Comptabilité en anglais

Accounting

1. Identify the events

2. Recording the events: Journal (journalization)

        3. Posting: Moving the transaction from journal to LEDGER

        4. Unadjusted trial balance

        5. Adjusting entries

        6. Adjusted trial balance

        7. Financial Statements: Income statement -> Financial performance

                                 Balance sheet (Statement of financial position)

                                 Statement of changes in equity

                                 Retained earnings

        8. Closing entries -> permanent accounts: Assets, Equity, Liabilities -> Balance sheet accounts

    -> Temporary accounts: Revenues, Expenses -> Income statements

                Closing entries: 1. Closing Revenues to income statement
                                2. Closing Expenses to income statement
                                3. Closing income statements to Retained Earnings
                                4. Closing dividends to Retained Earnings

Chapter 4: The classified statement of financial Position and related disclosures

Disclosure: Decision making

Key objective of financial statements:

• To fairly present the entity’s economic resources (assets), obligations (liabilities), equity (share capital, retained earnings), and a financial performance (profit, net income).

Focus of financial statement information:

• Needs of the financial statement users such as creditors (ability to repay debt) and investors (return on investment).
• Evaluate managers and assist in allocating resources effectively.

Challenges in applying GAAP (Generally Accepted Accounting Principles):

• How to measure wealth
• How to apply recognition criteria
• How much information should be disclosed

Accounting measurement of wealth:

• Changes in wealth always result from transactions in context with accounting principles:

• Cost                -Timeliness
• Recognition         -Monetary unit
• Going Concern        -Business Entity

To be useful, information is to be comparable, verifiable and presented with clarity and conciseness to be understandable.

• Classified – assets and liabilities grouped into meaningful and similar categories

...