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Which accounting assumption assumes that an enterprise will continue in operation long enough to carry?

going concern assumption


Who is the user of accounting information?

The users of accounting information are divided into two categories:- 1) internal users 2) External users 1. INTERNAL USERS These are the management and employees' of the organisation. - Management/managers need accounting information to assist them in making different decision concerning the business. eg. changing the product line, increasing production or sales of a certain product, expanding its operation or reducing its coverage etc. - Employees need accounting information in order to know their productivity, whether their earnings will be increased in the future, whether the business is able to pay their wages/salaries etc. 2. External Users These are the users apart from those within the organisation who need accounting information so as to make their own decision in relation to the bosiness/organisation. example of those external users are customer, suppliers, bankers of the business, competitors, tax authorities, investors, the government etc. Some the external users and their information needs are:- - Customers need information such as whether the business will continue to lender them services or not, and the ability of the business to meet their orders at the specified time. - supplier need accounting information so as to know whether the business will be able to pay their debts for the goods or services sold or lendered to it , and the time the business will take to pay its debt. - Investors need the accounting information so as to decide whether they should invest with the business, whether withdrowing their investments and or increase their investment in the business. - tax authorities need accounting information so as to predict/calculate how much will be received from the business as tax, or to increase or decrease tax payable by the business.


Why you wanted to be employ?

To be your own boss and independent and make your own decision that you think would be best for your business operation. But of course you do have all of your customers that you will have to please in order to make a profit from your self employed business operation and if you want to continue to make a net profit from the business.


Why do you want to be self-employed?

To be your own boss and independent and make your own decision that you think would be best for your business operation. But of course you do have all of your customers that you will have to please in order to make a profit from your self employed business operation and if you want to continue to make a net profit from the business.


What is the going concern assumption?

In accounting, "going concern" refers to a company's ability to continue functioning as a business entity. It is the responsibility of the directors to assess whether the going concern assumption is appropriate when preparing the financial statements. Financial statements are prepared on the assumption that the entity is a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of operations.


What are the Advantages and limitation of financial accounting?

Accounting has many advantages: Provides financial information about the business Provides assistance to management Helps in comparison of financial results comparison of its own results of different years comparison of financial results with other firms in the industry Helps in decision making Accounting information can be used as an evidence in legal matters Helps in valuation of the business Following are the limitations: Financial accounting permits alternative treatmentsAccounting is based on concepts and it follows " generally accepted principles" but there exist more than one principle for the treatment of any one item. This permits alternative treatments with in the framework of generally accepted principles. For example, the closing stock of a business may be valued by anyone of the following methods: FIFO (First-in- First-out), LIFO (Last-in-First-out), Average Price, Standard Price etc., but the results are not comparable. Financial accounting does not provide timely information It is not a limitation when high powered software application like HiTech Financial Accenting are used to keep online and concurrent accounts where the balance sheet is made available almost instantaneously. However, manual accounting does have this shortcoming. Financial accounting is designed to supply information in the form of statements (Balance Sheet and Profit and Loss Account) for a period normally one year. So the information is, at best, of historical interest and only 'post-mortem' analysis of the past can be conducted. The business requires timely information at frequent intervals to enable the management to plan and take corrective action. For example, if a business has budgeted that during the current year sales should be $ 12,00,000 then it requires information whether the sales in the first month of the year amounted to $ 10,00,000 or less or more? Traditionally, financial accounting is not supposed to supply information at shorter interval less than one year. With the advent of computerized accounting now a software like HiTech Financial Accounting displays monthly profit and loss account and balance sheet to overcome this limitation. Financial accounting is influenced by personal judgments'Convention of objectivity' is respected in accounting but to record certain events estimates have to be made which requires personal judgment. It is very difficult to expect accuracy in future estimates and objectivity suffers. For example, in order to determine the amount of depreciation to be charged every year for the use of fixed asset it is required estimation and the income disclosed by accounting is not authoritative but 'approximation'. Financial accounting ignores important non-monetary information Financial accounting does not consider those transactions of non- monetary in nature. For example, extent of competition faced by the business, technical innovations possessed by the business, loyalty and efficiency of the employees; changes in the value of money etc. are the important matters in which management of the business is highly interested but accounting is not tailored to take note of such matters. Thus any user of financial information is, naturally, deprived of vital information which is of non-monetary character. In modern times a good accounting software with MIS and CRM can be most useful to overcome this limitation partially. Financial Accounting does not provide detailed analysis The information supplied by the financial accounting is in reality aggregates of the financial transactions during the course of the year. Of course, it enables to study the overall results of the business the information is required regarding the cost, revenue and profit of each product but financial accounting does not provide such detailed information product- wise. For example, if business has earned a total profit of say, $ 5,00,000 during the accounting year and it sells three products namely petrol. diesel and mobile oil and wants to know profit earned by each product Financial accounting is not likely to help him unless he uses a computerized accounting system capable of handling such complex queries. Many reports in a computer accounting software like HiTech Financial Accounting which are explained with graphs and customized reports as per need of the business overcome this limitation. Financial Accounting does not disclose the present value of the business In financial accounting the position of the business as on a particular date is shown by a statement known as 'Balance Sheet'. In Balance Sheet the assets are shown on the basis of "Continuing Entity Concept. Thus it is presumed that business has relatively longer life and will continue to exist indefinitely, hence the asset values are 'going concern values.' The 'realized value' of each asset if sold to-day can't be known by studying the balance sheet.


Impact of MIS in the business?

Management information systems help business operate beyond walls. Managers from different departments and different facilities can communicate to ensure that the business has what it needs to continue production.


Where do I get more information on how to start my own business?

Well to start a company you need to hire or get some kind of loan to start out. Find the place or location of business and here's a link to continue. www.startupnation.com/business.


What is premises in Accounting?

In accounting, "premises" typically refer to the physical locations or properties used by a business for its operations, such as offices, factories, or warehouses. These premises are recorded as assets on the balance sheet and can be subject to depreciation over time. Additionally, the term can also refer to the underlying assumptions or principles that guide financial reporting, such as the going concern principle, which assumes that a business will continue operating indefinitely.


Discuss the consistency concept in accounting?

Consistency is a concept used when applying accounting methods to a business, the business must continue to use that particular method. For an example if a company is charging depreciation using the straight line method, they must stick with the straight line method. According to this concept,whatever accounting practices(whether logical or not) are selected for a given category of transactions,they should be followed from one accounting period to another to achieve compatibility for example:if depreciation is charged according to a particular method it should be followed year after year for the purpose of comparision.


What goal did the Western allies in Boxer Rebellion?

To protect the ability of business to continue trade with China


What are the 5 technologies and business trends that have enhanced the role of information systems?

Five business trends that have enhanced information systems include cloud computing, virtual team work, increased processing times, enhanced storage and more robust functionality. Advances in technology will continue to improve information systems.