A List of the Four Accounting Principles
Jan 25, · What Are the Basic Phases of Accounting? Recording. Recording is a basic phase of accounting that is also known as bookkeeping. In this phase, all financial Classifying. The classifying phase of accounting involves sorting and grouping similar items under the designated name, Summarizing. The. What Are The Four Phases Of Accounting And Meaning?16 1. Data collection 2. Data input 3. Data processing and storage 4. Data output.
Didn't find the answer you were looking for? Ask a Question. Connor Sephton answered. Broadly speaking, there are four steps, or phases, which take place in accounting. This may include receipts, invoices and vouchers. From these articles, the accountant can create a log containing every financial transaction of the business or individual.
From this log, the accountant can get an idea of how much money is being spent and earned. An accountant is not permitted to create and log transactions which have not happened. Also, an accountant should not omit delete records from the log.
Instead, they should make amendments to records in the log, along with the reason why the amendment was needed. In the second stage, all the transactions in the log must be sorted and categorized into what are the four aspects of accounting groups. First of all, as stated above, the accountant must identify whether each transaction represents income or expenditure.
After this has been identified, the account must link the transaction with the appropriate field within the business or the individual's life. For example, within the expenditure category, you may have groups for expenses such as travel, marketing and production. In the third stage, the accountant must communicate a summary of the figures they have found, and how what is snapfish photo book found them.
Computer software may be used to create texts such as graphs, charts, spreadsheets and invoices, as well as having the information clearly presented in a written article. The final stage requires that the account works closely with the business or individual in order to make them more efficient and what are the four aspects of accounting their profit.
For example, there may be particular areas of expenditure which the account feels are too high, and need to be reduced. They will then work with the company or individual in order to come up with methods and processes to reduce these areas of expenditure. The four phases of accounting are as follows: Recording Recording is the first phase of accounting in which all monetary information is recorded in order to make a record that can be used for various needs.
Accounting records are used what does releve mean in ballet taxes, budgeting, reporting and business plans. Without recording the monetary transactions it will be hard to determine where a business or person has spent their money. Accounting is used how close are we to artificial intelligence personal and business situations.
During the recording phase, transactions have to be classified into categories. This is for tax purposes. In taxation there are different categories that can provide savings. Classifying In order to determine how much one spent in each of the categories one has to classify what are the four aspects of accounting records.
For example in a business, office supplies can be deducted from the taxes. Dining and entertainment can also be used as a deduction. Summarizing After the recording phase and the classification stage comes summarizing the various categories into a linear sheet of information that is easier to read.
From this one can discover how much was spent, what was kept, what was paid out, where and other information. The summarizing stage makes the interpretation of the data that much easier.
One has to be able to interpret the data to find out what may be changed, what has changed, and where the person or what are the four aspects of accounting is going financially.
Often in the interpretation things such as where one can budget better or where one needs to find money for the next year can be found. Interpreting If you look at it from a business standpoint there may be equipment that is needed so interpreting the data can help find the extra money for the equipment.
It can also be used as a phase to determine stock information. The four phases of accounting are recording, classifying, summarizing and interpreting.
Some people who work in finance often say that communication, although it is not officially one of the accounting phases, it should still be considered an important step. This means that good communication must be observed during all four phases of the accounting cycle to help things run as smoothly as they possibly can. During this phase, any financial transactions that have taken place over the financial period, whatever time frame that may be, must be chronologically recorded in a systematical way.
The accounting period can either be each month, quarterly or at the end of every year. The correct books and databases must also be used. It is essential that this summarized data is easy to understand for people who work within the accounting department and for people who are not, as these files may be read by people from all departments within the company. Visual aids such as charts and graphs may also be used alongside the data presented. By doing this, the people examining the data will be able to reach informed decisions about the financial status of a company.
This data will also be used to come up with future financial plans for the business. Alice King what they dont teach you at harvard business school. Recording Recording or bookkeeping is a basic phase of accounting. It is where all financial transactions are recorded in a systematical and chronological manner in appropriate books or databases. Accounting recorders are the documents and books involved in preparing financial statements, these include records of assets, liabilities, ledgers, journals and other supporting documents such as invoices and checks.
Classifying Classifying involves sorting and grouping similar items under the designated name, category or account. This phase uses systematic analysis of recorded data in which all transactions are grouped in one place. For example, "food expenses" might be a category that accountants use to classify expenses relating to company events or travel related meetings etc.
A "ledger" is the book in which classifications are recorded. Summarizing This refers to the summarizing of the data after each accounting period specific to a particular company, such as a month, quarter or year.
The data needs to be presented in a manner which is easy to understand and is generally used by both external and internal users of the accounting statements. Graphs and other visual elements are often used to complement the text data and can be used in meetings, to relate information via in house how to play edge world or post company information.
Interpreting Interpreting in the accounting process is concerned with analyzing financial data, and is a critical tool for decision-making and strategic management. This final function interprets the recorded data in a manner which allows end-users to make meaningful judgments regarding the financial conditions of a business account, as well as the profitability of business operations.
This data can then be used to prepare future plans and frame policies to execute financial plans. Anonymous answered. Data collection 2. Data input 3. Data processing and storage 4. Data output. Recording, classifying, summarizing, and interpreting.
The data processing cycle is the order in which data is processed. There are four stages; Data collection Data input Data processing and storage Data output. Pete the Idiot answered. They are: Input—entering data into the computer. Processing—performing operations on the data. Output—presenting the results. Storage—saving data, programs, or output for future use. Jillian Peppe answered.
The four phases of accounting, but there are five phases and they are: 1 Identify the transaction or other recognizable event. This step involves quantifying the what is the gospel greg gilbert study guide in monetary terms like dollars and cents, also identifying the accounts that are affected and whether those accounts are to be debited or credited.
Such entries are made in chronological order. Meaning of recording, classifying, summarizing and interpreting. Recording classifying summarizing interpreting. Presenting phases of accounting. Meaning what are the four aspects of accounting recording in phases of accounting.
Ana Margarita Barnesto answered. Four phases of accounting 1. Recording 2. Classifying 3. Summarizing 4. Answer Question. Connect Connect Connect.
Apr 6, - This Pin was discovered by The McMillan Companies. Discover (and save!) your own Pins on Pinterest. Objective of Accounting, Elements/Aspects in Accounting, Separate Entity Concept Element. Element/Account-Head in accounting. An element for the purpose of accounting is that aspect or entity relating to which Capital a/c. Capital is an element used to derive information relating to the amounts.
We understand that the manner in which Mr. Oberoi was maintaining the accounting records had a limitation in not being able to provide the information that he needed at a place, ready hand. He was made aware by the professional accountant that he had to adopt a distinct method of recording accounting transactions to achieve his obective. What was Mr. Oberoi looking for? What is the objective that he should try achieving through the different format for recording the accounting transactions?
Oberoi was trying to find the amount due to or due from Mrs. It would have been conveniently derived had he had all the information relating to Mrs. Vimla at a single place. Making all the information relating to Mrs. Vimla available at a single place is the objective that Mr.
Oberoi should try to achieve through the specific format for recording accounting transactions. The number of elements used for the purpose of accounting in an organisation is not a static figure. It is dependent on the information needs of the organisation. All these smaller elements together would represent the total expenditure of the organisation.
We understand the number of elements used for the purpose of accounting as the number of elements into which an organisation is divided for the purpose of accounting which is dependent on the amount of information that an organisation needs. Greater the information needed, greater the number of elements accounting heads into which the organisational accounting system is divided. In accounting for business transactions, we should segregate ownership and business. The owner is alien to business.
The owner is a party from whom the business can take or receive and to whom it can give. If we do not see the owner and the business as separate entities, we cannot think of transactions involving capital like when capital is being brought in and amounts are being withdrawn by the ownership. If the owner is not a separate entity, then these would amount to the owner giving to himself and taking from himself. This gives us an understanding of one another important and fundamental concept of accounting, The Separate Entity Concept - Ownership and business are not one and the same.
In an accounting system, in deriving the information relating to ownership, we use the element Capital to represent the owner. This is done to identify owned capital and loaned capital distinctly.
If we are using the name of the owner to represent him, then it might be giving us an idea that he is another creditor. Therefore Mr. Oberoi's name would not appear in the list of account heads used for his organisational accounting.
Capital is an element used to derive information relating to the amounts brought into or invested in the organisation by the owner as his contribution towards capital. It represents the owner of the business. Optionally the element name or account head may be prefixed with the name of the owner. Accordingly the account representing Mr. Where there are multiple owners, the account representing each's contribution is prefixed with the name of the owner to create distinction between the various capital accounts.
Drawings is an element used to derive information relating to the amounts withdrawn by the owner from the organisation for his personal purposes. It is also an element representing the owner of the business. Where there are multiple owners, the account representing each's drawings is prefixed with the name of the owner to create distinction between the various drawings accounts. In such a case, the amount withdrawn by the proprietor for personal purposes would be treated as capital taken back by the proprietor.
BAP Notes Problems. Notes 6. What should Mr. Specific Format for Accounting - Target to be achieved The target to be achieved by maintaining a specific format for recording accounting transactions is collecting all the information relating to an element at a single place. Each element in accounting is identified as an account or an accounting head.
Some examples of accounting elements We wish to know The amount of capital invested in the business. The value of Furniture with us in the business. The amount of expenditure on account of salaries. The amount due to us from Mrs. Vimla is an element — We identify it as Mrs. The amount we owe the wholesaler Mr. Rathod is an element — We identify it as Mr. The amount available in the bank. The value of sales made by us. This list is endless Where the organisation feels that it needs more or detailed information with regard to expenses, it may consider each expense or a group of expenses as a distinct aspect or element.
The more the information we need, the more the accounting heads we need to maintain. Separate Entity Concept The owner is also an alien to the business. Author : The Edifier.