Basis of preparation
Accounting provides financial information managers need to lead a company to success. It seeks to discover the products and services competitive, price, or fraud, waste and use this information in your organization. As an administrator must take the form of financial statements and this information to understand the rules used to create a presentation.
Cash vs. Accrual
Accountants recognize the two accounting methods. Changes in cash in the hands of the records of all financial activities. Much money is paid if the bill appears in the consolidated profit and sales were reported. Similar rates have been paid, will not appear until the fiscal year. Accrual accounting also reports both income and expenses, as is the case. Sales of bank statements for the periods in which they appear. Expenses are also to buy. Many small businesses use cash for simplicity. Accrual accounting, financial experts believe that a better image of a set of corporate financial data. In order to understand financial statements, you need to know your company is using the system.
Generally Accepted Accounting Principles – GAAP – refers to a control system that identifies the proper accounting. The Financial Accounting Standards Board Accounting notices, government regulations and industry standards, the basic rules: GAAP consists of three parts. These rules make decisions on financial transactions, to provide a framework that is used by auditors. GAAP does not provide answers to specific problems, but provides a basis for a decision. For example, to prevent the accumulation of profit or loss disrupts the income and expenditure records during the same period meets the requirements of the principle of periodicity.
Accountants produce three basic financial statements. If the stock of a company’s financial situation at some point in an image. The value of the property, should the debt, the assets and liabilities of the company. The equation Assets = liabilities and shareholders’ equity is the basis of this statement. The equation must, both sides equal to each other, hence the name. Although the profit and loss account profit and loss statement, details of income and expenses over a given period. This report provides a financial point of view of progress. In the cash flow and cash flow statements of the information outside the company. The accumulated profit and loss account and profitable sales can significantly lag behind customer payments, the company can manage the business operations do not have enough cash.
The company offers a roadmap for achieving the objectives of the company budget. Variance report provides information on progress in achieving these goals. Any deviation from the budget over a certain dollar amount or percentage and clarifications. This description appears in the report of the variance. Note, the need for budget revenues or expenditures in the budget or research. Continuous low goal setting, budget revenues have been better. Expenditure against budget for an object or a failure to acquire show complete repair and maintenance.