MGM101H5 Lecture 13: UNDERSTANDING ACCOUNTING

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13 Dec 2018
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December 5,2018
MGM101H5
PROFESSOR DAVE SWANSTON
CHAPTER UNDERSTANDING ACCOUNTING AND FINANCIAL INFORMATION
Accounting is recording , summarizing , interpreting of financial events and
Transactions in an organization to provide management and other interested parties
financial information needed to make good financial decisions
Examples : financial transactions : buying and selling of goods and services , acquiring
insurance , paying employees etc
Accounting system is the method to record and summarize accounting data into
reports
Accounting system steps :
Inputs accounting documents :
o Example : sales documents , purchase documents ,payrolls , shipping
documents , travel records etc
Processing :
o Record entries in journal
o Posting those into ledgers
o Summarize accounts
Outputs :
o Financial statements
o Balance sheet
o Income statement
o Cash flow statement
o Other reports like annual reports
Main purpose of accounting statements : help Managers make better decisions
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