company) and accounts payable ( what the company owes) . It can also be quite complicated with subjects like retained earnings and accelerated depreciation . At the highest level of accounting and organization .
Much of it is , however, also has to do with basic accounting . This is the process that records every transaction every bill paid , every dime owed, every dollar and cent and accumulated .
But the owners of the company , which can be individual owners or millions of shareholders are most concerned with the summaries of these transactions, contained in the financial statements. The financial statements summarizes the assets of a company . A value of an asset is what it cost when it was acquired . The financial statement also records what the sources of the assets were . Some assets are in the form of loans that must be repaid. Profits are also an asset of the company.
In so-called double-entry bookkeeping , the liabilities are also summarized . Obviously, a company wants a larger amount of active and passive material to compensate for benefit show . The management of these two elements is the essence of accounting.
There is a system to do this, all companies or individual can devise their own accounting systems, the result would be chaos!
For example, the accounting of the company to periodically measure the profit and loss for a month, a quarter or a fiscal year and publish these results in a declaration of loss is called a statement of revenues and profits . These statements include elements such as accounts receivable ( what is owed to the company) and accounts payable ( what the company owes) . It can also be quite complicated with subjects like retained earnings and accelerated depreciation . At the highest level of accounting and organization .
Much of it is , however, also has to do with basic accounting . This is the process that records every transaction every bill paid , every dime owed, every dollar and cent and accumulated .
But the owners of the company , which can be individual owners or millions of shareholders are most concerned with the summaries of these transactions, contained in the financial statements. The financial statements summarizes the assets of a company . A value of an asset is what it cost when it was acquired . The financial statement also records what the sources of the assets were . Some assets are in the form of loans that must be repaid. Profits are also an asset of the company.
In so-called double-entry bookkeeping , the liabilities are also summarized . Obviously, a company wants a larger amount of active and passive material to compensate for benefit show . The management of these two elements is the essence of accounting.
There is a system to do this, all companies or individual can devise their own accounting systems, the result would be chaos!
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