ACC 310F Chapter Notes - Chapter 4: Net Income, Accounting Equation, Legal Personality
Document Summary
Accounting consists of three basic activities- it identifies, records, and communicates the economic events of an organization to interested users. As a starting point to the accounting process, a company identifies the economic events relevant to its business. Ex. the sale of snack chips by pepsico, the provision of telephone services at&t, and the payment of wages by ford motor company. Then the company records those events in order to provide a history of its financial activities. Including keeping a systematic, chronological diary of events, measured in dollars and cents. Then the company communicates the collected info to interested users by means of accounting reports. Ex. accumulation of sales transactions over a certain period of time and reports the data as one amount in the company"s financial statements. Analysis includes the use of ratios, percentages, graphs, and charts to highlight significant financial trends and relationships. Interpretation involves explaining the uses, meaning, and limitations of reported data.
