PRINCIPLES OF MANAGEMENT WEEK 1/2 (INTRODUCTION TO MANAGEMENT)

 Accountng is the process of identifying, measuring and communicating financial information about an entity, to permit informed judgements snd decisions by users of the information. 

accounting makes it possible to systematically record, analyse and report important financial infrmation. it is the backbone of any company ans is the language of business.

The reports on the profit at the end of the day is called financial statement.

income statement (P&L- profit and loss) is where you can find out how much sales a business has had,which costs and what was the profit.

Cots of goods are hoe much the produvts were bought for

sales/revenue is how much the product is being sold for 

Simple Income Statement ex:

   sales of reveue - costs of goods = net income 

Balance Sheet shows which assets the company owns, the liabilities it owes to others, and the equity that belongs to the owners.

assets are things of values that the company owes and uses 

ex: landing buildings, office equipments, inventory, cash 

liabilities are what the company owes to others 

ex: bank loan, IRS taxes, suppliers for goods 

Equity is the residual ammount that would be left if the company sold all its assets and paid off all its liabilities, the remaining money belongs to the owner of the company

equity= total assets - total liabilities 

flow of economic benefit is when money comes from one account to another (from a source to a destination)

the goods bought are called inventory