ACCOUNTANCY NOTES FOR FORM FIVE
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Click the topics below to view the Notes:
1. THE NATURE AND CONTEXT OF ACCOUNTANCY
2. RECORDING BUSINESS TRANSACTIONS IN BOOKS OF ACCOUNTS
3. CORRECTION OF ACCOUNTING ERRORS
4. RESERVES AND PROVISIONS OR ALLOWANCES
5. DEPRECIATION AND DISPOSAL OF NON-CURRENT ASSETS
6. RECOGNITION OF REVENUE AND EXPENSES
7. PREPARATION OF FINANCIAL STATEMENTS
8. FINANCIAL STATEMENTS ANALYSIS AND INTERPRETATION
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IMPORTANCE OF ACCOUNTING – PART 1
1. Keeps a record of business transactions
Accounting is important as it keeps a systematic
record of the organization’s financial information. Up-to-date records help
users compare current financial information to historical data. With full,
consistent, and accurate records, it enables users to assess the performance of
a company over a period of time.
2. Budget planning
Budgeting is a key factor for any business.
Planning a budget allows businesses to develop strategies, observe expenses and
work towards making a profit. The ability to plan a budget comes from the
keeping of previous records. This is made possible through the collection and
maintenance of financial data by an accountant. With this information, business
owners can form the basis for their planning and budget making.
3.
Purpose of Analysis/ Decision making
All
business and financial decisions are based on a thorough examination of
financial statements, a product of the accounting information system. This goal
will not be met without a well-kept account, and business executives will all
be operating blindly. Accounting data is used by both current and potential
investors to make investment decisions. Profitability, liquidity, efficiency,
and other metrics are derived from the accounting information system’s data.