Presentation on theme: " Process of identifying, measuring, and recording of business transactions and business events in monetary term and communicating the financial information."— Presentation transcript:
Process of identifying, measuring, and recording of business transactions and business events in monetary term and communicating the financial information to the interested parties. (Frank Wood & Alan Sangster) Concerned with the provision of information – useful to those who directly or indirectly connected with an organization.
To record and control the business transactions To maintain accuracy in recording To meet the requirement of the law To present final accounts to the owners of the business To facilitate the efficient allocation of resources
2 categories; - Internal – those who work in the organization; owners, managers & employees - External – those who indirectly involved with the organization; creditors/bankers, potential investors, government & customers Bookkeeping vs Accounting… Process of recording – just part of accounting process
UsersUses Owner - Interested in the profits - Financial stability & growth of the business Managers - Guide them in planning, organizing, controlling the organization - Evaluate the management/decisions Employees - Interested in the business ability to progress & expend - Look for steady employment, benefits Creditors/bankers - Ability of the business in repaying the amount owing to them Potential investors - Solvency & financial strength of the business - Present & future earning capacity Government - Tax purposes Customers - Good accounting control – reduce cost –reduce prices of the products
Sole ProprietorPartnershipLimited Companies Registration Business Registration Act 1957 Companies Act 1965 CapitalOwner Partners – partnership agreement Shareholders Ownership1 Prof – 2-50 Non prof – 2-20 Sdn. Bhd. – 2-50 Bhd – 2- infinity Management & control OwnerPartners or board BOD appointed by shareholders LiabilityUnlimited Limited Profit & LossOwner Partners – profit-sharing ratio Dividend Books & accounts No legal obligation to keep the books & prepare accounts Proper books of account must be kept and annual accounts must be send to the Commissioner of Company