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International Financial Reporting Standards
International Financial Reporting Standards, usually called IFRS,[1] are standards issued by the IFRS Foundation
IFRS Foundation
and the International Accounting
Accounting
Standards Board (IASB) to provide a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. They are the rules to be followed by accountants to maintain books of accounts which are comparable, understandable, reliable and relevant as per the users internal or external
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Governmental Accounting
Various governmental accounting systems are used by various public sector entities. In the United States, for instance, there are two levels of government which follow different accounting standards set forth by independent, private sector boards. At the federal level, the Federal Accounting Standards Advisory Board
Federal Accounting Standards Advisory Board
(FASAB) sets forth the accounting standards to follow. Similarly, there is the Governmental Accounting Standards Board (GASB) for state and local level government.Government Accounting can therefore be referred to as the process of recording and the management of all financial transactions incurred by the government which includes it's income and expenditures.Public vs. Private Accounting[edit] There is an important difference between private sector accounting and governmental accounting. The main reasons for this difference is the environment of the accounting system
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Bookkeeping
Bookkeeping
Bookkeeping
is the recording of financial transactions, and is part of the process of accounting in business.[1] Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation. There are several standard methods of bookkeeping, such as the single-entry bookkeeping system and the double-entry bookkeeping system, but, while they may be thought of as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process. Bookkeeping
Bookkeeping
is usually performed by a bookkeeper. A bookkeeper (or book-keeper) is a person who records the day-to-day financial transactions of a business. They are usually responsible for writing the daybooks, which contain records of purchases, sales, receipts, and payments
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Auditing
An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditing has become such a ubiquitous phenomenon in the corporate and the public sector that academics started identifying an " Audit
Audit
Society".[1] The auditor perceives and recognises the propositions before them for examination, obtains evidence, evaluates the same and formulates an opinion on the basis of his judgement which is communicated through their audit report.[2] Any subject matter may be audited
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Amortization
Amortization (or amortisation; see spelling differences) is paying off an amount owed over time by making planned, incremental payments of principal and interest. To amortize a loan means "to kill it off".[1] In accounting, amortization refers to charging or writing off an intangible asset's cost as an operational expense over its estimated useful life to reduce a company's taxable income.[2][1]Contents1 Etymology 2 Applications of amortization 3 See also 4 References 5 External linksEtymology[edit] The word comes from Middle English amortisen to kill, alienate in mortmain, from Anglo-French amorteser, alteration of amortir, from Vulgar Latin
Vulgar Latin
admortire "to kill", from Latin
Latin
ad- and mort-, "death". Applications of amortization[edit]When used in the context of a home purchase, amortization is the process by which loan principal decreases over the life of a loan, typically an amortizing loan
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Profit (accounting)
Profit, in accounting, is an income distributed to the owner in a profitable market production process (business). Profit is a measure of profitability which is the owner’s major interest in income formation process of market production. There are several profit measures in common use. Income
Income
formation in market production is always a balance between income generation and income distribution. The income generated is always distributed to the stakeholders of production as economic value within the review period. The profit is the share of income formation the owner is able to keep to himself/herself in the income distribution process. Profit is one of the major sources of economic well-being because it means incomes and opportunities to develop production
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Unit Of Account
A unit of account in economics is a nominal monetary unit of measure or currency used to represent the real value (or cost) of any economic item; i.e. goods, services, assets, liabilities, income, expenses. It is one of three well-known functions of money.[1] It lends meaning to profits, losses, liability, or assets. A unit of account in financial accounting refers to the words that are used to describe the specific assets and liabilities that are reported in financial statements rather than the units used to measure them.[2] Unit of account and unit of measure are sometimes treated as synonyms in financial accounting and economics.[2] Historically, prices were often given in a dominant currency used as a unit of account, but transactions actually settled by using a variety of coins that were available, and often goods, all converted into their value in the unit of account
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Social Accounting
Social accounting
Social accounting
(also known as social accounting and auditing, social accountability, social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting or accounting) is the process of communicating the social and environmental effects of organizations' economic actions to particular interest groups within society and to society at large.[1] Social accounting
Social accounting
is commonly used in the context of business, or corporate social responsibility (CSR), although any organisation, including NGOs, charities, and government agencies may engage in social accounting. Social Accounting can also be used in conjunction with community-based monitoring (CBM). Social accounting
Social accounting
emphasises the notion of corporate accountability. D
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Economic Entity
In accounting, an economic entity is one of the assumptions made in generally accepted accounting principles. Basically, any organization or unit in society can be an economic entity. Examples of economic entities are hospitals, companies, municipalities, and federal agencies. The " Economic entity assumption" states that the activities of the entity are to be kept separate from the activities of its owner and all other economic entities.[1] See also[edit]Piercing the corporate veilReferences[edit]^ Jerry J. Weygandt (2005). Hospitality Financial Accounting. John Wiley & Sons. pp. 41–. ISBN 978-0-471-27055-3. This economics-related article is a stub
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Materiality (auditing)
Materiality is a concept or convention within auditing and accounting relating to the importance/significance of an amount, transaction, or discrepancy.[1] The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in conformity with an identified financial reporting framework such as Generally Accepted Accounting
Accounting
Principles (GAAP). As a simple example, an expenditure of ten cents on paper is generally immaterial, and, if it were forgotten or recorded incorrectly, then no practical difference would result, even for a very small business. However, a transaction of many millions of dollars is almost always material, and if it were forgotten or recorded incorrectly, then financial managers, investors, and others would make incorrect decisions as a result of this error
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Going Concern
A going concern is a business that functions without the threat of liquidation for the foreseeable future, usually regarded as at least within 12 months. It implies for the business the basic declaration of intention to keep running its activities at least for the next year, which is a basic assumption to prepare financial statements considering the conceptual framework of the IFRS
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Annual Report
An annual report is a comprehensive report on a company's activities throughout the preceding year. Annual reports are intended to give shareholders and other interested people information about the company's activities and financial performance. They may be considered as grey literature. Most jurisdictions require companies to prepare and disclose annual reports, and many require the annual report to be filed at the company's registry
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Equity (finance)
In accounting, equity (or owner's equity) is the difference between the value of the assets and the value of the liabilities of something owned. It is governed by the following equation: equity = assets value − liabilities displaystyle text equity = text assets value - text liabilities For example, if someone owns a car worth $15,000 (an asset), but owes $5,000 on a loan against that car (a liability), the car represents $10,000 of equity. Equity can be negative if liabilities exceed assets. Shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the equity of a company as divided among shareholders of common or preferred stock. Negative shareholders' equity is often referred to as a shareholders' deficit. Alternatively, equity can also refer to a corporation's share capital (capital stock in American English)
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Cost Of Goods Sold
Cost of goods sold
Cost of goods sold
(COGS) refers to the carrying value of goods sold during a particular period. Costs are associated with particular goods using one of the several formulas, including specific identification, first-in first-out (FIFO), or average cost. Costs include all costs of purchase, costs of conversion and other costs that are incurred in bringing the inventories to their present location and condition. Costs of goods made by the businesses include material, labor, and allocated overhead
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Double-entry Bookkeeping System
Double-entry bookkeeping, in accounting, is a system of bookkeeping so named because every entry to an account requires a corresponding and opposite entry to a different account. The double entry has two equal and corresponding sides known as debit and credit. The left-hand side is debit and right-hand side is credit. For instance, recording a sale of $100 might require two entries: a debit of $100 to an account named "Cash" and a credit of $100 to an account named "Revenue."[further explanation needed] The accounting equation, Assets = Equity + Liabilities displaystyle text Assets = text Equity + text Liabilities , is an error detection tool; if at any point the sum of debits for all accounts does not equal the corresponding sum of credits for all accounts, an error has occurred
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Expense
In common usage, an expense or expenditure is an outflow of money to another person or group to pay for an item or service, or for a category of costs. For a tenant, rent is an expense. For students or parents, tuition is an expense. Buying food, clothing, furniture or an automobile is often referred to as an expense. An expense is a cost that is "paid" or "remitted", usually in exchange for something of value. Something that seems to cost a great deal is "expensive". Something that seems to cost little is "inexpensive". " Expenses
Expenses
of the table" are expenses of dining, refreshments, a feast, etc. In accounting, expense has a very specific meaning. It is an outflow of cash or other valuable assets from a person or company to another person or company. This outflow of cash is generally one side of a trade for products or services that have equal or better current or future value to the buyer than to the seller
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