Fundamental Concepts

sorting similar with three categories: assets liabilities and owners equity

affect the financial statements must be indicated

Four Aspects of Accounting

systematic process of measuring and reporting relevant financial information

financial reporting is only concerned with information

accounting as art of recording,classifying and summarizing

tax purposes and compliance with Securities and Exchange Commission(SEC)

Parties Interested in the Financial Information

production of items to be sold

enterprise for specified time periods

accounting period classified into:

engaged in selling and buying

duly supported by verifiable evidence

organizational managers use financial information

3 types of business organizations

accounting as a service activity; function to provide quantitative info

must recorded at original acquisition cost

provide information on company stability

provide financial resources to keep business

Basic Principles

3 types of Business Operations

preparing the financial statements

writing down of business transactions

should be recognize at the time it is earned

expressed in monetary terms

enterprise as separate

uniformly employed from period to period

business will continue to operate indefinitely

to determine capacity of business to pay it’s obligations

engaged in rendering of services

representing the quantitative and qualitative