The Basis For Business Decisions

Accounting
Accounting is the art of interpreting, measuring and communicating the result of economic activates. It translate the variables such as 1) Interprets 2) measure 3) Communicate they give useful information. We can say that accounting is the language of business.

Purpose of accounting:
The basic purpose of accounting provides the information which is useful for making decisions. Types of accounting:

1) Financial Accounting:
It reflects the financial position of the business, provide the information about the economic resources and obligation

2) Management accounting:
It is also called managerial accounting. Manager use this information to evaluating the performance of departments and individual, deciding whether to new line of product and in making virtually all types of managerial decision.

3) Tax Accounting:
Tax return is based upon financial accounting information.

Chapter No 2
Assets:
Assets are the economic resources which are owned business and are expected to benefit future operation. e.g A/R , N/R , Marketable securities, inventory, supplies etc

Liabilities:
Liabilities are the economic obligations that company pay in future. e.g A/P , N/P , interest payable, salaries payable etc. Owner Equity: It includes share capital or capital stock. It represent the resources invested by the owner. M Sohaib Anjum MBA (A) Ph# 03347601617

The Basis For Business Decisions

Increase in owner equity:

Investment by the owner Earning from profitable operation of the business

Decrease in owner equity:

Withdrawals of cash or other assets by the owner Losses from unprofitable operations Revenue: Revenue is the price of goods sold and services rendered during a given accounting period

Expenses:
Expenses are the cost of goods and services used up in the process of earning revenue.

Dividend:
When the profit is distributed in the share holders this portion is called dividend. Retain earning: The portion of profit which is not distribute, again invested or save for future is called retained earning

M Sohaib Anjum MBA (A) Ph# 03347601617