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					ATIQ ACCT ATIQ ACCT MBA 2010

Accounting Information System

Mardan Institute of Management Studies

Principles of Accounting Atiq ur Rahman

derstanding tastic ancial

Learning Accounting
If you want to learn accounting, you learn it one concept at a time, one principle at a time.

ATIQ ACCT 2009 ATIQ ACCT 2010

C1

Learning Objective

ATIQ ACCT 2009 ATIQ ACCT 2010

Explain the financial reporting environment

Conceptual

The Accounting System: A Conceptual Overview
Operating Environment
Entity B
Business Entity A
System Inputs: Measurable Transactions and Events

Entity C

Process and Summarize

System Outputs: Financial Statements and Reports

Entity D

Entity E

Financial Reporting Environment
FASB

GAAP
Financial Statements

Preparers
Audit Report

Decision makers

Auditors

ASB

GAAS

Independent Auditor

Management

Management Prepares 1

3
Auditors

A
G G A

A P S A
Income Statement Balance Sheet Statement of Cash Flows

Lends Credibility
4

Users

Basic Mistrust 2

International Accounting Principles
Despite our growing global economy, countries continue to maintain their unique set of acceptable accounting practices.

C2

Learning Objective

ATIQ ACCT 2009 ATIQ ACCT 2010

Identify, explain, and apply accounting principles.

Conceptual

A business continues operation instead of being closed or sold.

A business is accounted for separately from its owner(s).

Financial Statement information is supported by independent, unbiased evidence.

Express transactions and events in monetary units.

Financial statements are based on actual costs incurred in business transactions.

C3

Learning Objective

ATIQ ACCT 2009 ATIQ ACCT 2010

Identify, explain, and apply accounting principles.

Conceptual

The Accounting Process

Exh. 2.2

Transaction or event

Source documents

Analysis

Reporting Trial balance Recording & posting

Transactions and Events
Exchanges of economic consideration between two parties.
External Transactions occur between the organization and an outside party.

Internal Transactions occur within the organization.

Accounting Information System
Ongoing events in world
Recording

Boundary

Data Bank

Information

Classifying

C4

Learning Objective

ATIQ ACCT 2009 ATIQ ACCT 2010

Describe source documents and their purpose.

Conceptual

Source Documents
Other Invoices Bank Statement

Check DDs

Journal

C5

Learning Objective

ATIQ ACCT 2009 ATIQ ACCT 2010

Describe an account and its uses in recording transactions.

Conceptual

Account
A storage unit used to classify and summarize money measurements of business activity of a similar nature.

ATIQ ACCT 2009 ATIQ ACCT 2010

ATIQ ACCT 2009 ATIQ ACCT 2010

The Account
Detailed record of increases and decreases in specific assets, liabilities, equities, revenues, or expenses. =======================
Separate accounts are maintained for each item of importance.

The General Ledger
Accts Rec. Inventory Cash

General Ledger

Notes Pay. Mortgage Accts Pay.

Revenue Expenses Retained Earnings

ACCT 201

ACCT 201

ACCT 201

Account Title
Left Side Right Side

ATIQ ACCT ATIQ ACCT MBA 2010

The Formal Account
The Balance Column Ledger

Account Title
Date Item
Post Ref

Account No. ### Balance

Debit

Credit Debit Credit

A1

Learning Objective

ATIQ ACCT 2009 ATIQ ACCT 2010

Analyze business transactions using the accounting equation.

Analytical

Assets

=

Liabilities

+

Owners’ Equity

Capital Stock

Retained Earnings

The Accounting Equation A = L + OE

Revenue

-Expenses

=

Net Income

ATIQ ACCT 2009 ATIQ ACCT 2010

“One must learn by doing the thing; though you think you know it, you have no certainty until you try it.”
Publilius Syrus, Moral Sayings


				
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Description: This slide show is for exclusive use of MIMS Mardan and IBS Swabi