accountancy

Management  principles by henripayol

·  ORDER: For the sake of efficiency and coordination, all materials and people related to a specific kind of work should be treated as equally as possible.  

 ·  EQUITY: All employees should be treated as equally as possible.                                                                                                 

·  STABILITY OF TENURE OF PERSONNEL: Retaining productive employees should always be a high priority of management. Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring new workers.                                                                                                 

·  INITIATIVE: Management should take steps to encourage worker initiative, which is defined as new or additional work activity undertaken through self direction.                                                    

·  ESPIRIT DE CORPS: Management should encourage harmony and general good feelings among employees.

·  DISCIPLINE: A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort.                                                                               .                                                                                              

·  UNITY OF DIRECTION: The entire organization should be moving towards a common objective in a

Basic principles of accounting

Revenue principle The revenue principle, also known as the realization principle, states that revenue is earned when the sale is made, which is typically when goods or services are provided. A key component of the revenue principle, when it comes to the sale of goods, is that revenue is earned when legal ownership of the goods passes from seller to buyer. Note that revenue isn't earned when you collect cash for something.

Expense principle The expense principle states that an expense occurs when the business uses goods or receives services. In other words, the expense principle is the flip side of the revenue principle. As is the case with the revenue principle, if you receive some goods, simply receiving the goods means that you've incurred the expense of the goods. Similarly, if you received some service, you have incurred the expense. It doesn't matter that it takes a few days or a few weeks to get the bill. You incur an expense when goods or services are received.

Matching principle The matching principle is related to the revenue and the expense principles. The matching principle states that when you recognize revenue, you should match related expenses with the revenue. The best example of the matching principle concerns the case of businesses that resell inventory. for example, if you own a hot dog stand, you should count the expense of a hot dog and the expense of a bun on the day you sell that hot dog and that bun. Don't count the expense when you buy the buns and the dogs. Count the expense when you sell them. In other words, match the expense of the item with the revenue of the item. Accrual -based accounting, which is a term you've probably heard, is what you get when you apply the revenue principle, the expense principle, and the matching principle. In a nutshell, accrual-based accounting means that you record revenue when a sale is made and record expenses when goods are used or services are received.

Cost principle The cost principle states that amounts in your accounting system should be quantified, or measured, by using historical cost. For example, if you have a business and the business owns a building, that building, according to the cost principle, shows up on your balance sheet at its historical cost; you don't adjust the values in an accounting system for changes in a fair market value.

Objectivity principleThe objectivity principle states that accounting measurements and accounting reports should use objective, factual, and verifiable data. In other words, accountants, accounting systems, and accounting reports should rely on subjectivity as little as possible. An accountant always wants to use objective data (even if it's bad) rather than subjective data (even if the subjective data is arguably better).

Continuity assumptionThe continuity assumption states that accounting systems assume that a business will continue to operate. The importance of the continuity assumption becomes most clear if you consider the ramifications of assuming that a business won't continue. If a business won't continue, it becomes very unclear how one should value assets if the assets have no resale value. If a business won't continue operations, no assurance exists that any of the inventory can be sold. If the inventory can't be sold, what does that say about the owner's equity value shown in the balance sheet?

Unit-of-measure assumptionThe unit-of-measure assumption assumes that a business's domestic currency is the appropriate unit of measure for the business to use in its accounting. In other words, the unit-of-measure assumption states that it's okay for U.S. businesses to use U.S. dollars in their accounting. The unit-of-measure assumption also states, implicitly, that even though inflation and, occasionally, deflation change the purchasing power of the unit of measure used in the accounting system, that's still okay.

Separate entity assumptionThe separate entity assumption states that a business entity, like a sole proprietorship, is a separate entity, a separate thing from its business owner. And the separate entity assumption says that a partnership is a separate thing from the partners who own part of the business. The separate entity assumption, therefore, enables one to prepare financial statements just for the sole proprietorship or just for the partnership. As a result, the separate entity assumption also relies on a business being separate and distinct and definable as compared to its business owners.

Underlying assumptionsFinancial accounting relies on several underlying concepts that have a significant impact on the practice of accounting.The following are basic financial accounting assumptions:

·         Separate entity assumption - the business is an entity that is separate and distinct from its owners, so that the finances of the firm are not co-mingled with the finances of the owners.

·         Going concern assumption - the business is going to be operating for the foreseeable future.

·         Stable monetary unit assumption - e.g. the U.S. dollar

·         Fixed time period assumption - info prepared and reported periodically (quarterly, annually, etc.)

Definition of 'Generally Accepted Accounting Principles - GAAP' The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information.

Business ethics

Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.^[1]Business ethics has both normative and descriptive dimensions. As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behavior employ descriptive methods. The range and quantity of business ethical issues reflects the interaction of profit-maximizing behavior with non-economic concerns. Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporations promote their commitment to non-economic values under headings such as ethics codes and social responsibility charters. Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."^[2] Governments use laws and regulations to point business behavior in what they perceive to be beneficial directions. Ethics implicitly regulates areas and details of behavior that lie beyond governmental control.^[3] The emergence of large corporations with limited relationships and sensitivity to the communities in which they operate accelerated the development of formal ethics regimes.^[4]

Accounting equation

The basic accounting equation, also called the balance sheet equation, represents the relationship between the assets, liabilities, and owner's equity of a business. It is the foundation for the double-entry bookkeeping system. For each transaction, the total debits equal the total credits. It can be expressed asIn a corporation, capital represents the stockholders' equity. Since every business transaction affects at least two of a company’s accounts, the accounting equation will always be “in balance,” meaning the left side should always equal the right side. Thus, the accounting formula essentially shows that what the firm owns (its assets) is purchased by either what it owes (its liabilities) or by what its owners invest (its shareholders equity or capital)

Debits ang credits of accunting information system

They are as fundamental to accounting as addition (+) and subtraction (−) are to mathematics. It would not be appropriate to apply this mathematical analogy in all cases as it would give a distorted meaning. Thus, it would not be appropriate to consider debit to be an equivalent of addition and credit to be an equivalent of subtraction. You just need to understand that debit and credit are two actions that are opposite in nature. An element (account) that is effected by an accounting transaction is either debited or credited (with an amount that is reflected in the transaction) depending on the nature of the account and the rule applicable to it.

Diff. bet. Data and facts

Data is raw material & unorganized facts that need to be processed
When data are processed, organized, structured or presented in a given context so as to make them useful, they are called Information.
Data are plain facts. When data are processed, organized, structured or presented in a given context so as to make them useful, they are called Information.
It is not enough to have data (such as statistics on the economy). Data in themselves are fairly useless. But when these data are interpreted and processed to determine its true meaning, they become useful and can be called Information. Data is the computer's language. Information is our translation of this language.

Diiff. Bet hardware and software

Computer hardware is any physical device, something that you are able to touch and software is a collection of instructions and code installed into the computer and cannot be touched. For example, the computer monitor you are using to read this text on and the mouse you are using to navigate this web page is computer hardware. The Internet browser that allowed you to visit this page and the operating system that the browser is running on is software.

Peoplewareis a term used to refer to one of the three core aspects of computer technology, the other two being hardware and software. Peopleware can refer to anything that has to do with the role of people in the development or use of computer software and hardware systems, including such issues as developer productivity, teamwork, group dynamics, the psychology of programming, project management, organizational factors, human interface design, and human-machine-interaction.^[1

A microcomputer is a small, relatively inexpensive computer with a microprocessor as its central processing unit (CPU).^[2] It includes a microprocessor, memory, and input/output (I/O) facilities. Microcomputers became popular in the 1970s and 80s with the advent of increasingly powerful microprocessors. The predecessors to these computers, mainframes and minicomputers, were comparatively much larger and more expensive (though indeed present-day mainframes such as the IBM System z machines use one or more custom microprocessors as their CPUs). Many microcomputers (when equipped with a keyboard and screen for input and output) are also personal computers (in the generic sense)

A minicomputer, or colloquially mini, is a class of smaller computers that evolved in the mid-1960s and sold for much less than mainframe and mid-size computers from IBM and its direct competitors. In a 1970 survey, the New York Times suggested a consensus definition of a minicomputer as a machine costing less than 25 000 USD, with an input-output device such as a teleprinter and at least 4K words of memory, that is capable of running programs in a higher level language, such as Fortran or Basic.^[1] The class formed a distinct group with its own hardware architectures and operating systems. Minis were designed for control, instrumentation, human interaction, and communication switching as distinct from calculation and record keeping. Many were sold indirectly to Original Equipment Manufacturers (OEMs) for final end use application. During the two decade lifetime of the minicomputer class (1965-1985), almost 100 companies formed and only a half dozen remained

A supercomputer
 is a computer at the frontline of contemporary processing capacity--particularly speed of calculation.
Supercomputers were introduced in the 1960s, designed initially and, for decades, primarily by Seymour Cray at Control Data Corporation (CDC), Cray Research and subsequent companies bearing his name or monogram. While the supercomputers of the 1970s used only a few processors, in the 1990s machines with thousands of processors began to appear and, by the end of the 20th century, massively parallel supercomputers with tens of thousands of "off-the-shelf" processors were the norm.^[2][3] As of June 2013, China's Tianhe-2 supercomputer is the fastest in the world at 33.86 petaflops.