Accounting Systems And The Financial Management

cognizant of the fact that the choices he makes can affect the price a buyer pays

This assignment reviews basic accounting entries for a series of transactions, emphasizes the integration of journals to the financial statements, and introduces students to these journal entries in SAP ERP

The accounting equation: Assets = Liabilities + Owner’s Equity. Assets are the resources of the company. Examples include cash, land, buildings, and equipment. Liabilities are “outsider claims”, the company’s obligations to creditors. Examples include accounts payable, notes payable, and income taxes payable. Owner’s Equity represents “insider claims” of the company or the owner’s share of the assets. If a business is keeping accurate records this equation should always be in balance.

Assets and liabilities are bifurcated in current and non-current. Current asset is defined as any asset which can be converted into cash readily and will be used within one accounting period normally 1 year e.g. Receivables, Inventory, Prepaid Expenses.

Items of value to a company such as equipment or supplies needed for running an efficient business are called an asset. A liability is when a company owes for a service or pay for employees. After a liability is subtracted from an asset this becomes the owners interest in the company or owners’ equity. Regardless of the standards followed by accountants, they will always classify accounts into these three categories resulting in the Accounting Equation: (Editorial Board, 2012, p. 9- 10)

The accounting equation is, Assets are equal to Liabilities plus Stockholders’ Equity. Assets are resources owned by a business. Liabilities are the debts and obligations of the business. Liabilities represent claims of creditors on the assets of a business. Stockholders’ equity represents the claims of owners on the assets of the business. This equity is divided into two parts: common stock and retained earnings. The balance sheet reports assets and claims to assets at one specific point in time. Claims to assets are subdivided into two categories: claims of creditors and claims of owners. The accounting equation must always balance. Each transaction has a dual effect on the equation. As an example if an individual asset is increased,

The current assets are those which are readily convertible into cash and cash equivalents due to their highly liquid nature and also form part of working capital of the company’s operations. However, the long term assets in contrast are not liquid because since they have a useful life of more than a year and hence their full value cannot be easily realized within

The accounting system we use today started in Venice in renaissance period over 520 years ago. The trade business increased hugely during this time and all the financial recordings had to be written down to help people see how their business is doing. During that time in 1494 the first book about was published in accounting by Luca Paciolli and was called “The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality”. He was called “The father of Accounting” and most of his described principles have been used up until this day.

On some balance sheets assets are split into current and long-term assets as seen in Figure 1. Current assets are asset that are readily liquidated for money within a year, for example: cash, money markets, accounts receivable, inventory, and other current (Edition, 2011). Other current assets group is for prepaid expenses. Under long-term asset is land, plant, building, which refers to real estate machinery. For equipment that possibly has wear and tear or become out of date, is less depreciation. “The book value of an asset is equal to its acquisition cost less accumulated depreciation. Net property, plant, and equipment shows the book value of these assets” (Edition, 2011, p. 750). If you notice in Figure 1, goodwill and intangible asset are part of long-term assets.

These liabilities are described as what the business or organization owes such as accounts payable, payroll taxes due, notes payable, and mortgages payable are all liabilities. Assets are economic resources that have expected future benefits to the business (Baker & Baker, 2000). It is described as what the business or organization owns or controls. This can include cash, accounts receivable, notes receivable, and inventory.

The company has capital, which are loans and shares. The liabilities are finances and debt. These two together equal the assets. Some items include, cash, inventory, machines, computers, even desks and chairs. Everything the company has, assets, belongs to somebody else, liabilities, or to the company 's owners, capital (Sink, Pg. 2).

To illustrate the importance of maintaining a good accounting system for tracking company sales and expense data.

When determining the overall financial strength of a company, businesses rely on their current assets to show value. Current assets are defined as assets that can or will be converted into cash quickly. The value of the asset’s will vary and may be used at any time as collateral for loans or other investment business development plans. Current assets will include, of course, cash and cash equivalents, which is the amount of money the company has in its bank accounts including savings bonds, certificates of deposit, and money market funds. Assets must always be calculated as net assets, that is, less any debt owed by the organization.

showed no taxes no schedule C or E. Michelle did not question the taxes or schedules yes I spoke to the

Current assets include cash and those assets which can be converted into cash within year such as inventories, sundry debtors, marketable securities, loans and advances and prepaid expenses.