ACFI1001 Lecture 1: ACFI1001 Week 1
Four financial statements:
1. Statement of comprehensive income – statement of financial performance – profit and loss
– income statement – Income and expenses
2. profit and loss → statement of changes in equity – statement of changes in retained
earnings – opening balance in retained earnings + profit - dividend/drawings = closing
retained earnings
3. Closing retained earnings → balance sheet/statement of financial position – assets,
liabilities and capital
4. Cash flow statement – assets, liabilities, income, capital, expenses
Accounting encompasses the information system that:
• measures business activity
• processes the data into reports
• communicates the results to decision makers
It is divided into two main types, namely:
• financial accounting
• managerial accounting
Financial accounting is the preparation and presentation of financial reports (bounded by GAAP –
General Accepted Accounting Principles) for all types of users to enable them to make economic
decisions regarding the firm. It uses historical costs.
Management accounting provides manager with information required for the day-to-day running of
a business
A business is an organization in which basic resources (inputs), such as materials and labor, are
assembled and processed to provide goods or services (outputs) to customers (the objective of most
businesses is to earn a profit).
Accounting is concerned with the collection, analysis and communication of economic information.
Accounting can be defined as an information system that provides reports to users about the
economic activities and condition of a business.
Today’s aoutat focuses on the ultimate needs of decision makers who use accounting
information, whether those decision makers are inside or outside the business.
Accounting fulfils two roles:
• Stewardship – traditional role of providing accountability reports of transactions for a given
period
• Decision usefulness – is about assisting users with making informed choices about issues
e.g. resource allocation
Assets (own)
Liabilities (owe)
Income (earn)
Capital (invest)
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Four financial statements: statement of comprehensive income statement of financial performance profit and loss. Accounting encompasses the information system that: measures business activity, processes the data into reports communicates the results to decision makers. It is divided into two main types, namely: financial accounting: managerial accounting. Financial accounting is the preparation and presentation of financial reports (bounded by gaap . General accepted accounting principles) for all types of users to enable them to make economic decisions regarding the firm. Management accounting provides manager with information required for the day-to-day running of a business. A business is an organization in which basic resources (inputs), such as materials and labor, are assembled and processed to provide goods or services (outputs) to customers (the objective of most businesses is to earn a profit). Accounting is concerned with the collection, analysis and communication of economic information.
