What
is accounting?
Accounting is processing
of financial information. This processing includes recording of transaction,
classifying of transactions, summarizing the transactions, and interpreting the
financial information.
What
is purpose of accounting?
The purpose of
accounting includes the tracking of payables and receivables, profit
calculation, legal requirement for maintaining record, calculating tax and
audit purposes.
What
are elements of financial statements?
The financial statement
elements can be broadly classified into five types i.e. assets, liabilities,
equity expense and revenue. The assets, liabilities and equity relate to
balances sheets, where expense and revenue are shown in profit and loss
account.
What
are component of financial statements?
The component of financial
statement includes statement of financial position, statement of comprehensive
income, statement of changes in equity, statement of cash flows, related notes
and disclosures.
What
is difference between statement of financial position and balance sheet?
The balance sheet was
old name of statement of financial position. The new term more comprehensive explains
the purpose of financial statement more clearly.
What
is difference between profit and loss account and statement of comprehensive income?
Statement of comprehensive
income is new name of profit and loss account. The new term was introduced to
improve the user understanding about the statement.
