fbpx

ECO. 121 ONLINE DISCUSSION/QUIZ—6-2-2023 (PRINCIPLES OF ACCOUNTING)

ECO. 121 ONLINE DISCUSSION/QUIZ—6-2-2023 (PRINCIPLES OF ACCOUNTING)
1. Accounting, is the process of measuring, processing, and sharing financial and other information about businesses and corporations. It is the process of keeping the accounting books of the financial transactions of the company.
Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the major differences between them?
2. What are the qualitative attributes of accounting?
3. Discuss the fundamental Principles of Accounting

Related Posts

Comments 189

  1. Avatar Nnanyere success Ihechukwu says:

    NAME: NNANYERE SUCCESS IHECHUKWU
    REGISTRATION NUMBER: 2021/241956
    DEPARTMENT: ECONOMICS

    1. Accounting is classified into two namely;
    i. Financial Accounting
    ii. managerial accounting
    Financial Accounting:
    Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time. It involves the process of preparing financial statements that companies’ use to show their financial performance and position to people outside the company, Including investors, creditors, suppliers, and customers.
    Financial accounting is important for businesses because it helps them keep track of their financial transactions. In turn, they can make sound decisions on how to allocate their resources. In addition, financial accounting helps you communicate your business finances to outside parties such as creditors and investors. The financial statements generated provide all the necessary information to other parties, which will either encourage or discourage them from partnering with your business.

    Managerial Accounting:
    Managerial accounting, also called management accounting, is a method of accounting that creates statements, reports, and documents that help management in making better decisions related to their business’ performance. Managerial accounting is primarily used for internal purposes. It is also the process of analyzing, and presenting financial information used to help company management make sound business decisions.
    This would include everything from providing detailed financial statements for different divisions within a large company, to analyzing the financial impact of a potential expansion or business acquisition. Management accounting is at the center of almost every significant business decision made.
    DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING
    1. Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes
    2.Managerial accountants focus on short-term growth strategies relating to economic maintenance. For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product while Financial accountants focus on long-term financial strategies relating to organizational growth.
    3.Financial accounting is exact and must adhere to Generally Accepted Accounting Principles (GAAP), while management accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.
    4. The main objectives of financial accounting are to disclose the end results of the business, and the financial condition of the business on a particular date while The main objective of managerial accounting is to help management by providing information that is used to plan, set goals and evaluate these goals.
    5.Financial accounting provides monetary and verifiable information while managerial provide monetary and company goal driven information.
    QUALITATIVE ATTRIBUTES OF ACCOUNTING
    i. RELEVANCE:
    Relevance implies that all those items of information should be reported that may aid the users in making decisions and/or predictions.Relevant Accounting information must be capable of making a difference in a decision by helping users to form predictions about the outcomes of past, present and future events or to confirm or correct expectations.Relevant Accounting information must be capable of making a difference in a decision by helping users to form predictions about the outcomes of past, present and future events or to confirm or correct expectations.
    ii. RELIABILITY:
    Reliable information is required to form judgments about the earning potential and financial position of a business firm. Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.
    iii. UNDERSTANDABILITY:
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the iv. COMPARABILITY:
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.
    Comparability can also refer to a company’s ability to compare its financial statements to its competitors. This can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.
    v. FAITHFUL REPRESENTATION:
    This is the extent to which information accurately reflects a company’s resources, obligatory claims, transactions.

    3. FUNDAMENTAL PRINCIPLES OF ACCOUNTING
    1. Revenue Recognition Principle
    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    2. Cost Principle
    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    3. Matching Principle
    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    4. Full Disclosure Principle
    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    5. Objectivity Principle
    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

  2. Avatar Kalu Valentina Onyinyechi says:

    Kalu Valentina Onyinyechi
    2021/246562
    Economics department
    tinakalu88@gmail.com

    The two categories of accounting is the FINANCIAL ACCOUNTING and the MANAGERIAL ACCOUNTING.

    Although financial accounting and managerial accounting complement each other in an organization’s financial strategy, professionals considering one of these careers should understand the differences between the two.
    Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.

    Managerial accountants focus on short-term growth strategies relating to economic maintenance. The managerial accounting involves the analysing of information gathered from finance accounting.
    For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product.

    Financial accountants focus on long-term financial strategies relating to organizational growth. The financial reports that these accountants produce follow established formats and abide by Financial Accounting Standards Board (FASB) rules and regulations.
    They have to do with the preparation of accurate financial statement.

    2. The qualitative attribute of accounting includes:
    a) Reliability: reliability implies that the information must be factual and verifiable.
    b) Understandability: accounting information should be a simple and logical manner that are understandable easily by the users.
    c) Relevance: accounting information depicted by financial statements must be relevant to the objectives of enterprise.
    d) Faithful representation: accounting aims at preparing those financial statements that dipicts the true and fair view of profitability
    e) Comparability: the financial statements should contain the figures of previous year, along side with the figures of current year so that the current performance can be compared with the past information.

    3. The principles of accounting includes

    a) Revenue Recognition Principle
    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    2. Cost Principle
    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    3. Matching Principle
    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    4. Full Disclosure Principle
    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    5. Objectivity Principle
    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

  3. 1. Financial accounting:This involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal management use to help make decisions.
    Accounting principles and standards such as GAAP (Generally Accepted Accounting Principles), IFRS (International Financial Reporting Standards), or ASPE (Accounting Standards for Private Enterprises),are standards that are widely adopted in financial accounting. The accounting standards are important because they allow all stakeholders and shareholders to easily understand and interpret the reported financial statements from year to year.

    Managerial accounting: Managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team to make tactical decisions.
    Managerial accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take and then broadcasting the required steps to all internal business managers.
    An example of managerial accounting is cost accounting. Cost accounting focuses on a detailed break-up cost of cost for effective control. Managerial accounting is very important in the decision making process.

    2. Qualitative attributes of Accounting
    a. Reliability: Reliability implies that the information must be factual and verifiable. The accounting information has said to have verifiability. If such information can be verified from source documents such as cash memos, purchase invoices, sales invoices, correspondence, agreement, property deeds and other similar documents. It must be neutral, prudent and complete.
    b. Relevance: Accounting information depicted by financial statements must be relevant to the objectives of enterprise. Unnecessary and irrelevant information should not be included in financial statements. The relevance of information is affected by its nature and materiality. If an item or event is material, it is probably relevant to the users of financial statements.
    c. Understandability: Accounting information should be presented in such a simple and logical manner that they are understood easily by their users such as investors, lenders, employees e.t.c. A person who does not have any knowledge of accounting terminology should also be able to understand them without much difficulty.
    d. Comparability: Comparability is a very useful quality of the accounting. The financial statements should contain the figures of previous year along with the figures of current year so that the current performance can be compared with the past performance. Similarly the financial statements should be prepared in such a way that the profitability and financial position of the concern may be compared with the other concerns of the similar type.
    e. Faithful representation: Accounting aims at preparing those financial statements that depict the true and fair view of profitability, liquidity, and solvency position of an enterprise. Application of appropriate accounting standards normally results in financial statements portraying true and fair view of information of an enterprise.

    3a. Revenue Recognition Principle: When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received
    b. Cost principle:Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
    c. Matching principle: Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
    d. Full disclosure principle:The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.
    e. Objectivity Principle: The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

  4. NWANKWO ESTHER CHIOMA
    ECONOMICS DEPT.
    2021/244120

    1a. TWO MAJOR CATEGORIES OF
    ACCOUNTING

    1. FINANCIAL ACCOUNTING
    What Is Financial Accounting? Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time.

    2. MANAGERIAL ACCOUNTING
    Managerial accounting is the process of “identification, measurement, analysis, and interpretation of accounting information” that helps business leaders make sound financial decisions and efficiently manage their daily operations, according to the Corporate Finance Institute.

    b MAJOR DIFFERENCES BETWEEN FINANCIAL
    AND MANAGERIAL ACCOUNTING

    1. The difference between financial and managerial accounting is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

    2. The certification for each of these types of accounting is different as well. People who have been trained in financial accounting have a Certified Public Accountant designation, while those with a Certified Management Accountant designation are trained in managerial accounting.

    3. Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.

    4. Financial accounting is focused on creating financial statements to be shared internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company.

    2. QUALITATIVE ATTRIBUTES OF
    ACCOUNTING
    a. Relevance
    Relevance refers to how helpful the information is for financial decision-making processes. For accounting information to be relevant, it must possess:

    i. Confirmatory value – Provides information about past events.
    ii. Predictive value – Provides predictive power regarding possible future events.

    b. Timeliness
    Timeliness is how quickly information is available to users of accounting information. The less timely (thus resulting in older information), the less useful information is for decision-making. Timeliness matters for accounting information because it competes with other information.

    c. Representational Faithfulness
    Representational faithfulness, also known as reliability, is the extent to which information accurately reflects a company’s resources, obligatory claims, transactions, etc. To help, think of a pictorial depiction of something in real life – how accurately does the picture represent what you see in real life? For accounting information to possess representational faithfulness, it must be complete and neutral.

    3. FUNDAMENTAL PRINCIPLES OF
    ACCOUNTING
    What Are Accounting Principles?
    Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.
    These principles are:

    1. Accrual Principle: This principle states that revenue and expenses are recognized and included in the profit and loss account as they are accrued, not as they are paid or received.

    2. Going Concern: This principle states that financial statements are prepared on the understanding that the business is a going or a continuous business and not one on the verge of cessation.

    3. Revenue Recognition: The revenue recognition principle, a key feature of accrual-basis accounting, dictates that  companies recognize revenue as it is earned, not when they receive payment. Accurate revenue recognition is essential because it directly affects the integrity and consistency of a company’s financial reporting.

    4. Principle of Cost: This states that the value of assets are shown at the cost of acquisition. The accountant cannot value assets in terms of the future returns it is expected to generate.

    5. Principle of Materiality: It states that in the preparation of accounts, amount of material value must be recorded. This means that the accountant should not report certain economic event when the result of doing so are insignificant as to affect the financial statement, e.g depreciation of a stapler.

    6. Matching Principle: This states that all the expenses are matched against the revenue generated at that period to determine the net profit.

    7. Principle of Conservatism: This principle often express the accountant’s view of his responsibility to the organization for whom he provides information.
    The principle states that:
    a. Income should not be anticipated and all possible losses must be provided for.
    b. Given a choice between two methods of valuing an asset, the accountant should choose the lower value. e.g stock should be valued at the lower of cost and market value.

    8. Consistency Principle: This principle states that similar transactions within the same period and between one period and another must be dealt with, in a consistent manner. Methods must not be changed at will as this will lead to a distortion of the profits.

  5. Avatar Omeje sharon Amarachi says:

    Omeje sharon Amarachi
    2019/244241

    Eco/pol (css)

    1 Cash Accounting
    Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.

    In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size.

    If a business generates more than $25 million in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to Internal Revenue Service rules.
    Accrual Accounting
    Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.
    Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made.
    the Main Difference Between Cash and Accrual Accounting.
    The main difference between accrual and cash basis accounting is the timing of when revenue and expenses are recorded and recognized. Cash basis method is more immediate in recognizing revenue and expenses, while the accrual basis method of accounting focuses on anticipated revenue and expenses.

    Here are some examples that apply these concepts:

    Revenue Recognition

    A company sells $20,000 of product to a customer in August. The customer pays that invoice in September. With the cash basis method, the company recognizes the sale in September, when cash is received. Whereas with the accrual basis accounting, the company recognizes the sale in August, when it is issued the invoice.

    Expense Recognition

    A company buys $700 of office supplies in March, which it pays for in April. With the cash basis method, the company recognizes the purchase in April, when it pays the bill. Whereas with the accrual basis accounting, the company recognizes the purchase in March, when it received the supplier invoice.
    2.Qualitative characteristics of accounting information assist management, investors and accountants in making important decisions and predicting financial outcomes. Learning the different characteristics can help you understand how to produce accurate, reliable financial documents that can improve your company’s financial well-being. In this article, we list different types of qualitative characteristics of accounting information, provide steps on how to use these characteristics and share an example of these characteristics so you can see how one would use them in the decision-making process.
    Get the latest trending stories, job search tips, career advice and more!
    What are qualitative characteristics of accounting information?
    Qualitative characteristics of accounting information are traits that allow financial professionals to more easily understand and make decisions on accounting reports.

    Relevance
    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.

    Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

    Representational faithfulness
    Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.

    There are three factors that measure a company’s representational faithfulness, including:

    Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
    Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
    Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
    Verifiability
    To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.

    Understandability
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.

    Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

    Comparability
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.

    Comparability can also refer to a company’s ability to compare its financial statements to its competitors. This can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.
    Timeliness
    Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions
    3.Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  6. Avatar Umehonyefosim mercy chinelo says:

    Name: Umehonyefosim mercy chinelo
    Reg no.2021/244215
    Department: combined social science (economics /psychology)
    Email: chinelomerrcy08@gmail.com

    Answer to question no 1
    Financial accounting – is the process of recording, summarizing, and reporting a company’s business transactions through financial statements.Financial accounting is concerned specifically with the generation of these reports, that they are based on accurate information and follow generally accepted accounting principles also known as (GAAP).its also the financial statements that are written records that convey the business activities and the financial performance of a company.it involves the generation of accounting statements
    B.Managerial accounting – also called management accounting, is a method of accounting that creates statements, reports, and documents that help management in making better decisions related to their business’ performance. Managerial accounting is primarily used for internal purposes. managerial accounting analyzes the information gathered from financial accounting

    Difference between financial and managerial accounting:

    a)Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.
    b)Financial accounting is focused on creating financial statements to be shared internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company.
    c)Financial accounting looks at the entire business while managerial accounting reports at a more detailed level. Managerial accounting focuses on detailed reports like profits by product, product line, customer and geographic region.
    d)A business’ profitability and efficiency are reported through financial accounting. Managerial accounting reports on what is causing a problem and how to fix that problem.
    d)Financial statements are due at the end of an accounting period, while managerial reports may be issued more frequently, to provide managers with relevant information they can act on immediately.
    e)Considerable precision is needed to prove that financial records are correct. Financial accounting relies on this accurate data for reporting, while managerial accounting frequently deals with estimates opposed to proven facts.
    e)When managerial accounting is made for internal consumption there is no set of standards to compile that information. On the other hand, financial accounting must follow various accounting standards.
    f)Financial accounting looks to the past to examine financial results that have already been achieved, so it is historically focused. Managerial accounting looks to the future with forecasting.
    Answer to question no 2
    1)Reliability: this means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represent what it is meant to represent.
    2.Relevance: this means information must be available in time,must help in prediction and feedback and must influence the decision of users in a positive manner.Timeliness;
    3)Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions.Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. 4)Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.
    Most companies aim to have financial reports that individuals without a background in accounting can understand.
    5)Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.

    Answer to question no 3
    Fundamental principle of accounting:
    Objectivity – This is the concept that all recorded data must be based on documented information, rather than on anticipated transactions, or assumed outcomes.
    • Arm’s-length transactions – This concept dictates that parties to a transaction are unrelated to one another.
    • Going Concern Concept – This concept assumes that the business entities in the transaction will remain in business and are not subject to close in the foreseeable future.
    • Monetary Measurement – This concept states that accounting transactions must be recorded in terms of money.
    • Revenue Recognition – This concept dictates that revenue should be recorded when it is earned rather than when payment is actually received.
    • Separate Entities – This principle states that all business transactions must be recorded separately from any private transactions of the business owners or principals.

  7. Avatar Onuoha samuel chiemezuo says:

    NAME: ONUOHA SAMUEL CHIEMEZUO
    DEPARTMENT:ECONOMICS
    MATRIC NO:2021/241353
    EMAIL:SAMUELCHIEMEZUO13@GMAIL.COM

    NO 1
    Accounting can be classified into two categories
    1. Financial Accounting and
    2. Management Accounting

    Financial Accounting: Financial Accounting is the original form of accounting that deals with recording business transactions and summarizing the data into reports, which are presented to the users so that financial decisions can be made rationally. On the other hand, management accounting is a new field of accounting that studies managerial aspects. It deals with the provision of financial data to the company’s management so that they can make rational economic decisions. Financial accounting emphasizes on giving true and a fair view of the financial position of the company to various parties. On the contrary, management accounting aims at providing both qualitative and quantitative information to the managers, so as to assist them in decision making and thus maximizing the profit.

    2. Management Accounting: Another name for management accounting is managerial accounting. It is the accounting for managers that facilitates management in formulating policies, forecasting, planning and controlling the deviations. It captures and analyses both quantitative and qualitative information. Any format that is simple and understandable can be used to prepare management reports. It can include tables, charts, graphs, etc. for a better presentation. Simply, management accounting is a process that involves the preparation of management reports and accounts to provide accurate and timely information, that managers require for decision-making purposes. Further, depending on the requirement of the management, these reports can be prepared, – daily, weekly, monthly or yearly. There is no format set on the basis of which it is to be reported.

    Major Differences between Financial Accounting and Management Accounting

    1. Financial Accounting is a discipline that deals with the preparation of financial statements, and communication of the information to the users. As against, management accounting is all about the provision of information that is useful to the management, to assist the management in the formulation of policies and day to day operations for efficient operation of the business.
    2. Financial Accounting uses the monetary records of past financial activities, so it is historically oriented. As against, management accounting is future-oriented, as it provides both present and future information in the form of forecasts and budgets which are duly analysed and presented in a detailed manner, so as to act as a base for management decision making.
    3. Financial Accounting reports only those events which can be described in monetary terms, but non-monetary events which have a positive or negative impact on the company’s success or failure are completely ignored. Conversely, management accounting records and reports both financial and non-financial events, for better decision making. Measures like a number of employees. labour hours, machine hours and product units are also important for analysis and decision making.
    4. In financial accounting, the reports prepared are mainly used by external users, but internal users also use them. It reflects how the business enterprise uses resources during a particular period of time. External users use it for decision-making purposes. However, it is the members of management who use the reports generated under management accounting.
    5. For the purpose of recording, classifying, summarizing and reporting business transactions, in financial accounting. Generally Accepted Accounting Principles (GAAPs) are used. Conversely, in the case of management accounting, there is no such compulsion of using Generally Accepted Accounting Principles (GAAPs).
    6. Financial Accounting generates information and reports that are public in nature. These are general purpose financial statements that serve the informational needs of multiple users. It keeps a track of the financial performance of the entire firm and not just of an individual segment or department. As against, in management accounting reports are prepared for private use by the company’s management and so they are confidential. These are specific purpose reports and are meant to determine the performance of entities, product lines and departments. Data produced comprise facts, estimates, analysis forecasts, budgets etc.
    7. Financial Accounting looks at the big picture, as it looks at the business as a whole. As against, management accounting looks at business in segments, commonly known as responsibility centres.
    8. Maintenance of records and preparation of the periodical financial statements, as per the financial accounting system is compulsory. In contrast, management accounting is optional.

    NO 2
    1. Reliability
    2. Relevance
    3. Understability
    4. Comparability and
    5. Faithful Representation

    NO 3
    Fundamental principles of Accounting

    1. Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    2. Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    3. Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    4. Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  8. Avatar Omeje onyinyechi paschaline says:

    Financial accounting
    Financial accounting involves capturing and summarizing all of a business’s financial transactions and creating reports to provide a clear overview of those business transactions. Financial accountants also generate financial records that provide valuable information about a company’s fiscal health, such as balance sheets, cash flow statements, and income statements.
    Managerial accounting
    The management accounting method is used by businesses to gain greater insights into a company’s operations. Since managerial accounting is strictly focused on providing accounting information for internal use, it doesn’t have to stick to the same strict GAAP guidelines as financial accounting.
    Cost accounting
    Cost accounting is technically considered a subcategory of management accounting. It focuses specifically on a company’s cost of doing business. This is used explicitly for internal purposes, helping determine how to reduce costs and increase profit margins.
    Tax accounting
    Tax accounting focuses on ensuring a business, nonprofit, or individual is abiding by all relevant tax laws and regulations that may apply to them. Tax accountants operate according to guidelines set forth by the Internal Revenue

    Qualitative attributes of accounting
    Verifiability
    Verifiability is the extent to which information is reproducible given the same data and assumptions. For example, if a company owns equipment worth $1,000 and told an accountant the purchase cost, salvage value, depreciation method, and useful life, the accountant should be able to reproduce the same result. If they cannot, the information is considered not verifiable.
    Timeliness
    Timeliness is how quickly information is available to users of accounting information. The less timely (thus resulting in older information), the less useful information is for decision-making. For example, if a company issues its financial statements a year after its accounting period, users of financial statements would find it difficult to determine how well the company is doing in the present.
    Understandability
    Understandability is the degree to which information is easily understood. In today’s society, corporate annual reports are in excess of 100 pages, with significant qualitative information. Information that is understandable to the average user of financial statements is highly desirable.
    Comparability
    Comparability is the degree to which accounting standards and policies are consistently applied from one period to another. Financial statements that are comparable, with consistent accounting standards and policies applied throughout each accounting period, enable users to draw insightful conclusions about the trends and performance of the company over time.
    Fundamental principles of accounting
    1. Revenue Recognition Principle
    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
    2. Cost Principle
    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
    3. Matching Principle
    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
    4. Full Disclosure Principle
    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

  9. Avatar Umeh Chinaza Lucy says:

    Name: Umeh Chinaza Lucy
    Reg no: 2018/246901
    Course: Eco 121
    Dept: Education economics
    EMAIL: umehchinazalucy@gmail.com

    Assignment Question:

    Accounting, is the process of measuring, processing, and sharing financial and other information about businesses and corporations. It is the process of keeping the accounting books of the financial transactions of the company.
    Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the major differences between them?
    2. What are the qualitative attributes of accounting?
    3. Discuss the fundamental Principles of Accounting

    ANSWER

    (1) Categories of Accounting:

    a) Financial Accounting: Financial accounting is the type of accounting that focuses on the preparation of financial statements for external users, such as investors, creditors, and other stakeholders. It involves the recording, summarizing, and reporting of financial transactions and events in accordance with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS). The financial statements, such as the balance sheet, income statement, and cash flow statement, provide an overview of a company’s financial position, performance, and cash flows.
    Major differences:

    External Users: Financial accounting is primarily geared towards providing financial information to external users, such as investors, creditors, and regulatory authorities, who are interested in the overall financial performance and position of a company.

    Historical Data: Financial accounting mainly deals with the recording and reporting of past financial transactions and events, providing a historical perspective on a company’s financial performance.

    Standardization: Financial accounting follows standardized accounting principles and guidelines, such as GAAP or IFRS, to ensure consistency and comparability of financial information across different companies and industries.

    b) Managerial Accounting: Managerial accounting, also known as cost accounting, is the type of accounting that focuses on providing internal information to help management make informed decisions and manage the operations of a company. It involves the measurement, analysis, interpretation, and reporting of financial and non-financial data to support strategic planning, budgeting, performance evaluation, and decision-making within an organization.

    Major differences:

    Internal Users: Managerial accounting is intended for internal users, such as managers, executives, and employees, who need relevant and timely information for decision-making and performance evaluation within the organization.
    Future-oriented: Managerial accounting is forward-looking and focuses on providing information for planning, budgeting, and decision-making for the future, rather than just reporting past financial performance.
    Flexibility: Managerial accounting allows for more flexibility in terms of reporting and analysis methods, as it caters to the specific needs of management and can be customized to suit the organization’s unique requirements.

    (2) Qualitative attributes of accounting:

    a) Relevance: Information provided by accounting should be relevant and useful for decision-making purposes. It should be timely, accurate, and have predictive or feedback value to aid in decision-making processes.
    b) Reliability: Accounting information should be reliable and free from bias or error. It should be verifiable, complete, and presented in a neutral and faithful manner to reflect the true financial position and performance of a company.
    c) Comparability: Accounting information should be comparable over time, allowing for trend analysis and comparison with industry standards. It should also be comparable across different companies and industries to facilitate benchmarking and performance evaluation.
    d) Understandability: Accounting information should be presented in a clear, concise, and understandable manner to enable users to comprehend and interpret the financial data without undue effort. It should be presented in a format that is easily understandable to a wide range of users, regardless of their accounting expertise.

    (3) Fundamental Principles of Accounting:

    a) Going Concern: This principle assumes that a company will continue its operations in the foreseeable future, and its financial statements should be prepared accordingly, assuming that the company will continue to operate and not be liquidated.
    b) Accrual Basis: This principle requires that transactions and events be recorded in the accounting records when they occur and not when the cash is received or paid. It focuses on recognizing revenue when it is earned and expenses when they are incurred, regardless of when the cash is received or paid.
    c) Consistency: This principle requires that a company uses the same accounting methods and practices consistently from one accounting period to another, ensuring comparability and consistency in financial reporting.
    d) Materiality: This principle suggests that only significant information that could affect the decision.

  10. Avatar Arubaleze Raluchukwu Marie-Zita (Reg no: 2021/241310) says:

    Name: Arubaleze Raluchukwu Marie-Zita
    Department: Economics
    Reg No: 2021/241310

    1.Financial accounting is the process of gathering, classifying, analysing, recording, summarizing, reporting and reporting a company’s business transactions through financial statements over a period of time. The financial statements are: the income statement, the balance sheet, the cash flow statement and the statement of retained earnings.

    Managerial accounting, also called management accounting. Managerial accounting is the process of identifying, analyzing, interpreting and communicating information to managers to help managers make decisions within a company and to help achieve business goals.

    The major differences between financial accounting and managerial accounting are:

    I.) Managerial accounting information is aimed at helping managers within the organization make well-informed business decisions, while financial accounting is aimed at providing financial information to parties outside the organization.

    management accounting is presented to a company’s internal community, while financial accounting is prepared for an external audience

    II.) The financial accounting is exact and must adhere to Generally Accepted Accounting Principles (GAAP), while management accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.

    III.) Financial accounting is concerned with the financial results that a business has already achieved, so it has a historical orientation. Managerial accounting may address budgets and forecasts, and so can have a future orientation.

    IV.) Financial accounting reports on the results of an entire business. Managerial accounting almost always reports at a more detailed level, such as profits by product, product line, customer, and geographic region

    V.) Financial accounting requires that financial statements be issued following the end of an accounting period. Managerial accounting may issue reports much more frequently, since the information it provides is of most relevance if managers can see it right away.

    2. The qualitative attributes of accounting are:
    a.) Reliability
    b.) Relevance
    c.) Understandability
    d.) Comparability
    e.) Faithful Representation

    3. The Fundamental Principles of accounting are:
    I.) Monetary unit principle: Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.
    II.) Going Concern Concept: A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
    III.) Principles of conservatism: Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
    IV.) Cost principle: Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
    V.) Matching principle: Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
    VI.) Objectivity principle: The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.
    VII.) Accrual principle: The Accrual Accounting principle states that revenue is recognized when the sale is completed,regardless of whether it is a cash or credit sale. Accrual basis of accounting recognizes revenues, expenses, gains and losses and the related increase or decrease in assets and liabilities in the period when the accounting event occurs.
    VIII.) Materiality principle: Materiality concept in accounting refers to the concept that all the material items should be reported properly in the financial statements. Material items are considered as those items whose inclusion or exclusion results in significant changes in the decision making for the users of business information.

  11. Avatar Obiania Gloria Mkpuruchukwu says:

    Name: OBIANIA GLORIA MKPURUCHUKWU
    Matric no: 2021/244124
    Department: Economics
    Course: ECO 121(Introduction to Accounting)

    1.) CATEGORIES OF ACCOUNTING
    A.) Financial Accounting: This entails the documenting of financial transactions as well as the creation of financial statements including balance sheets, income statements, and cash flow statements. The goal of this type of accounting is to precisely gauge a company’s financial performance. Although internal management may utilize the information for decision-making, it is primarily for external usage.
    B.) Management Accounting: This entails the evaluation of data obtained from financial statements. It entails the creation of reports pertaining to the company. Reports detailing, among other things, an examination of cash flow and inventory turnover. Reports that assist management in making wise business decisions. It is used only internally.
    DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING
    A.) Financial accounting has a historical component. Financial transactions that have occurred here are documented. Management accounting, on the other hand, is more prospective. Future corporate decisions are aided by the reports that management accountants produce.
    B. Financial accounting is primarily used by outside parties. It is not necessarily prepared with management in mind, to put it another way. Instead, it is prepared for investors, stockholders, and the like. However, management accounting is only used internally. In order for management to make wise business decisions, it is primarily prepared for them.
    C. Generally Accepted Accounting Principles (GAAP) must be used by financial accountants. This is as a result of the fact that many types of individuals use their work. Management accountants aren’t required to follow GAAP, though. Instead, as management is the intended audience for their work, their reports are typically tailored to meet their demands.
    2.) QUALITATIVE ATTRIBUTES OF ACCOUNTING
    A. Reliability: Accountants’ statements and/or reports must be trustworthy.
    They must be factual and verifiable, in other words. When information can be checked against sources of authority, it is verifiable. In order to be considered reliable, information provided by accountants must also be prudent, impartial, thorough, and should reflect the true nature of transactions rather than just following the letter of the law.
    B.) Relevance: The data provided by accountants should be pertinent to the company’s goals. That is to say, accountants shouldn’t provide information to users that has no bearing on their economic or commercial decisions.
    C.) Understandability: Accounting data should be presented so that even someone with no prior accounting knowledge or experience may understand what the data means to them. Tye information should be presented as simply as possible and should be logical and unambiguous. The information may also be accompanied by explanatory annotations.
    D.) Comparability: The information provided by accountants should be arranged such that it may be compared to information from other accounting or fiscal periods, as well as information on other business-related issues or even information from other businesses. This is crucial since it enables customers to identify a company’s strengths and weaknesses and take appropriate action.
    E.) Faithful Representation: Accounting information should give truthful and fair perspectives on important issues including the business’s profitability, liquidity, degree of solvency, etc.
    3.) FUNDAMENTAL PRINCIPLES OF ACCOUNTING
    A.) The revenue recognition principle describes the specific circumstances under which income is recognized as well as how to account for that revenue. According to accrual accounting, revenue should be recognized and recorded when it is earned rather than always when it is paid out in cash. In other words, when the good or service that a company has paid for has been provided to the customer.
    B.) The cost principle asserts that a company’s assets should be valued at their original cost rather than their current market worth.
    C.) Full Disclosure Principle: In order to help users make the best decisions for the organization, accountants must present information that is complete and not in any manner deceptive.
    D.) The objectivity principle states that accountants’ information should be free of all bias and subjective judgments. The information provided should be backed up by facts. Source documents are one method.
    E.) The Prudence Principle, which emphasizes that neither assets nor liabilities should be artificially overstated or understated. Furthermore, revenue should not be recorded until it is regarded as practically definite.

  12. Avatar ezeogusystus@gmail.com says:

    NAME: EZEOGU SYSTUS CHIMUANYA B.
    MATRIC NUMBER: 2021/241332
    COURSE: ECO 121(ASSIGNMENT)

    Major categories in accounting
    i. Financial accounting:-
    it involves the preparation of accurate financial statement. The focus of financial accounting is the measurement of financial performance of a business as accurately as possible. Financial statements often used externally, they may also b used for internal measurements to help make decisions about the business.
    Accounting principles and standards such as GAAP ( Generally Accepted Accounting Principle ), IFRS ( International Financial Reporting standard ), are standards that are widely adopted in financial accounting. The accounting standards are important because they allow all stakeholders and shareholders to easily interpret yearly financial statements.

    ii. Managerial accounting
    involves the analyzing the information gathered from financial accounting. It refers ro the process of preparing report about business operations. The report serve to assist the management make tactical decision.
    It is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best step to take and then broadcasting the required step to all internal business. An example of managerial accounting is cost accounting.

    2. What are the qualitative attributes of accounting
    this are attributes that simplifies and expand on the financial figures to ensure easy understanding and comparability
    i. Reliability:- implies that the information must be factual and verifiable. It must posses verifiability
    ii. Relevance:- the financial statement must be relevant to the objective of the enterprise. Unnecessary and irrelevant information should be put aside
    iii. Understandability:- it should be presented in a simple manner that they are easily understood by their users. Even those without much knowledge in accounting should be able to understand them

    iv. faithful representation:- aims at preparing those financial statements that depicts the true and fair view of profitability, liquidity and solvency position of an enterprise

    3. Discuss the fundamental principle of accounting
    1. . Accrual Principle
    It is a concept in accounting that mandates the recording of transactions in the time period in which they occur. It is regardless of the time when actual cash flows for the transactions are received. Through this principle, one can gain an accurate insight into the financial status of a business. Most large-scale businesses adopt an accrual system to determine the cash flow of the business operations. Along with this, revenues and related expenses are recorded in the same time period of reporting. Both IFRS and GAAP support this concept. In case, a business has more than $5 million in revenue, then such businesses must adopt this system for the purpose of taxation.
    2. Consistency principle
    According to this principle, when an organisation adopts a specific accounting method of reporting or documentation, then it should stay consistent with the method. The aim of this basic accounting principle is to make financial statements comparable across industries and companies. This principle has two issues associated with it. First, the principle is not properly followed when many people are recording data and compiling reports. To combat this issue, organizations need to have a set method internally. The second issue is related to switching between the financial reporting methods. Some organizations do this in order to manipulate the data to their advantage.

    3. Conservatism Principle
    The principle gives you a realistic perspective of unexpected situations. According to this principle, one should recognize expenses and liabilities at the early stages even if there is uncertainty about the outcome. However, the principle recognizes revenues and assets when there is an assurance of its receival. This principle can be applied to recognizing the estimates. The conservatism principle is the foundation of lower cost or market rule. As per this rule, one should record inventory at a lower end of its current market value or at its acquisition cost.

    4. Cost Principle
    Whenever a business acquires an asset, its initial value is recorded in its financial reports of the business. This value might not be improved in the market value of inflation. It is also not updated to reflect any depreciation or even appreciation. This value is known as the cost principle. As per the principle, companies keep a record of their tangible assets without reflecting the market value. Through this principle, companies can assess the actual cost of using financial services for calculating the historical cost principles of the assets of the company.

    5. Economic Entity Principle
    This is a concept of accounting that requires businesses to be treated as a separate financial and legal entity. This means that the recorded activities of the business entity must be kept separate from the recorded activities of the owner and other entities. These may include either a sole trader, limited liability partnership, or general partnership.

  13. Avatar Joel chibuikem Kingsley says:

    Joel chibuikem Kingsley
    2021/244125
    Eco 121
    Ans: Cash Accounting
    Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting tansactions are only recorded when cash is spent or received.

    Accrual Accounting
    Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.
    Major Differences Between Them Are;
    The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

    2) what are the qualitative attributes of accounting?
    Ans:
    1)Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.
    2)Verifiability
    The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.
    3)Timeliness
    The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.
    4)Understandability
    The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. The financial reports are prepared with the assumption that its users have a ‘reasonable knowledge’ of the business and its economic activities.

    3) Discuss the fundamental Principles of Accounting.
    Ans:
    Some of the most fundamental accounting principles include the following:

    1)Accrual principle
    2(Conservatism principle
    3)Consistency principle
    4(Cost principle
    5)Economic entity principle
    6)Full disclosure principle
    7)Going concern principle
    8)Matching principle
    9)Materiality principle
    10)Monetary unit principle
    11)Reliability principle
    12)Revenue recognition principle
    13)Time period principle.

    The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle. Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements. Consistency refers to a company’s use of accounting principles over time.

  14. Avatar Ogbodo Uchechukwu Jacinta says:

    OGBODO UCHECHUKWU JACINTA
    REG NO: 2021/241933
    DEPARTMENT OF COMBINED SOCIAL SCIENCES ( ECONOMICS/SOCIOLOGY)
    ogbodoaxjacinta@gmail.com

    1.) CATEGORIES OF ACCOUNTING

    a.) Financial Accounting:
    This involves the recording of financial transactions, and the preparation of financial statements such as cash flow statements, income statements, balance sheet. In this form of accounting, the purpose is to accurately measure the financial performance of businesses. It is mainly for external use, although internal management can use its information for decision making.

    B.) Management Accounting:
    This involves the analysis of information garnered from the financial statements. It involves the preparation of reports concerning the business. Reports such as the cash flow analysis, inventory turnover analysis, sales forecasts, etc. Reports, which help management in making good decisions concerning the business. It is for internal use.

    DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING

    A.) Financial accounting is somewhat historical:
    Here, records are made of financial transactions that have been made. On the other hand, management accounting, is more forward-looking. The reports made by management accountants, are used to help making business decisions in the near future.

    B.) Financial accounting is mainly for external use:
    That is to say, it is not necessarily prepared, with management in mind. Rather, it is prepared for shareholders, investors, and the like. On the other hand, management accounting is for internal use. It is prepared primarily for management so they can make good business decisions.

    C.) Financial accountants are obligated to use GAAP (Generally Accepted Accounting Principles):
    This is due to the fact that different kinds of people make use of their work. However, management accountants aren’t obligated to use GAAP. Instead their reports are generally tailored to the needs of the management, who are the users of their work.

    2.) QUALITATIVE ATTRIBUTES OF ACCOUNTING

    A.) Reliability:
    The statements and/or reports made by accountants must be reliable
    That is to say, they must be verifiable and factual. Information is verifiable if it can be verified through the use of source documents. Reliability also implies that the information provided by accountants should be prudent, void of personal bias, comprehensive, and should reflect the actual realities of transactions rather than simply conforming with legal form.

    B.) Relevance:
    The information given by accountants should be be relevant to the objectives of the business. That is to say, information that doesn’t in anyway, influence the economic or business decisions users should not be given by accountants.

    C.) Understandability:
    accounting information should be presented in ways that even people with no prior knowledge or understanding of accounting, would be able to understand what the information means for them. Tye information should be clear and logical, and presented as simply as possible. Explanatory notes can also be included with the information.

    D.) Comparability:
    The information provided by accountants should be prepared in such a way, that they can be compared with information provided in other accounting or fiscal periods, or even information on other issues related to the business, or even other businesses. This is important, because it makes it possible for users to see the strong or weak points of a business, and they can therefore, act accordingly.

    E.) Faithful Representation:
    Accounting information should true and fair views on crucial matters such as the profitability of the business, the liquidity of the business, the level of solvency of the business.

    3. Fundamental principles of accounting includes:
    a) MONETARY UNIT

    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    b) GOING CONCERN
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    c) PRINCIPLE OF CONSERVATISM
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    d) COST PRINCIPLE
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  15. NAME: OKOLIE CHINWENDU THERESA
    REGISTRATION NUMBER: 2021/246807
    COURSE: ECO 121; INTRODUCTION TO ACCOUNTING
    DETARTMENT: ECONOMICS
    FACULTY: SOCIAL SCIENCES
    BLOG: okolietheresa.blogspot.com

    ASSIGNMENT
    1. Deeply discuss the major categories of Accounting.
    The major categories of accounting are;
    1. Financial Accounting
    2. Managerial Accounting
    FINANCIAL ACCOUNTING:
    This is a specific branch of accounting that involves a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time. These transactions are summarized in the preparation of financial statements including the balance sheet, income statement and cash flow statement, that records the company’s operating performance over a specific period of time. Financial accounting is the framework that dictates the rules, processes, and standards for financial recordkeeping.
    Nonprofit organizations, corporations, and small businesses use financial accountants to prepare their books and keep records and generate their financial reports. Financial accounting may be performed under the accrual method (recording expenses for items that have not yet been paid) or under the cash method (only cash transactions are recorded).
    MANAGERIAL ACCOUNTING:
    This is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals. It is a category or branch of accounting that encompasses many facets of accounting that is aimed at improving the quality of information delivered to management about business operation metrics. It makes use of information relating to the cost and sales revenue of goods and services generated by a company. With managerial accounting, companies can track and craft spending budgets, reduce costs, manage cash flows and project sales figure, among other tasks.

    b. What are the major differences between them?
    DIFFERENCES BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING
    1. Efficiency;
    Financial accounting reports on the profitability or efficiency of a business, while managerial accounting reports on specifically what is causing problems and how to fix them. Managerial accounting reports are used in improving operations, while financial accounting reports are used by outsiders to decide whether to invest in or lend to a business.
    2. Aggregation;
    Financial accounting reports on the results of an entire business, whereas managerial accounting reports at a more detailed level, such as profits by products, product line, customer, and geographic region. Financial accounting reports are more likely to be distributed to outsiders, while the results of managerial accounting are only used by insiders or the business.
    3. Valuation;
    Financial accounting addresses the proper valuation of assets and liabilities, and so is involved with impairments, revaluations, and so on. Managerial accounting is not concerned with the value of these items, only their productivity.
    4. Time Period;
    Financial accounting is concerned with the financial results that a business has already achieved, so it has a historic orientation. Managerial accounting may address budgets and forecasts, and so can have a future orientation.
    5. Systems;
    Financial accounting pays no attention to the overall system that a company has for generating a profit, only its outcome. Conversely, managerial accounting is interested in the location of bottleneck operations, and the various ways to enhance profits by resolving bottleneck issues.
    6. Timing;
    Financial accounting requires the financial statements be issued following the end of an accounting period. Managerial accounting may issue reports much more frequently, since the information it provides is of most relevance if managers can see it right away.
    7. Standards;
    Financial accounting must comply with various accounting standards, whereas managerial accounting does not have to comply with any standard when information is compiled for internal consumption.

    2. What are the qualitative attributes of accounting?
    The qualitative characteristics of accounting information are as follows;
    1. Reliability:
    The first qualitative attribute of accounting is reliability. Reliability means that the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.
    2. Relevance:
    The second qualitative characteristics of accounting information is relevance. A relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.
    3. Understandability;
    This is the third most important quality of an accounting information. Understandability means that decision makers must interpret accounting information in the same sense as it is prepared and conveyed to them.
    4. Comparability;
    The last quantitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

    3. Discuss the fundamental principles of accounting
    Accounting principles are defined as the various guidelines and rules that companies must follow when documenting, recording, and reporting financial transactions and information. These principles are;
    • Objectivity – This is the concept that all recorded data must be based on documented information, rather than on anticipated transactions, or assumed outcomes.
    • Arm’s-length transactions – This concept dictates that parties to a transaction are unrelated to one another.
    • Going Concern Concept – This concept assumes that the business entities in the transaction will remain in business and are not subject to close in the foreseeable future.
    • Monetary Measurement – This concept states that accounting transactions must be recorded in terms of money.
    • Revenue Recognition – This concept dictates that revenue should be recorded when it is earned rather than when payment is actually received.
    • Separate Entities – This principle states that all business transactions must be recorded separately from any private transactions of the business owners or principals.

  16. Avatar Chekwube festus joshua says:

    Name :chekwube festus Joshua
    Department:economics
    Reg no:2021/241952

    1.financial accounting
    The primary function of financial accounting is to track, record, and recap all daily transactions into monthly, quarterly, and yearly financial statements. From the financial statements, the owners and financial managers can perform multiple forms of financial analysis, such as Common size financial statement analysis or Ratio analysis. The result from the analysis is reported to the stakeholders later. In short, financial accounting provides a general look at business performance over a period of time in the form of financial statements – the Balance Sheet, Income Statement, and Statement of Cash Flows, and “financial reporting” to your description would make it more comprehensive. Finance bookkeeping involves recording financial transactions and maintaining financial records, while financial reporting involves preparing financial statements and other reports for external stakeholders.

    Managerial accounting:
    Managerial accounting can be easily mistaken for financial accounting, but actually, they are two different aspects. Managerial accounting is the process of organizing financial data and reporting financial status to managers. Thereby helping business managers make optimal operating decisions and grasp the issues as soon as possible if there are any. Management accounting information is especially important in operating an enterprise, and at the same time serves to control and evaluate that business. While financial accounting can be publicly shared with stakeholders, management accounting information is shared exclusively with others in an organization due to the sensitive nature of the information

    2.qualitative attributes of accounting
    1.Relevance
    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.

    Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

    2.Representational faithfulness
    Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.

    There are three factors that measure a company’s representational faithfulness, including:

    3.Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
    Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
    Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
    Verifiability
    To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.

    4.Understandability
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.

    Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

    5.Comparability
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.

    Comparability can also refer to a company’s ability to compare its financial statements to its competitors. This can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.

    3.fundamental principles of accounting
    1.Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    2.Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    3.Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    4.Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  17. Name: Godspower chinecherem mercy
    Reg no: 2021/244131
    faculty: Social Sciences
    Department: Economics
    Course title: Introduction to accounting ( Eco 121)
    Assignment
    Number 1 Answer
    The two major categories are financial and managerial accounting
    financial accounting involves preparing accurate financial statement . this accounting focuses on measuring the performance of a business firm as accurate as possible. it adopt standard and principles such as GAAP(generally accepted accounting principles),IFPR (International financial reporting standard) or ASPE (Accounting Standard for Private Enterprises) which help shareholders and stakeholders to easily understand and interpret accounting statement from year to year while, managerial accounting is the type of Accounting that analyses the information gathered from the financial accounting.it is the process that allows an Enterprise to decide on the best following steps to take and then broadcasting those steps to all the internal business managers
    1.b. Differences
    financial accounting prepares the accurate financial statement while managerial accounting analyses the information gathered from financial accounting.
    financial accounting adopt standard and principles such as GAAP, IFPR or ASPE which help shareholders or stakeholders to easily understand and interpret accounting statement while, managerial accounting decide on the best steps to take and then broadcast the steps to all the internal business managers
    iii. Financial accounting is taken to help shareholders and stakeholders interpret and understand the reported financial statement from year to year while, managerial accounting is taken to assist the management team to make tactical issues.
    2.a. Reliability-it means that the information must be factual and verifiable from source documents like purchase invoice sales invoice etc
    b. Relevance-“Information is relevanct when it influences the economic decisions of users by helping them evaluate past, present or future events or confirming or correcting their past evaluation” according to IASP.
    c. Understandability- this means that accounting information should be presented in a such a simple and logical manner that even persons with no accounting knowledge can interpret it.
    d. Comparability- financial statement should contain the figures of previous year with the figures of the current year so that the current performances can be compared with the last performance.
    3.a.Revenue recognition principle- Companies revenues are recognized when the service or product is considered delivered to the consumer
    b.Materiality principle- All items that are reasonably likely to impact investors decision making must be recorded or reported in details using GAAP standard.
    c. Matching principle- Am accounting principle for recording revenues and expenses
    d. Consistency principle- Business should maintain the same accounting methods throughout the accounting period,so that the users can make meaningful conclusion from the data.

  18. NAME: Njoku Nmesoma Gift
    REG NO: 2021/244122
    DEPARTMENT: ECONOMICS
    COURSE TITLE: ECO 121

    1A. What are the categories of accounting? Deeply discuss what the categories are?
    Answers:
    There are;
    Financial accounting and managerial accounting

    (I) Financial accounting: is one the categories of accounting whereby they mark, record and sum-up or summarize all daily transactions into monthly, quarterly and yearly financial statements. Through the financial statements, owners and financial managers can form multiple forms of financial analysis, such as common size financial statements and ratio analysis. Then the analysis result is being reported to the stakeholders later. It helps to see if the business is performing well over a period of time in the form of financial statements ie the balance sheet, income statement etc. Those are used by outsiders to analyze the health of the business or company.
    (II) Managerial accounting: it is the process of organizing financial data and reporting financial status to managers, this mode of accounting is important in operating an enterprise and serves to control and evaluate the business. Management accounting information is shared exclusively with others in an organization due to the sensitive nature of the information. The report being made in managerial accounting are internally and data are being translated in useful information for utilization of the company’s management for their decision making process.

    1B. Difference between managerial accounting
    and financial accounting.
    I. Financial accounting focuses on an
    organization’s external financial processes
    while managerial accounting focuses on an
    organization’s internal financial processes.
    ii. Managerial accounting focus on short-term
    growth strategies relating to economic
    maintenance. financial accounting deals on
    long-term financial strategies relating to
    organizational growth.
    iii. The reports financial accounting produce
    follow established formats and abide by
    financial accounting standard board (FASB)
    rules and regulation. For they will prepare
    reports for external users i.e. stakeholders,
    potential investors as well as executives, while
    managerial accounting is made for internal
    consumption there is no set of standard to
    compile that information, they are not subject
    to rules and regulations on like financial
    accounting.
    iv. Managerial accounting command higher
    salaries than financial accountants.
    v. Financial accounting cares about generating a
    profit and not the overall system of how the
    company works, managerial accounting looks
    for bottleneck operation and determine
    various ways to enhance profit by eliminating
    bottleneck issues.
    vi. Financial statements are due to the end of an
    accounting period while managerial reports
    are issued or may be issued more frequently,
    to provide managers with relevant information
    they can act on instantly.
    vii.Managerial accounting is only concerned with
    the value these items have on a company’s
    productivity. While financial accounting is
    concerned with knowing the properties of a
    company’s assets and liabilities.

    2. What are the qualitative attributes of
    accounting?
    a. Relevance: For the information to be relevant
    they must have information about past events
    that can assist in making predictions about
    future. They must have confirmatory and
    predictive value to develop and have accurate
    accounting information.
    b. Reliability: accounting information must be
    reliable, when it’s financial statements should
    have been verified from source documents.
    c. Understandability:: financial information
    should be made clear and easy to understand
    so that investors or externals who may not
    have a background in accounting will find it
    easy to comprehend.
    d. Comparability: it is the ability for companies to
    compare it’s financial statement to it’s
    competitors, whereby accounting methods
    are used ; balance sheet, cash flow or income
    reports etc. in comparing company’s trends
    and overall financial performance.
    e. Timeliness: it involves how available and how
    rapidly accounting information is to
    professionals.

    3. Discuss the fundamental Principles of
    Accounting.
    a. Revenue recognition: it is the principle that
    identifies the specific conditions in which
    revenue is recognized and determined how to
    account for it and it is recognized when critical
    event has occurred, when product or service
    has been delivered to customers and the
    amount is easily measurable to the company.
    b. Consistency principle: this states that
    accountants should adhere and abide to the
    same set of standards throughout all
    business recordings.
    c. Materiality principle: states that all financial
    data and material transactions should be fully
    disclosed in appropriate reports.
    d. principle of regularity: it states that the GAAP
    rules and regulations should be adhered as a
    standard by accountants.
    e. Matching principle: it states that revenues and
    expenses should be matched in the income
    statement for a period of time or to say that
    companies should report expenses at the
    same time as the revenues that are related to
    it.
    f. Cost principle: it is the principle which states
    that cost of an asset should be recorded at the
    cash amount at the time the asset was
    acquired and it prohibit a company from
    recordings an asset that was not acquired in a
    transaction. Cost principle means that a long-
    term asset purchased for a given cash amount
    should be recorded and will be depreciated on
    it’s cost, under exception of land as an asset
    and the amount recorded should not be
    increased for inflation or improvement in
    market value.
    g. Disclosure principle: is the principle that
    require a company to provide the necessary
    information so that people who are able to
    make informed decisions regarding the
    company.

  19. 1A. What are the categories of accounting? Deeply discuss what the categories are?
    Answers:
    There are;
    Financial accounting and managerial accounting

    (I) Financial accounting: is one the categories of accounting whereby they mark, record and sum-up or summarize all daily transactions into monthly, quarterly and yearly financial statements. Through the financial statements, owners and financial managers can form multiple forms of financial analysis, such as common size financial statements and ratio analysis. Then the analysis result is being reported to the stakeholders later. It helps to see if the business is performing well over a period of time in the form of financial statements ie the balance sheet, income statement etc. Those are used by outsiders to analyze the health of the business or company.

    (II) Managerial accounting: it is the process of organizing financial data and reporting financial status to managers, this mode of accounting is important in operating an enterprise and serves to control and evaluate the business. Management accounting information is shared exclusively with others in an organization due to the sensitive nature of the information. The report being made in managerial accounting are internally and data are being translated in useful information for utilization of the company’s management for their decision making process.

    1B. Difference between managerial accounting
    and financial accounting.
    I. Financial accounting focuses on an
    organization’s external financial processes
    while managerial accounting focuses on an
    organization’s internal financial processes.
    ii. Managerial accounting focus on short-term
    growth strategies relating to economic
    maintenance. financial accounting deals on
    long-term financial strategies relating to
    organizational growth.
    iii. The reports financial accounting produce
    follow established formats and abide by
    financial accounting standard board (FASB)
    rules and regulation. For they will prepare
    reports for external users i.e. stakeholders,
    potential investors as well as executives, while
    managerial accounting is made for internal
    consumption there is no set of standard to
    compile that information, they are not subject
    to rules and regulations on like financial
    accounting.
    iv. Managerial accounting command higher
    salaries than financial accountants.
    v. Financial accounting cares about generating a
    profit and not the overall system of how the
    company works, managerial accounting looks
    for bottleneck operation and determine
    various ways to enhance profit by eliminating
    bottleneck issues.
    vi. Financial statements are due to the end of an
    accounting period while managerial reports
    are issued or may be issued more frequently,
    to provide managers with relevant information
    they can act on instantly.
    vii.Managerial accounting is only concerned with
    the value these items have on a company’s
    productivity. While financial accounting is
    concerned with knowing the properties of a
    company’s assets and liabilities.

    2. What are the qualitative attributes of
    accounting?
    a. Relevance: For the information to be relevant
    they must have information about past events
    that can assist in making predictions about
    future. They must have confirmatory and
    predictive value to develop and have accurate
    accounting information.
    b. Reliability: accounting information must be
    reliable, when it’s financial statements should
    have been verified from source documents.
    c. Understandability:: financial information
    should be made clear and easy to understand
    so that investors or externals who may not
    have a background in accounting will find it
    easy to comprehend.
    d. Comparability: it is the ability for companies to
    compare it’s financial statement to it’s
    competitors, whereby accounting methods
    are used ; balance sheet, cash flow or income
    reports etc. in comparing company’s trends
    and overall financial performance.
    e. Timeliness: it involves how available and how
    rapidly accounting information is to
    professionals.

    3. Discuss the fundamental Principles of
    Accounting.
    a. Revenue recognition: it is the principle that
    identifies the specific conditions in which
    revenue is recognized and determined how to
    account for it and it is recognized when critical
    event has occurred, when product or service
    has been delivered to customers and the
    amount is easily measurable to the company.
    b. Consistency principle: this states that
    accountants should adhere and abide to the
    same set of standards throughout all
    business recordings.
    c. Materiality principle: states that all financial
    data and material transactions should be fully
    disclosed in appropriate reports.
    d. principle of regularity: it states that the GAAP
    rules and regulations should be adhered as a
    standard by accountants.
    e. Matching principle: it states that revenues and
    expenses should be matched in the income
    statement for a period of time or to say that
    companies should report expenses at the
    same time as the revenues that are related to
    it.
    f. Cost principle: it is the principle which states
    that cost of an asset should be recorded at the
    cash amount at the time the asset was
    acquired and it prohibit a company from
    recordings an asset that was not acquired in a
    transaction. Cost principle means that a long-
    term asset purchased for a given cash amount
    should be recorded and will be depreciated on
    it’s cost, under exception of land as an asset
    and the amount recorded should not be
    increased for inflation or improvement in
    market value.
    g. Disclosure principle: is the principle that
    require a company to provide the necessary
    information so that people who are able to
    make informed decisions regarding the
    company.

  20. Avatar Ajah Helminna Sama says:

    Name: Ajah Helminna Sama
    Reg num: 2021/243688
    Dept: Economics
    1 The two primary categories of accounting are accrual accounting (generally used by companies) and cash accounting (generally used by individuals).

    Cash accounting reports revenues and expenses as they are received and paid through cash inflows and outflows;
    accrual accounting reports them as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable

    Cash accounting records revenues and expenses when they are received and paid.
    Accrual accounting records revenues and expenses when they occur.

    The major difference between cash account and accural is that accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses

    Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed.
    Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.

    3. The fundamental accounting principles include:
    Conservatism Principle
    The conservatism principle states that accountants and businesses should record both expenses and liabilities A. Furthermore, it states the revenues and assets should only be recorded when you are sure that they will occur.

    Consistency Principle
    It asks accountants to continue to use any accounting principle or method they began with so long as they don’t have a demonstrably better principle or method.

    Cost Principle
    The cost principle states that businesses should only record their assets, equity investments, and any liabilities at original purchase costs. However, some businesses ignore this principle these days since they may opt to adjust assets and liabilities according to fair values instead.

    Economic Entity Principle
    The economic entity principle is the idea that any business transactions should be kept separate from the transactions of its owners or other businesses.

    Full Disclosure Principle
    The full disclosure principle states that businesses and their accountants should include all information necessary to understand financial statements in or alongside those financial statements.

    In other words, financial documents should be understandable by themselves without needing additional documents for clarification. This prevents confusion both within a business and in the event of an outside audit.

    Going Concern Principle
    The going concern principle is more of a philosophy than the other principle so far. It allows accountants and business owners to act as though the business will remain in operation for the foreseeable future.
    In practical terms, this allows businesses to defer the recognition of certain expenses, like depreciation, until they would likely kick in or come into effect.

    Matching Principle
    The matching principle is a simplistic concept that states you should record all expenses related to revenue at the same time that you record the original revenue.
    For example, if you record revenue from selling several retail inventory items, you should also record the expenses for inventory and cost of goods.

    Materiality Principle
    The materiality principle states that you should always record transactions and accounting records if, by not doing so, you might alter the business decision-making process or the conclusions that someone might come to if they read a company’s financial statements.

    Monetary Unit Principle
    The monetary unit principle states that businesses should only record transactions that can accurately be stated in terms of currencies or units of value.
    This prevents businesses from estimating the value of their assets and liabilities too much and keeps things grounded in real, precise numbers.

    Objectivity Principle
    It’s the principle that states any accounting data should be as accurate and unbiased as possible. Personal opinions, such as your gut feelings or hypothetical dreams about the future of your company, should never be taken into account or recorded as official data.

    Furthermore, accounting data should be supported by evidence wherever possible.

    Reliability Principle
    The reliability principle focuses on proven transactions. According to this principle, only transactions that you can prove should be recorded. This is particularly important for auditors, who use “physical” evidence like recorded transactions to come to conclusions about their subject organizations.

    Revenue Recognition Principle
    The revenue recognition principle is similar to the last. It states that revenue should only be recognized when the business in question has mostly or substantially completed the earnings process. This prevents businesses from reporting earnings and revenue when it’s too early to guarantee that said income will be added to the company’s coffers.

    Time Period Principle
    Lastly, the time period principle essentially states that businesses should try to report the results of their activities over a set and standard period of time. For instance, accountants should not record business transactions over a quarter of three months, then record business transactions over a single month timeframe later.

    This allows accountants to make standard sets of comparable timeframes, helping them to create long-form or trend analyses using accounting software.Cg

    2 the qualitative attributes of accounting include:
    Relevance
    Representational faithfulness
    Verifiability
    Timeliness
    Understandability
    Comparability

  21. Avatar Tadinma Chisom Emmanuel says:

    Tadinma Chisom Emmanuel
    departmént: combined social science Economics/ psychólogy
    matric no 2021/241442

    1. Major categories in accounting
    i. Financial accounting:-
    it involves the preparation of accurate financial statement. The focus of financial accounting is the measurement of financial performance of a business as accurately as possible. Financial statements often used externally, they may also b used for internal measurements to help make decisions about the business.
    Accounting principles and standards such as GAAP ( Generally Accepted Accounting Principle ), IFRS ( International Financial Reporting standard ), are standards that are widely adopted in financial accounting. The accounting standards are important because they allow all stakeholders and shareholders to easily interpret yearly financial statements.
    ii. Managerial accounting
    involves the analyzing the information gathered from financial accounting. It refers ro the process of preparing report about business operations. The report serve to assist the management make tactical decision.
    It is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best step to take and then broadcasting the required step to all internal business. An example of managerial accounting is cost accounting.

    2. What are the qualitative attributes of accounting
    this are attributes that simplifies and expand on the financial figures to ensure easy understanding and comparability
    i. Reliability:- implies that the information must be factual and verifiable. It must posses verifiability
    ii. Relevance:- the financial statement must be relevant to the objective of the enterprise. Unnecessary and irrelevant information should be put aside
    iii. Understandability:- it should be presented in a simple manner that they are easily understood by their users. Even those without much knowledge in accounting should be able to understand them
    iv. faithful representation:- aims at preparing those financial statements that depicts the true and fair view of profitability, liquidity and solvency position of an enterprise

    3. Discuss the fundamental principle of accounting
    1. . Accrual Principle
    It is a concept in accounting that mandates the recording of transactions in the time period in which they occur. It is regardless of the time when actual cash flows for the transactions are received. Through this principle, one can gain an accurate insight into the financial status of a business. Most large-scale businesses adopt an accrual system to determine the cash flow of the business operations. Along with this, revenues and related expenses are recorded in the same time period of reporting. Both IFRS and GAAP support this concept. In case, a business has more than $5 million in revenue, then such businesses must adopt this system for the purpose of taxation.
    2. Consistency principle
    According to this principle, when an organisation adopts a specific accounting method of reporting or documentation, then it should stay consistent with the method. The aim of this basic accounting principle is to make financial statements comparable across industries and companies. This principle has two issues associated with it. First, the principle is not properly followed when many people are recording data and compiling reports. To combat this issue, organizations need to have a set method internally. The second issue is related to switching between the financial reporting methods. Some organizations do this in order to manipulate the data to their advantage.

    3. Conservatism Principle
    The principle gives you a realistic perspective of unexpected situations. According to this principle, one should recognize expenses and liabilities at the early stages even if there is uncertainty about the outcome. However, the principle recognizes revenues and assets when there is an assurance of its receival. This principle can be applied to recognizing the estimates. The conservatism principle is the foundation of lower cost or market rule. As per this rule, one should record inventory at a lower end of its current market value or at its acquisition cost.

    4. Cost Principle
    Whenever a business acquires an asset, its initial value is recorded in its financial reports of the business. This value might not be improved in the market value of inflation. It is also not updated to reflect any depreciation or even appreciation. This value is known as the cost principle. As per the principle, companies keep a record of their tangible assets without reflecting the market value. Through this principle, companies can assess the actual cost of using financial services for calculating the historical cost principles of the assets of the company.

    5. Economic Entity Principle
    This is a concept of accounting that requires businesses to be treated as a separate financial and legal entity. This means that the recorded activities of the business entity must be kept separate from the recorded activities of the owner and other entities. These may include either a sole trader, limited liability partnership, or general partnership.

    • Avatar Omeje onyinyechi paschaline says:

      Financial accounting
      Financial accounting involves capturing and summarizing all of a business’s financial transactions and creating reports to provide a clear overview of those business transactions. Financial accountants also generate financial records that provide valuable information about a company’s fiscal health, such as balance sheets, cash flow statements, and income statements.
      Managerial accounting
      The management accounting method is used by businesses to gain greater insights into a company’s operations. Since managerial accounting is strictly focused on providing accounting information for internal use, it doesn’t have to stick to the same strict GAAP guidelines as financial accounting.
      Cost accounting
      Cost accounting is technically considered a subcategory of management accounting. It focuses specifically on a company’s cost of doing business. This is used explicitly for internal purposes, helping determine how to reduce costs and increase profit margins.
      Tax accounting
      Tax accounting focuses on ensuring a business, nonprofit, or individual is abiding by all relevant tax laws and regulations that may apply to them. Tax accountants operate according to guidelines set forth by the Internal Revenue

      Qualitative attributes of accounting
      Verifiability
      Verifiability is the extent to which information is reproducible given the same data and assumptions. For example, if a company owns equipment worth $1,000 and told an accountant the purchase cost, salvage value, depreciation method, and useful life, the accountant should be able to reproduce the same result. If they cannot, the information is considered not verifiable.
      Timeliness
      Timeliness is how quickly information is available to users of accounting information. The less timely (thus resulting in older information), the less useful information is for decision-making. For example, if a company issues its financial statements a year after its accounting period, users of financial statements would find it difficult to determine how well the company is doing in the present.
      Understandability
      Understandability is the degree to which information is easily understood. In today’s society, corporate annual reports are in excess of 100 pages, with significant qualitative information. Information that is understandable to the average user of financial statements is highly desirable.
      Comparability
      Comparability is the degree to which accounting standards and policies are consistently applied from one period to another. Financial statements that are comparable, with consistent accounting standards and policies applied throughout each accounting period, enable users to draw insightful conclusions about the trends and performance of the company over time.
      Fundamental principles of accounting
      1. Revenue Recognition Principle
      When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
      2. Cost Principle
      Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
      3. Matching Principle
      Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
      4. Full Disclosure Principle
      The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

  22. 1. THE TWO MAJOR CATEGORIES IN ACCOUNTING

    Financial accounting is a particular discipline of accounting that deals with the process of documenting, compiling, and presenting the numerous transactions resulting from corporate operations throughout time. Financial statements, such as the balance sheet, income statement, and cash flow statement, which track the business’ operating performance over a given time period, are prepared using a summary of these activities. Financial accounting employs a set of established accounting principles. The accounting principles used in financial accounting are determined by the regulatory and reporting requirements that the business faces. Work opportunities for a financial accountant can be found in both the public and private sectors. A financial accountant’s duties may differ from those of a general accountant, who works for himself or herself rather than directly for a company or organization.

    Managerial accounting (also known as cost accounting or management accounting) is a branch of accounting that is concerned with the identification, measurement, analysis, and interpretation of accounting information so that it can be used to help managers make informed operational decisions. Managerial accountants need to analyze various events and operational metrics in order to translate data into useful information that can be leveraged by the company’s management in their decision-making process. They aim to provide detailed information regarding the company’s operations by analyzing each individual line of products, operating activity, facility, etc.

    THE DIFFERENCE BETWEEN FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING
    Unlike financial accounting, which is primarily concerned with the coordination and reporting of the company’s financial transactions to outsiders (e.g., investors, lenders), managerial accounting is concerned with internal reporting to aid decision-making.

    2. THE QUALITATIVE ATTRIBUTES OF
    ACCOUNTING:
    1. RELEVANCE
    According to the feature of relevance, data should be useful for users in making and assessing economic decisions by way of confirmation and prediction. Information’s type and substance have an impact on how relevant it is. Information is relevant if leaving it out or misrepresenting it could affect how decisions are made. A financial report needs to contain all information that is relevant to a certain company.

    2. CLARITY
    The ability to understand something indicates that the material’s creators have categorized, described, and presented the information in a clear and succinct manner. The preparation of the financial reports Is based on the premise that its readers have “reasonable understanding” of the company and its economic activities.

    3. RELIABLE INTERPRETATION
    Financial information should accurately represent the phenomena it claims to represent, according to the feature of faithful representation. This representation suggests that the financial data is accurate, impartial, and thorough.

    4. VERIFIABILITY Verifiability is a quality that gives assurance that the information accurately depicts what it is supposed to.

    5. Comparability The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.

    3. FUNDAMENTAL PRINCIPLE OF
    ACCOUNTING

    Principle of Consistency The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle. If the accuracy theory is properly and narrowly followed, there are many advantages for financial statement stakeholders. That applies to the use of small business financial reporting software. Software that follows the consistency principle will simplify things for you.

    Principle of Economic Entity. According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses. This implies that the transactions reported in the entity accounts are just those belonging to the entity. For example, let us consider that you are running a cake shop. And you are picking up two cakes for your daughter’s birthday. Now, the online accounting software you are using for billing and managing the finance needs to be clear who is an entity and who is the owner to record the transaction.

    Matching Principle. The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements. The theory ensures that profits and liabilities in the income statement are accurately measured in the timeframe in which they were sustained. If you are using accounting software for financial services that remains the same. When this theory is followed correctly, net profits appear in the income statement indeed and equitably. That is not due to an overestimation or underestimation of sales or expenditures.

    Principle of Going Concern. Going concern is the term that means the entity can continue to operate shortly, usually twelve months from the operation date if the financial accounts are compiled based on a going concern. So, that’s a plus if your small business financial reporting software works on an ongoing concern principle.

    Principle of Full Disclosure. The Full Disclosure Principle demands that the company publish any relevant material in its financial report. The critical theory behind this concept is that consumers of an entity’s financial statements can rely on financial statements to make decisions. As a result, it is essential to ensure that they have access to all relevant material using accounting software for financial services. As a result, this concept is implemented to guarantee the material reported in the entity’s financial report following accounting principles or mechanisms has been disclosed.

    Principles of Conservatism. The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business. Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

    Principle of Accrual. The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time. So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received. If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

    Principle of Cost. The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation. The exemption to this rule is whether a short-term transaction in a corporation’s capital stock has had a change in market valuation. However, this exception only happens if the securities are publicly traded on one international stock market. Well, if your accounting software for financial services is not working as per the principle of cost, then your organization’s financial statements might not be accurate as they should have been.

  23. Avatar Ugochi Marylillian Ogonnaya says:

    Name:Ugochi Marylillian Ogonnaya
    Reg no:10433683HF
    Email:ugochijambo@gmail.com

    *Answers*
    1.
    The two major categories of accounting are financial accounting and managerial accounting. Financial accounting deals with producing documents such as income statements and balance sheets, which external parties(investors,industry regulators)use.
    The statements document an organizations financial performance over a period of time as well ad its overall financial health. Agencies such as the Securities and Exchange Commission (SEC) regulate the work of financial accountants, who produce these statements. Whereas Managerial accounting deals with producing financial documents that organization use internally. The documents account for company resources such as raw materials, labour or equipment in ways that help executives maximize efficiency.
    Differences between financial and managerial accounting.
    a)Managerial accounting focuses on an organisation’s internal processes while financial accounting focuses on an organisation’s external processes
    b)Managerial accountants focus on short-term growth strategies relating to economic maintenance while financial accountants focus on long term financial strategies relating to organizational growth.
    c)Managerial accountants command higher salaries than financial accountants

    2.
    The qualitative attributes of accounting are
    1.Reliability: this means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represent what it is meant to represent.
    2.Relevance: this means information must be available in time,must help in prediction and feedback and must influence the decision of users in a positive manner.
    3.Understandability: this means decision make4s must interpret accounting information in the same sense as it is prepared and conveyed to them.
    4.Comparability:this means that users of the general purpose financial report are able to compare various aspects of an entity over different time periods and with other entities.

    3.
    3.Fundamental Principles of Accounting includes:
    1.Revenue recognition principle
    2.cost principle
    3.matching principle
    4.full disclosure principle
    5.objectivity principle

  24. Avatar Ike Gina Chinyere says:

    1. Accounting are of two categories namely, financial accounting and managerial accounting
    Financial accounting is the process of recording, summarizing, and reporting a company’s business transactions through financial statements. These statements are: the income statement, the balance sheet, the cash flow statement, and the statement of retained earnings.
    Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business. This involves the preparation of financial statements available for public use. Stockholders, suppliers, banks, employees, government agencies, business owners, and other stakeholders are examples of people interested in receiving such information for decision making purposes.
    Financial accountancy is governed by both local and international accounting standards. Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting used in any given jurisdiction. It includes the standards, conventions and rules that accountants follow in recording and summarizing and in the preparation of financial statements.
    On the other hand, International Financial Reporting Standards (IFRS) is a set of accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board (IASB). With IFRS becoming more widespread on the international scene, consistency in financial reporting has become more prevalent between global organizations.

    Managerial accounting, also called management accounting, is a method of accounting that creates statements, reports, and documents that help management in making better decisions related to their business’ performance. Managerial accounting is primarily used for internal purposes.
    Managerial accounting is the practice of using accounting information — from revenues to production inputs and outputs affecting the supply chain — internally, in support of organization-wide efficiency and for tracking the organization’s progress toward attaining its stated goals.
    Management accounting helps in analysing and recording financial information which can be used by a company to increase its efficiency and productivity. It presents the financial information in regular intervals using easy-to-understand techniques such as standard costing, marginal costing, project appraisal, and control accounting. However, the information required to make managerial decisions depends completely on financial statements. Hence it becomes important to maintain error free records. Besides several disadvantages, it acts as a useful tool for better management of business.

    The following show the differences between financial and managerial accounting.

    SYSTEMS
    Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.
    REPORTING FOCUS
    Financial accounting is focused on creating financial statements to be shared internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company.
    AGGREGATION
    Financial accounting looks at the entire business while managerial accounting reports at a more detailed level. Managerial accounting focuses on detailed reports like profits by product, product line, customer and geographic region.
    EFFICIENCY
    A business’ profitability and efficiency are reported through financial accounting. Managerial accounting reports on what is causing a problem and how to fix that problem.
    TIMING
    Financial statements are due at the end of an accounting period, while managerial reports may be issued more frequently, to provide managers with relevant information they can act on immediately.
    PROVEN INFORMATION
    Considerable precision is needed to prove that financial records are correct. Financial accounting relies on this accurate data for reporting, while managerial accounting frequently deals with estimates opposed to proven facts.
    STANDARDS
    When managerial accounting is made for internal consumption there is no set of standards to compile that information. On the other hand, financial accounting must follow various accounting standards.
    TIME PERIOD
    Financial accounting looks to the past to examine financial results that have already been achieved, so it is historically focused. Managerial accounting looks to the future with forecasting.

    VALUATION
    Financial accounting is concerned with knowing the proper value of a company’s assets and liabilities. Managerial accounting is only concerned with the value these items have on a company’s productivity

    2. Qualitative attributes of accounting

    Relevance;
    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.
    Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

    Representational faithfulness;
    Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.

    Verifiability:
    To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.

    Understandability:
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.
    Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

    Comparability;
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.
    Comparability can also refer to a company’s ability to compare its financial statements to its competitors. This can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.

    Timeliness;
    Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions.

    3. Fundamental Principles of Accounting

    1. Monetary Unit:
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    2. Going Concern:
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    3. Principle Of Conservatism:
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    4. Cost Principle:
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  25. Avatar Ngige Franklin Chukwugozie says:

    Accounting can be defined as the process of analyzing, classifying, recording, summarizing and interpreting business transaction.One of the key aspect of the process is keeping “running totals”of things.
    They are classified into five categories:
    1.Assets: anything of value that a business owns
    2.Liability:debts that business owes; claims on assets by outsiders.
    3.Stockholders equity: worth of the owner of a business; claims on assets by the owners.
    4.Revenue: income that results when a business operates and generates sales.
    5.Expenses: costs associated with earning revenue.
    And this account fall in different categories:
    Cash fall in assets group.
    Fee Earned fall in revenue group.
    Expenses fall in expenses group.
    But the two major groups of accounting are:
    Cash accounting and Accrual accounting.
    1.Cash accounting records revenue and expenses when they are recieved and paid.
    2.Accrual accounting records revenue and expenses when they occur.
    The five fundamental principles of accounting are:
    1.Revenue recognition principle.
    2.Cost principle.
    3.Matching principle.
    4.Full disclosure principle.
    5.Objective principle.

  26. Avatar OKORONKWO CHIMUANYA SHARON says:

    NAME:OKORONKWO CHIMUANYA SHARON
    MATRIC NUMBER:2021/241960
    DEPARTMENT:ECONOMICS
    COURSE NAME:INTRODUCTION TO ACCOUNTING
    COURSE CODE:ECO 121
    Answer to the questions
    Accounting can be classified into two categories which is
    Financial and Managerial Accounts
    Financial accounting and managerial accounting (sometimes called management accounting) are quite different. While both these types of accounting deal with numbers, managerial accounting is strictly for internal use. Financial accounting, on the other hand, focuses primarily on the collection of accounting information to create financial statements.
    A financial accounting system is aimed at external decision-makers such as investors, regulators, and creditors, while a managerial accounting system is aimed at internal decision-makers such as managers.
    THE DIFFERENCE BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING
    Most accounting tasks can be divided into financial accounting and managerial accounting. It is useful to describe the differences between these two aspects of accounting, since each one describes a distinctly different career path. In general, financial accounting refers to the aggregation of accounting information into financial statements, while managerial accounting refers to the internal processes used to account for business transactions. There are a number of differences between financial and managerial accounting, which are noted below.
    Aggregation

    Financial accounting reports on the results of an entire business. Managerial accounting almost always reports at a more detailed level, such as profits by product, product line, customer, and geographic region. Financial accounting reports are more likely to be distributed to outsiders, while the results of managerial accounting are more likely to only be used by insiders.
    Efficiency

    Financial accounting reports on the profitability (and therefore the efficiency) of a business, whereas managerial accounting reports on specifically what is causing problems and how to fix them. Managerial accounting reports are more likely to be of use in improving operations, while financial accounting reports are used by outsiders to decide whether to invest in or lend to a business.
    Proven Information

    Financial accounting requires that records be kept with considerable precision, which is needed to prove that the financial statements are correct. Outside auditors rely on this information when auditing a firm’s financial statements. Conversely, managerial accounting frequently deals with estimates, rather than proven and verifiable facts.
    Standards

    Financial accounting must comply with various accounting standards, whereas managerial accounting does not have to comply with any standards when information is compiled for internal consumption.
    Timing

    Financial accounting requires that financial statements be issued following the end of an accounting period. Managerial accounting may issue reports much more frequently, since the information it provides is of most relevance if managers can see it right away.

    Valuation

    Financial accounting addresses the proper valuation of assets and liabilities, and so is involved with impairments, revaluations, and so forth. Managerial accounting is not concerned with the value of these items, only their productivity.
    No 2
    Qualitative characteristics of accounting information assist management, investors and accountants in making important decisions and predicting financial outcomes. Learning the different characteristics can help you understand how to produce accurate, reliable financial documents that can improve your company’s financial well-being. In this article, we list different types of qualitative characteristics of accounting information, provide steps on how to use these characteristics and share an example of these characteristics so you can see how one would use them in the decision-making process.
    Qualitative characteristics of accounting information are traits that allow financial professionals to more easily understand and make decisions on accounting reports.
    There are six different types of qualitative characteristics of accounting information, including:
    1) Relevance
    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.
    Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.
    2) Representational faithfulness
    Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.
    There are three factors that measure a company’s representational faithfulness, including:
    Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
    Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
    Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
    3) Verifiability
    To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.
    4) Understandability
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.
    Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.
    5) Comparability
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.
    Comparability can also refer to a company’s ability to compare its financial statements to its competitors. This can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.
    No 3 Answer
    Accounting principles are the rules that an organization follows when reporting financial information. A number of basic accounting principles have been developed through common usage. They form the basis upon which the complete suite of accounting standards have been built. The best-known of these principles are as follows:

    Accrual principle. This is the concept that accounting transactions should be recorded in the accounting periods when they actually occur, rather than in the periods when there are cash flows associated with them. This is the foundation of the accrual basis of accounting. It is important for the construction of financial statements that show what actually happened in an accounting period, rather than being artificially delayed or accelerated by the associated cash flows. For example, if you ignored the accrual principle, you would record an expense only when you paid for it, which might incorporate a lengthy delay caused by the payment terms for the associated supplier invoice.
    Conservatism principle. This is the concept that you should record expenses and liabilities as soon as possible, but to record revenues and assets only when you are sure that they will occur. This introduces a conservative slant to the financial statements that may yield lower reported profits, since revenue and asset recognition may be delayed for some time. Conversely, this principle tends to encourage the recordation of losses earlier, rather than later. This concept can be taken too far, where a business persistently misstates its results to be worse than is realistically the case.
    Consistency principle. This is the concept that, once you adopt an accounting principle or method, you should continue to use it until a demonstrably better principle or method comes along. Not following the consistency principle means that a business could continually jump between different accounting treatments of its transactions that makes its long-term financial results extremely difficult to discern.
    Cost principle. This is the concept that a business should only record its assets, liabilities, and equity investments at their original purchase costs. This principle is becoming less valid, as a host of accounting standards are heading in the direction of adjusting assets and liabilities to their fair values.
    Economic entity principle. This is the concept that the transactions of a business should be kept separate from those of its owners and other businesses. This prevents intermingling of assets and liabilities among multiple entities, which can cause considerable difficulties when the financial statements of a fledgling business are first audited.
    Full disclosure principle. This is the concept that you should include in or alongside the financial statements of a business all of the information that may impact a reader’s understanding of those statements. The accounting standards have greatly amplified upon this concept in specifying an enormous number of informational disclosures.
    Going concern principle. This is the concept that a business will remain in operation for the foreseeable future. This means that you would be justified in deferring the recognition of some expenses, such as depreciation, until later periods. Otherwise, you would have to recognize all expenses at once and not defer any of them.
    Matching principle. This is the concept that, when you record revenue, you should record all related expenses at the same time. Thus, you charge inventory to the cost of goods sold at the same time that you record revenue from the sale of those inventory items. This is a cornerstone of the accrual basis of accounting. The cash basis of accounting does not use the matching the principle.
    Materiality principle. This is the concept that you should record a transaction in the accounting records if not doing so might have altered the decision making process of someone reading the company’s financial statements. This is quite a vague concept that is difficult to quantify, which has led some of the more picayune controllers to record even the smallest transactions.
    Monetary unit principle. This is the concept that a business should only record transactions that can be stated in terms of a unit of currency. Thus, it is easy enough to record the purchase of a fixed asset, since it was bought for a specific price, whereas the value of the quality control system of a business is not recorded. This concept keeps a business from engaging in an excessive level of estimation in deriving the value of its assets and liabilities.
    Reliability principle. This is the concept that only those transactions that can be proven should be recorded. For example, a supplier invoice is solid evidence that an expense has been recorded. This concept is of prime interest to auditors, who are constantly in search of the evidence supporting transactions.
    Revenue recognition principle. This is the concept that you should only recognize revenue when the business has substantially completed the earnings process. So many people have skirted around the fringes of this concept to commit reporting fraud that a variety of standard-setting bodies have developed a massive amount of information about what constitutes proper revenue recognition.
    Time period principle. This is the concept that a business should report the results of its operations over a standard period of time. This may qualify as the most glaringly obvious of all accounting principles, but is intended to create a standard set of comparable periods, which is useful for trend analysis.
    In conclusion these principles are incorporated into a number of accounting frameworks, from which accounting standards govern the treatment and reporting of business transactions.

  27. Avatar Ezema miracle oluebube. 2021/241316 says:

    Name: Ezema Miracle oluebube
    Matric no: 2021/241316

    1. The two categories of accounting
    a) Financial Accounting
    This is concerned specifically with the generation of accounting reports (expenses,data management and the generation of financial reports), that they are based on accurate information and follow Generaly Accepted Accounting Principles (GAAP).
    Financial accounting is the process of recording, summarising and reporting a company’s business transactions through Financial statements which includes ( the income statement, the balance sheet, the cash flow statement and the statement of retained earnings).
    A private company is not required to share its Financial statements outside of the organisation, only registered (public) companies are. Financial accounting helps the organisation to access the overall economic condition, diagonise and resolve issues at once. The records of the transactions are done using the Double-entry method where an amount is entered twice as credit and debit.
    The principles of financial accounting are objectivity, recognition of revenue and expense, matching and consistency. The establishment of these accounting principles is to provide consistent information to investors, creditors,regulators and tax authorities. International Public companies also frequently report financial statements in accordance with International Financial Reporting Standards.
    The primary purpose of financial accounting is to paint a clear picture of a company’s operational performance over a specified period of time, as well as summarise its assets,liabilities and equity at a point in time.

    b) Managerial Accounting
    This use capital budgeting to access the potential cash inflows and outflows of specific business decisions. For example: If a manufacturer was planning to open a new production facility, grey would first need to determine the total cost of the project and the expected ROI.
    Managerial Accounting also known as Cost or Management Accounting is a branch of accounting that is concerned with the identification, measurement, analysis and interpretation of accounting information so that it can be used to help the manager make informed operational decisions.
    One simple definition of Managerial Accounting is the provision of financial and non-financial decision making information to managers.
    Management action helps in analysing and recording financial information which can be used by a company to increase its efficiency and productivity. It presents the financial information in regular intervals using easy-to-understand techniques such as standard costing, marginal costing, project approval and control accounting.

    ii) The major differences includes:
    a) Financial Accounting involves recording and repairing both non financial and financial information pertaining to the company while
    Managerial Accounting deals with keeping track of the company’s financial data, it is focused on internal reporting to aid decision making
    b) Financial Accounting focus on long term financial strategies relating to organisational growth while
    Managerial Accounting focus on short term growth strategies relating to economic maintenance
    c) Financial Accounting focus on historical perspectives, they allow the board of directors, stockholders, potential investors, creditors and financial institutions to see how the company has performed during a specific time in the past while
    Managerial Accounting focus on future emphasis.

    2. Qualitative attributes of accounting
    a) Reliability
    b) Relevance
    c) Understandability
    d) Comparability

    3. Fundamental principles of accounting includes:
    a) Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    b) Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    c) principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    d) Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  28. Avatar onu faithfulness chinyere says:

    Name; Onu Faithfulness Chinyere
    Reg no: 2021/244051
    Department: Economics
    Email: Onfaithfulness@gmail.com
    Answers:
    1a)
    -Financial Accounting; it is a specific branch in accounting involving the process of recording, summarizing and reporting the myriad of transaction s resulting from business operations over a period of time. These transactions are summarized in the preparation of financial statements, including balance sheet, income statement and cash flow statement, that record the company’s operating performance over a specified period.
    -Managerial Accounting; it is the process of identification, measurement , analysis and interpretation of accounting information that helps business leaders make sound financial decisions and efficiently manage their daily operations, according to the corporate Finance institute. Managerial accounting focuses on understanding their company’s cash flows, financial transactions, operating costs and internal rate of return.
    : 1b)
    -Financial accounting reports are consumed by stake holders , while managerial accounting information is for internal purposes.
    -Financial Accounting is heavily used public regulators , creditors and shareholders, while Managerial Accounting information is confidential and used largely by managers only inside the company.
    -financial accountancy is legally required and expected by law, while managerial accounting is not required by any law or norm.
    -financial accounting is encompassing , focusing on the entire organisation, while managerial accounting specific offering detailed and divided information in diverse things such as tasks, operations, specific activities, product
    2)
    [a]relevance ;is closely and directly related to the concept of useful information Relevance implies that all those items of information should be reported that may aid the users in making decisions and/or prediction. [b] Reliability:
    Reliability is described as one of the two primary qualities (relevance and reliability) that make accounting information useful for decision-making. (C) Comparability:
    Economic decision requires making choice among possible courses of actions. In making decisions, the decision-maker will make comparisons among alternatives, which is facilitated by financial information.
    (d) Conservatism:
    There is a place for a convention, such as conservatism – meaning prudence in financial accounting and reporting, because business and economic activities are surrounded by uncertainty, but it needs to be applied with care.
    (e) Understandability:
    Understandability is the quality of information that enables users to perceive its significance. The benefits of information may be increased by making it more understandable and hence useful to a wider circle of users.
    [: 3)
    [a] Going concern principle; it works on the rule of believing in the business and the fact that it has the liabilities to last for years to come.
    [b]Accrual principle; The accrual principle helps you to know your money flow statics better and attach it to different times.
    [c]objectivity principle; in this principle , all the entity’s accounting and cost details should always be realistic and separate from any personal assumption or the need to create a well drawn image for your firm materiality ledger.
    [d] conservatism principle; This principle gives you more realistic look into your firm accounting principles without any assumptions.
    [e] matching principle; by setting an archive for your entity’s revenue and cash income accounts , you should create a record for the related expenses by this principle.

  29. Avatar EJIOFOR THERESA ESOMCHUKWU says:

    DISCUSS THE DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING.
    FINANCIAL ACCOUNTING
    1.OBJECTIVES; To record transactions and determine financial position amd profit or loss.
    while managerial accounting
    assists the management in decision making and policy formulatio
    2.. DATA USED; Qualitative aspects are not recorded.
    while managerial accounting
    uses both quantitative and Qualitative concepts.

    3.PRINCIPLE FOLLOWED; Governed by GAAP.
    while managerial accounting
    No set principles are followed in it.
    4.NATURE; concerned with historical data.
    while managerial accounting
    Deals with projection of data for the future ( futuristic in nature)

    2. QUALITATIVE ATTRIBUTES OF ACCOUNTING.
    Decision usefulness
    compatability
    consistency
    verifiability
    Timelessness
    understandabilility

    DISCUSS FUNDAMENTAL PRINCIPLES OF ACCOUNTING.
    INTEGRITY; Straight forward, honest implies fair dealing and truthfulness.
    OBJECTIVITY ; Uncompromising by bias, conflict of interest or the undue influence of others.
    PROFESSIONAL COMPETENCE AND DUE CARE; Maintain professional knowledge and skill and act diligently.
    CONFIDENTIALITY; refrains from disclosure and confidential information and from using such information for personal (or third party) advantage.
    PROFESSIONAL BEHAVIOUR; Comply with relevant laws and regulations and avoid any action that may bring the profession into disrepute.

  30. Avatar Okeke Kachidubem precious says:

    Name:Okeke Kachidubem precious
    Course:Eco121
    Reg no.:2021/244121
    Department:Economics
    Date:13 February 2023

    1a)Financial accounting
    This involves the preparation of accurate financial statements.The focus of financial accusations the measure the performance of a business accurately as possible.Accounting principles are standards such as GAAP,IFRS and ASPE are standards that are widely adopted in financial accounting.the standards are important because they allow all stakeholders and shareholders to easily understand and interpret the reported financial statements from year to year
    b)Managerial Accounting
    This analyses the information gathered from financial accounting it refers to the process of preparing reports about business operations.The reports serve to assist the management team to make tactical decisions.It helps enterprises to achieve maximum efficiency by reviewing final accounting.Picking the best following steps to take and then broadcasting the final required steps to all internal business managers. eg cost accounting
    Differences
    Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.

    Managerial accountants focus on short-term growth strategies relating to economic maintenance. For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product.

    Financial accountants focus on long-term financial strategies relating to organizational growth. The financial reports that these accountants produce follow established formats and abide by Financial Accounting Standards Board (FASB) rules and regulations. The guidelines are outlined in the generally accepted accounting principles (GAAP), which all publicly traded companies in the U.S. have adopted.

    Compliance with established formats is vital for financial accountants, who must prepare reports for shareholders and potential investors as well as executives. Managerial accountants, however, generally prepare their reports for internal audiences.

    Managerial accountants typically command higher salaries than financial accountants.
    2)Qualitative attributes main purpose is to simplify and expand on the financial figures to ensure easy understanding and comparability of results

    The attributes are
    a)Reliability: This implies that the information must be factual and verifiable
    b)Relevance: Accounting information depleted by financial statements must be relevant to the objective of enterprise
    c)Understandability: The accounting information should be represented in a simple and logical way that they are understood easily by their users such as investors, lenders, employees.
    d)Comparability: It should contain financial statements from previous years
    e)Faithful Representation: Accounting aims at preparing those financial statements that depict the true and fair view of profitability, liquidity and solvency position of an enterprise

    3) 1. Revenue Recognition Principle
    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
    2. Cost Principle
    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
    3. Matching Principle
    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
    4. Full Disclosure Principle
    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.
    5. Objectivity Principle
    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

  31. Avatar UGWUOGBU CASMIR CHIBUIKE says:

    Name: UGWUOGBU CASMIR CHIBUIKE.
    Reg No.: 2021/241962
    Email: ugwuogbucasmir@gmail.com

    1(A) Discuss the two Categories of accounting?

    There are two major categories of accounting, namely:
    1. Financial Accounting, and
    2. Managerial accounting.

    1. Financial accounting: This refers to the preparation of accurate financial statements. The main focal point of financial accounting is to measure the performances of a business as accurately as possible. While financial statements are mostly adopted for external use, they may also be adopted for internal use or management which helps to make decisions.

    There are various principles and standards which are mostly used in financial accounting, like;

    (i) Generally Accepted Accounting Principles (GAAP).

    (ii) International Financial Reporting Standards(IFRS), or

    (iii) Accounting Standards for Private Enterprises(ASPE)

    It is with the help of these accounting principles and standards that stakeholders and shareholders are able to easily comprehend and analyze the financial statements from year to year, hence they are very crucial in financial accounting.

    2. Managerial accounting: This is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required steps to all internal business managers. It helps to interpret the information gathered from financial accounting. It involves the process of preparing reports about business transactions. It is with the help of this report that the management team makes tactical decisions in the business.

    An example of managerial accounting is cost accounting. Cost accounting focuses on a detailed breakup of cost for effective cost control. Managerial accounting is very important in the decision-making process.

    1(B) What are the major differences between them?
    The differences between managerial accounting and financial accounting are:
    i. Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.

    ii.Managerial Accounting focuses on the future, while Financial Accounting Describes the Past External financial statements based on historical cost basis, and reflects what happened in the past.

    iii. Another basic difference between managerial accounting and financial accounting is that managerial accounting provides information primarily intended for managers and others inside the company, while financial accounting provides information primarily intended for people outside the organization.

    iv. Financial accounting must comply with various accounting standards, whereas managerial accounting does not have to comply with any standards when information is compiled for internal consumption.

    v. Financial accounting pays no attention to the overall system that a company has for generating a profit, only its outcome. Conversely, managerial accounting is interested in the location of bottleneck operations, and the various ways to enhance profits by resolving bottleneck issues.

    2. The qualitative attributes of accounting are:
    i. Reliability

    ii. Comparability

    iii. Relevance Understandability

    iv. Faithful Representation

    3. Discuss the fundamental Principles of Accounting:
    Accounting principles are the set guidelines and rules issued by accounting standards like GAAP and IFRS for the companies to follow while recording and presenting the financial information in the books of accounts. These principles help companies present a true and fair representation of financial statements.These principles are rules and guidelines maintaining how a company should report its financial data. Some of the accounting principles are:

    i. Accrual principle:
    The company should record accounting transactions
    in the same period it happens, not when the cash flow was earned. For example, let’s say that a company has sold products on credit. As per the accrual principle, the sales should be recorded during the period, not when the money would be collected.

    ii. Consistency principle:
    If a company follows an accounting principle, it should keep following the same principle until a better one is found. If the consistency principle is not followed, the company will jump around here and there, and financial reporting will be messy. As a result, it would be difficult for investors to see where the company has been going and how it is approaching its long-term financial growth.

    iii. Conservatism principle:
    As per the conservatism principle, accounting faces two alternatives – one, report a more significant amount, or two, report a lesser amount. This encourages the accountant to report more significant liability amount, lesser asset amount, and also a lower amount of net profits. For instance: If a company has reported that it has machinery worth $60,000 as its cost. Now, as the market changes, the selling value of this machinery comes down to $50,000. Now the accountant has to choose one from two choices;

    *first, ignore the loss the company may incur on selling the machinery before it’s sold,

    *second, report the loss on machinery immediately.

    As per the conservatism principle, the accountant should go with the former choice, i.e., to report the loss of machinery even before the loss would happen.

    iv. Going concern principle:
    As per the going concern principle, a company would operate for as long as it can in the near or foreseeable future. Therefore, by following the going concern
    principle, a company may defer its depreciation or similar expenses for the next period.

    v. Matching principle:
    The matching principle is the basis of the accrual principle we have seen before. As per the matching principle, it’s said that if a company recognizes and records revenue, it should also record all costs and expenses related to it. So, for example, if a company records its sales or revenues, it should also record the cost of goods sold and also other operating expenses.

    vi. Full disclosure principle:
    As per this principle, a company should disclose all financial information to help the readers see the company transparently. Without the full disclosure principle, the investors may misread the financial statements because they may not have all the information available to make a sound judgment.

  32. 1. The two main categories of accounting includes: financial accounting and managerial accounting.
    Financial accounting: it deals with the preparation of accurate financial statement
    While
    Managerial accounting analyzes the information gathered from financial statement

    2.The qualitative attributes of accounting are:
    I Reliability
    ii Compactability
    III. verifiability
    iv timelines and so on
    But the most important is verifiability. Every account must be verifiable. For example,suppose an accountant says the depreciation on an asset must be worth a certain amount based on a certain calculation. In that case they must do that calculation based on sounding accounting measurement. An auditor also have his work to look into this aspect of account.

    accounting principles are the rules and guidelines companies and other bodies must follow when reporting financial data. They include: Accural principles, consistency principles, economic entities principles, going concern principles, matching principles and lots more.

  33. 2:The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.

    3:Going concern principle; Matching principle; Materiality principle; Monetary unit principle; Reliability principle; Revenue recognition principle; Time period …

    Matching Principle. Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was …

    Objectivity Principle. The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by …,

    Cost principle; Economic entity principle; Full disclosure principle; Going concern principle; Matching principle; Materiality principle; Monetary unit …

    1: financial accounting is a type of accounting which capturing and summarizing all of a business financial transaction and creating reports to provide a clear overview of the business transactions.

    Managerial accounting is a major category of accounting which are used by business to gain greater insights into a company operation.

  34. Avatar Enum Edwin Chigozie says:

    The two main accounting categories are cash accounting and accrual accounting.
    Accrual accounting is a financial accounting method that allows a company to record revenue before receiving payment for goods or services sold and record expenses as they are incurred.
    Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are actually paid.
    DIFFERENCE BETWEEN CASH AND ACCRUAL ACCOUNTING
    The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

    QUALITATIVE ATTRIBUTES OF ACCOUNTING
    Accounting information should satisfy the following criteria:

    Understandability

    This implies the expression, with clarity, of accounting information in such a way that it will be understandable to users – who are generally assumed to have a reasonable knowledge of business and economic activities

    Relevance

    This implies that, to be useful, accounting information must assist a user to form, confirm or maybe revise a view – usually in the context of making a decision (e.g. should I invest, should I lend money to this business? Should I work for this business?)

    Consistency

    This implies consistent treatment of similar items and application of accounting policies

    Comparability

    This implies the ability for users to be able to compare similar companies in the same industry group and to make comparisons of performance over time. Much of the work that goes into setting accounting standards is based around the need for comparability.

    Reliability

    This implies that the accounting information that is presented is truthful, accurate, complete (nothing significant missed out) and capable of being verified (e.g. by a potential investor).

    Objectivity

    This implies that accounting information is prepared and reported in a “neutral” way. In other words, it is not biased towards a particular user group or vested interest

    FUNDAMENTAL PRINCIPLES OF ACCOUNTING
    Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.

    Accounting standards are implemented to improve the quality of financial information reported by companies.
    In the United States, the Financial Accounting Standards Board (FASB) issues generally accepted accounting principles (GAAP).
    GAAP is required for all publicly traded companies in the U.S.; it is also routinely implemented by non-publicly traded companies as well.
    Internationally, the International Accounting Standards Board (IASB) issues International Financial Reporting Standards (IFRS).
    The FASB and the IASB sometimes work together to issue joint standards on hot-topic issues, but there is no intention for the U.S. to switch to IFRS in the foreseeable future.

  35. Avatar Ogbodo Dikanna Francis 2020/245751 combined social science Eco/Geo says:

    Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations.[1][2] Accounting, which has been called the “language of business”,[3] measures the results of an organization’s economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators.[4] Practitioners of accounting are known as accountants. The terms “accounting” and “financial reporting” are often used as synonyms.

    Accounting can be divided into several fields including financial accounting, management accounting, tax accounting and cost accounting.[5][6] Financial accounting focuses on the reporting of an organization’s financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers.[7] Management accounting focuses on the measurement, analysis and reporting of information for internal use by management.[1][7] The recording of financial transactions, so that summaries of the financials may be presented in financial reports, is known as bookkeeping, of which double-entry bookkeeping is the most common system.[8] Accounting information systems are designed to support accounting functions and related activities.

    Accounting has existed in various forms and levels of sophistication throughout human history. The double-entry accounting system in use today was developed in medieval Europe, particularly in Venice, and is usually attributed to the Italian mathematician and Franciscan friar Luca Pacioli.[9] Today, accounting is facilitated by accounting organizations such as standard-setters, accounting firms and professional bodies. Financial statements are usually audited by accounting firms,[10] and are prepared in accordance with generally accepted accounting principles (GAAP).[7] GAAP is set by various standard-setting organizations such as the Financial Accounting Standards Board (FASB) Accounting is thousands of years old and can be traced to ancient civilizations.[12][13][14] The early development of accounting dates back to ancient Mesopotamia, and is closely related to developments in writing, counting and money;[12] there is also evidence of early forms of bookkeeping in ancient Iran,[15][16] and early auditing systems by the ancient Egyptians and Babylonians.[13] By the time of Emperor Augustus, the Roman government had access to detailed financial information.[17]

    Double-entry bookkeeping was pioneered in the Jewish community of the early-medieval Middle East[18][19] and was further refined in medieval Europe.[20] With the development of joint-stock companies, accounting split into financial accounting and management accounting.

    The first published work on a double-entry bookkeeping system was the Summa de arithmetica, published in Italy in 1494 by Luca Pacioli (the “Father of Accounting”).[21][22] Accounting began to transition into an organized profession in the nineteenth century,[23][24] with local professional bodies in England merging to form the Institute of Chartered Accountants in England and Wales in 1880.[25] In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset).[1] The balance sheet of a firm records the monetary[2] value of the assets owned by that firm. It covers money and other valuables belonging to an individual or to a business.[1]

    Assets can be grouped into two major classes: tangible assets and intangible assets. Tangible assets contain various subclasses, including current assets and fixed assets.[3] Current assets include cash, inventory, accounts receivable, while fixed assets include land, buildings and equipment.[4] Intangible assets are non-physical resources and rights that have a value to the firm because they give the firm an advantage in the marketplace. Intangible assets include goodwill, copyrights, trademarks, patents, computer programs,[4] and financial assets, including financial investments, bonds, and stocks.
    Fundamental qualitative characteristics:

    Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.
    Faithful representation
    The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.
    Enhancing qualitative characteristics:

    Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.
    Verifiability
    The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.
    Timeliness
    The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.
    Understandability
    The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. The financial reports are prepared with the assumption that its users have a ‘reasonable knowledge’ of the business and its economic activities.
    Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.
    What are the 8 Fundamental Principles of Financial Accounting?

    Here are some of the most widely recognized accounting standards and how they relate to the accounting software for financial services, position, and responsibilities of an accountant.

    1. Principles of Conservatism
    The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

    Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

    2. Principle of Accrual
    The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

    So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

    If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

    3. Principle of Cost
    The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation.

    Principle-of-Cost

    The exemption to this rule is whether a short-term transaction in a corporation’s capital stock has had a change in market valuation. However, this exception only happens if the securities are publicly traded on one international stock market.

    Well, if your accounting software for financial services is not working as per the principle of cost, then your organization’s financial statements might not be accurate as they should have been.

    4. Principle of Consistency
    The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.

    If the accuracy theory is properly and narrowly followed, there are many advantages for financial statement stakeholders. That applies to the use of small business financial reporting software. Software that follows the consistency principle will simplify things for you.

    5. Principle of Economic Entity
    According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

    This implies that the transactions reported in the entity accounts are just those belonging to the entity.

    For example, let us consider that you are running a cake shop. And you are picking up two cakes for your daughter’s birthday. Now, the online accounting software you are using for billing and managing the finance needs to be clear who is an entity and who is the owner to record the transaction.

    6. Matching Principle
    The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.

    Matching-Principle

    The theory ensures that profits and liabilities in the income statement are accurately measured in the timeframe in which they were sustained. If you are using accounting software for financial services that remains the same.

    When this theory is followed correctly, net profits appear in the income statement indeed and equitably. That is not due to an overestimation or underestimation of sales or expenditures.

    7. Principle of Going Concern
    Going concern is the term that means the entity can continue to operate shortly, usually twelve months from the operation date if the financial accounts are compiled based on a going concern.

    So, that’s a plus if your small business financial reporting software works on an ongoing concern principle.

    8. Principle of Full Disclosure
    The Full Disclosure Principle demands that the company publish any relevant material in its financial report. The critical theory behind this concept is that consumers of an entity’s financial statements can rely on financial statements to make decisions.

    As a result, it is essential to ensure that they have access to all relevant material using accounting software for financial services.

    As a result, this concept is implemented to guarantee the material reported in the entity’s financial report following accounting principles or mechanisms has been disclosed.

    You should obey each accounting requirement regardless of whether the condition that occurs in your entity should be revealed or not.

  36. Avatar Amogu Sunny Ndukwe says:

    Name : Amogu sunny Ndukwe
    Reg Number: 2021/245590

    (1)Financial Accounting is the process of recording, summarizing and reporting transactions and revenue-expense generations in a time period. For example, investors or sponsors need to verify an account statement before showing interest in associating with the business.

    (1i)Managerial accounting is the practice of using accounting information — from revenues to production inputs and outputs affecting the supply chain — internally, in support of organization-wide efficiency and for tracking the organization’s progress .
    (1ii)
    The difference between financial and managerial accounting is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

    (2) The qualitative attributes of accounting are
    (2i) Reliability: The first qualitative characteristic of accounting information is reliability.
    (2ii) Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information.
    (2iii) Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances .
    (2iv) Comparability can also refer to a company’s ability to compare its financial statements to its competitors.

    (3)The fundamental principles of accounting:
    3(I) Accrual accounting is an accounting method where revenue or expenses are recorded when a transaction occurs vs. when payment is received or made. The method follows the matching principle, which says that revenues and expenses should be recognized in the same period.
    (3ii) The consistency principle states that business should maintain the same accounting methods or principles throughout the accounting periods, so that users of the financial statements or information are able to make meaningful conclusions from the data.

    (3iii)The matching principle is an accounting concept that dictates that companies report expenses at the same time as the revenues they are related to.

    (3iv)Materiality is an accounting principle which states that all items that are reasonably likely to impact investors’ decision-making must be recorded or reported in detail in a business’s financial statements using GAAP standards.

    (3v) The cost principle means items need to be recorded as the actual price paid. It is the same way when a buyer buys products, and the recording is done based on the price paid. In short, the cost principle is equal to the amount paid for each transaction.

    (3vi)revenue recognition principle means that companies’ revenues are recognized when the service or product is considered delivered to the customer.

    (3vii)The going concern principle assumes that any organization will continue to operate its business for the foreseeable future.

    (3viii)Conversation is a Developmental Process. Quantity Principle – only be informative as necessary to communicate your intended meaning. Relation principle – you talk about what is relevant to the conversation. Turn-requesting cues- let the speaker know that you want to speak.

  37. Avatar Elochukwu chigozie says:

    Name: Elochukwu chigozie Victor
    Reg no: 2021/241954
    Department: Economics

    1) Accounting can be categorised into 2 : Financial accounting and managerial accounting
    A) Financial accounting: This involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal managements use to help make decisions
    B) Managerial accounting: This analyses the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team to make tactical decisions. It is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required steps to all internal business managers.
    The major difference between financial accounting and managerial accounting is that managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on the organization’s external financial processes. Financial accounting focus on long-term financial strategies relating to organizational growth, while managerial accounting focus on short-term growth strategies relating to economic maintenance.

    2)The qualitative attributes of accounting:
    I).Reliabilityv
    Ii).relevance
    Iii)understandability
    Iv).comparability
    V).faithful representation

    3) fundamental principles of accounting:

    1. Principles of Conservatism
    The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

    Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

    2. Principle of Accrual
    The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

    So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

    If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

    3. Principle of Cost
    The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation. Professional Invoicing Software

    4. Principle of Consistency
    The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.

    If the accuracy theory is properly and narrowly followed, there are many advantages for financial statement stakeholders. That applies to the use of small business financial reporting software. Software that follows the consistency principle will simplify things for you.

    5. Principle of Economic Entity
    According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

    This implies that the transactions reported in the entity accounts are just those belonging to the entity.

    For example, let us consider that you are running a cake shop. And you are picking up two cakes for your daughter’s birthday. Now, the online accounting software you are using for billing and managing the finance needs to be clear who is an entity and who is the owner to record the transaction.

    6. Matching Principle
    The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.Grab 70% OFF For Three Months. Buy Now & Save
    Professional Invoicing Software

    7. Principle of Going Concern
    Going concern is the term that means the entity can continue to operate shortly, usually twelve months from the operation date if the financial accounts are compiled based on a going concern.
    .

    8. Principle of Full Disclosure
    The Full Disclosure Principle demands that the company publish any relevant material in its financial report. The critical theory behind this concept is that consumers of an entity’s financial statements can rely on financial statements to make decisions.

  38. Avatar Elochukwu chigozie says:

    Name: Elochukwu chigozie Victor
    Reg no: 2021/241954
    Department: Economics

    1) Accounting can be categorised into 2 : Financial accounting and managerial accounting
    A) Financial accounting: This involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal managements use to help make decisions
    B) Managerial accounting: This analyses the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team to make tactical decisions. It is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required steps to all internal business managers.
    The major difference between financial accounting and managerial accounting is that managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on the organization’s external financial processes. Financial accounting focus on long-term financial strategies relating to organizational growth, while managerial accounting focus on short-term growth strategies relating to economic maintenance.

    2)The qualitative attributes of accounting:
    I).Reliabilityv
    Ii).relevance
    Iii)understandability
    Iv).comparability
    V).faithful representation

    3) fundamental principles of accounting:
    a)
    What are the 8 Fundamental Principles of Financial Accounting?
    6 Min Read Last Updated: October 20, 2022
    What are the 8 Fundamental Principles of Financial Accounting?
    Published On: May 23, 2022
    The fundamental principles of financial accounting are a set of guidelines that govern how a company should manage their business accounting. To ensure consistency and accountability, all accountants shall adhere to those standards while doing their duties. Certain countries adhere to particular standards, but some of these laws are more universally understood globally. This post will go through the most basic accounting rules, which online accounting software also follows.

    When you practice accounting, you must have a basic grasp of these main accounting concepts. This isn’t as simple as memorizing financial facts for an exam and then recalling it two days later. In the study of accounting, these values can be seen all over the world. Accounting software for financial services follows these to conduct the seamless accounting process for any business, small or large.

    First, Let’s talk about the trends, facts, and stats for billing software and online accounting software, and then we will continue with the basic principles of financial accounting.

    Implementation of Accounting Software – Moon Invoice

    Implementation of Accounting Software (Source – Year Ahead Report)

    According to the “Year Ahead” report conducted by AccountingToday.com in 2018, almost 57 percent of Mid-sized companies have adopted accounting software, only 1 percent fewer than big corporations. In contrast, the concept of online billing software is increasingly permeating in small firms, with 45%.

    What are the 8 Fundamental Principles of Financial Accounting?

    Here are some of the most widely recognized accounting standards and how they relate to the accounting software for financial services, position, and responsibilities of an accountant.

    1. Principles of Conservatism
    The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

    Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

    2. Principle of Accrual
    The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

    So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

    If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

    3. Principle of Cost
    The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation. Professional Invoicing Software

    What are the 8 Fundamental Principles of Financial Accounting?
    6 Min Read Last Updated: October 20, 2022
    What are the 8 Fundamental Principles of Financial Accounting?
    Published On: May 23, 2022
    The fundamental principles of financial accounting are a set of guidelines that govern how a company should manage their business accounting. To ensure consistency and accountability, all accountants shall adhere to those standards while doing their duties. Certain countries adhere to particular standards, but some of these laws are more universally understood globally. This post will go through the most basic accounting rules, which online accounting software also follows.

    When you practice accounting, you must have a basic grasp of these main accounting concepts. This isn’t as simple as memorizing financial facts for an exam and then recalling it two days later. In the study of accounting, these values can be seen all over the world. Accounting software for financial services follows these to conduct the seamless accounting process for any business, small or large.

    First, Let’s talk about the trends, facts, and stats for billing software and online accounting software, and then we will continue with the basic principles of financial accounting.

    Implementation of Accounting Software – Moon Invoice

    Implementation of Accounting Software (Source – Year Ahead Report)

    According to the “Year Ahead” report conducted by AccountingToday.com in 2018, almost 57 percent of Mid-sized companies have adopted accounting software, only 1 percent fewer than big corporations. In contrast, the concept of online billing software is increasingly permeating in small firms, with 45%.

    What are the 8 Fundamental Principles of Financial Accounting?

    Here are some of the most widely recognized accounting standards and how they relate to the accounting software for financial services, position, and responsibilities of an accountant.

    1. Principles of Conservatism
    The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

    Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

    2. Principle of Accrual
    The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

    So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

    If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

    3. Principle of Cost
    The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation.

    Principle-of-Cost

    The exemption to this rule is whether a short-term transaction in a corporation’s capital stock has had a change in market valuation. However, this exception only happens if the securities are publicly traded on one international stock market.

    Well, if your accounting software for financial services is not working as per the principle of cost, then your organization’s financial statements might not be accurate as they should have been.

    4. Principle of Consistency
    The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.

    If the accuracy theory is properly and narrowly followed, there are many advantages for financial statement stakeholders. That applies to the use of small business financial reporting software. Software that follows the consistency principle will simplify things for you.

    5. Principle of Economic Entity
    According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

    This implies that the transactions reported in the entity accounts are just those belonging to the entity.

    For example, let us consider that you are running a cake shop. And you are picking up two cakes for your daughter’s birthday. Now, the online accounting software you are using for billing and managing the finance needs to be clear who is an entity and who is the owner to record the transaction.

    6. Matching Principle
    The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.Grab 70% OFF For Three Months. Buy Now & Save
    Professional Invoicing Software

    What are the 8 Fundamental Principles of Financial Accounting?
    6 Min Read Last Updated: October 20, 2022
    What are the 8 Fundamental Principles of Financial Accounting?
    Published On: May 23, 2022
    The fundamental principles of financial accounting are a set of guidelines that govern how a company should manage their business accounting. To ensure consistency and accountability, all accountants shall adhere to those standards while doing their duties. Certain countries adhere to particular standards, but some of these laws are more universally understood globally. This post will go through the most basic accounting rules, which online accounting software also follows.

    When you practice accounting, you must have a basic grasp of these main accounting concepts. This isn’t as simple as memorizing financial facts for an exam and then recalling it two days later. In the study of accounting, these values can be seen all over the world. Accounting software for financial services follows these to conduct the seamless accounting process for any business, small or large.

    First, Let’s talk about the trends, facts, and stats for billing software and online accounting software, and then we will continue with the basic principles of financial accounting.

    Implementation of Accounting Software – Moon Invoice

    Implementation of Accounting Software (Source – Year Ahead Report)

    According to the “Year Ahead” report conducted by AccountingToday.com in 2018, almost 57 percent of Mid-sized companies have adopted accounting software, only 1 percent fewer than big corporations. In contrast, the concept of online billing software is increasingly permeating in small firms, with 45%.

    What are the 8 Fundamental Principles of Financial Accounting?

    Here are some of the most widely recognized accounting standards and how they relate to the accounting software for financial services, position, and responsibilities of an accountant.

    1. Principles of Conservatism
    The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

    Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

    2. Principle of Accrual
    The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

    So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

    If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

    3. Principle of Cost
    The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation.
    .

    4. Principle of Consistency
    The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.

    If the accuracy theory is properly and narrowly followed, there are many advantages for financial statement stakeholders. That applies to the use of small business financial reporting software. Software that follows the consistency principle will simplify things for you.

    5. Principle of Economic Entity
    According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

    This implies that the transactions reported in the entity accounts are just those belonging to the entity.
    .

    6. Matching Principle
    The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.

    7. Principle of Going Concern
    Going concern is the term that means the entity can continue to operate shortly, usually twelve months from the operation date if the financial accounts are compiled based on a going concern.
    .

    8. Principle of Full Disclosure
    The Full Disclosure Principle demands that the company publish any relevant material in its financial report. The critical theory behind this concept is that consumers of an entity’s financial statements can rely on financial statements to make decisions.

  39. Avatar Emerhe Lucky Ejirooghene says:

    Name:Emerhe Lucky Ejirooghene
    Reg No: 2021/246367
    Email: ejirochosen@gmail.com

    1. TWO MAJOR CATEGORIES OF ACCOUNTING;
    FINANCIAL ACCOUNTING:This is mainly concerned with the process of collecting information for monetary statements for external reporting. It also involves recording and organizing transactions for businesses. 
    MANAGERIAL ACCOUNTING: This involves documenting, monitoring and assisting in the financial planning of organizations A managerial accountant must be prudent in communicating confidential statements and to whom. Managerial accounting concentrates on your business’s income and expenses and how you use the assets you have on hand.

    2. THE QUALIFICATION ATTRIBUTE OF ACCOUNTING;
    a. RELEVANCE: This means that all those segments of information should be reported that may benefit the users in making decisions and predictions. Its information must be eligible of making a difference in decision-making by helping users to form predictions about former outcomes, current and future events or objectives.

    b. RELIABILITY: This is required to make decisions about the earning potential and financial position of a business enterprise.

    c.VERIFIABILITY: The item of verifiability assures that the information faithfully indicates what it purports to be indicating.

    c. TIMELINESS: The aspect of timeliness implies that the accounting statement is available to all stakeholders in time for decision-making purposes.

    d. UNDERSTANDABILITY: This means that preparers of information have categorized, characterised and presented the information clearly and concisely. 

    e.COMPARABILITY: This implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time.

    f.CONSISTENTLY: This involves the consistent use of the same accounting principles from one accounting period to another which improves the utility of financial statements to users by stimulating analysis and understanding of comparative accounting data.

    g. MATERIALITY:This implies that not all monetary information needs or should be communicated in accounting reports-only material information should be reported.

    h. CONSERVATISM:means prudence in monetary accounting and reporting, because business and economic activities are surrounded by uncertainty, but it needs to be applied with care.

    3. FUNDAMENTAL PRINCIPLE OF ACCOUNTING;
    a. Principal Of Full Disclosure: This requires that the company disclose any relevant entity in its financial report.

    b.Principle Of Going Concerned: This is the term that means the entity can continue to operate shortly, usually twelve months from the operation date if the financial accounts are compiled based on a going concern. 

    c. Matching Principle: The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.

    d. Principle Of Economics Entity:The company must distinguish all purchases from its owners, shareholders, and other businesses. This implies that the transactions reported in the entity accounts are just those belonging to the entity. 

    e. Principle Of Consistency: The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.

    f. Principle Of Cost: This state that an organization can report all capital, profits, and liabilities at their original purchasing prices. It also states that the quantities reported cannot be modified for market value increases or inflation. 

    g. Principle Of Accrual: This states that all payments should be recorded in the amounts they occur instead of when cash flow is correlated with them.

    h. Principles Of Conservatism:This states that any expenditure and liabilities should be reported as soon as practicable. 

  40. Avatar IFEDI AGATHA OBIAGERI says:

    1.Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business.[1] This involves the preparation of financial statements available for public use. Stockholders, suppliers, banks, employees, government agencies, business owners, and other stakeholders are examples of people interested in receiving such information for decision making purposes.
    Financial accountancy is governed by both local and international accounting standards. Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting used in any given jurisdiction. It includes the standards, conventions and rules that accountants follow in recording and summarizing and in the preparation of financial statements.
    On the other hand, International Financial Reporting Standards (IFRS) is a set of accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board (IASB).[2] With IFRS becoming more widespread on the international scene, consistency in financial reporting has become more prevalent between global organizations.
    While financial accounting is used to prepare accounting information for people outside the organization or not involved in the day-to-day running of the company, managerial accounting provides accounting information to help managers make decisions to manage the business.

    What Is Managerial Accounting?
    Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals.
    Managerial accounting differs from financial accounting because the intended purpose of managerial accounting is to assist users internal to the company in making well-informed business decisions.

    Managerial Accounting vs. Financial Accounting
    The key difference between managerial accounting and financial accounting relates to the intended users of the information. Managerial accounting information is aimed at helping managers within the organization make well-informed business decisions, while financial accounting is aimed at providing financial information to parties outside the organization.
    Financial accounting must conform to certain standards, such as generally accepted accounting principles (GAAP). All publicly held companies are required to complete their financial statements in accordance with GAAP as a requisite for maintaining their publicly traded status.Most other companies in the U.S. conform to GAAP in order to meet debt covenants often required by financial institutions offering lines of credit.
    Because managerial accounting is not for external users, it can be modified to meet the needs of its intended users. This may vary considerably by company or even by department within a company. For example, managers in the production department may want to see their financial information displayed as a percentage of units produced in the period. The HR department manager may be interested in seeing a graph of salaries by employee over a period of time. Managerial accounting is able to meet the needs of both departments by offering information in whatever format is most beneficial to that specific need.

    2.The qualitative characteristics of accounting information are as follows

    Reliability: The first qualitative characteristic of accounting information is reliability. Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.

    Relevance: The second qualitative characteristic of accounting information is relevance. It is believed that a relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.

    Understandability: Understandability is the third most important qualitative characteristic of accounting information. Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.

    Comparability: The last qualitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

    3.What Are Accounting Principles?
    Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.
    The International Financial Reporting Standards (IFRS) is the most widely used set of accounting principles, with adoption in 167 jurisdictions. The United States uses a separate set of accounting principles, known as generally accepted accounting principles (GAAP).
    What Are the Basic Accounting Principles?
    Some of the most fundamental accounting principles include the following:
    Accrual principle
    Conservatism principle
    Consistency principle
    Cost principle
    Economic entity principle
    Full disclosure principle
    Going concern principle
    Matching principle
    Materiality principle
    Monetary unit principle
    Reliability principle
    Revenue recognition principle
    Time period principle
    The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle. Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements. Consistency refers to a company’s use of accounting principles over time.

  41. Avatar Omeogo mmesoma Esther says:

    NAME : OMEOGO MMESOMA ESTHER
    REG NO:2021/245468
    UNIT :EDUCATION AND EDUCATION
    E MAIL: mmesomae464@ gmail.com.

    1 Cost accounting is the process of assigning costs to cost objects that typically include a company’s products services and other activities that involves the company that identifies where a company’s products, services and other activities that involves the company.

    2 managerial accounting: it is a method that creates statements, reports and documents that helps management in decision making related to their business performance and it is used for internal purposes.

    3 financial accounting is the process of recording, summarizing and reporting transactions and revenue expence generations in a time period.

    Differences
    Financial accounting is the collection of data to create financial statements while managerial accounting is the internal processing used to account for business transactions. And cost accounting is majorly the process of recording all costs incurred in a business in a way that can be used to improve it’s management.
    2 qualitative attributes
    1 Relevance .
    2 faithful representation.
    3 verifiability.
    4 understandability.
    5 timeliness.
    6 consistency.
    7 comparability.

    3 principles
    (1) matching principles is a fundamental principle that stipulates that business revenue is recorded alongside expences made.
    (2) cost principle of accounting is an accounting principle that records assets at their respective cash amounts at the time the asset was purchased or required it is recorded at the actual price paid for them.
    (3) Objectivity principle of accounting states that financial statements should be objective in nature and financial statements should be unbiased and free from internal interest.

  42. Avatar OGBODO KINGSLEY OBINNA says:

    NAME: OGBODO KINGSLEY OBINNA
    REG NO: 2023/243698
    EMAIL: ogbodokingsley26@gmail.com
    DEPARTMENT: ECONOMICS
    QUESTION 1
    Accounting, is the process of measuring, processing, and sharing financial and other information about businesses and corporations. It is the process of keeping the accounting books of the financial transactions of the company.
    ANSWER NO 1
    Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations. Accounting, which has been called the “language of business”, measures the results of an organization’s economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants. The terms “accounting” and “financial reporting” are often used as synonyms.
    Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the major differences between them?
    Financial accounting
    Financial accounting focuses on the reporting of an organization’s financial information to external users of the information, such as investors, potential investors and creditors. It calculates and records business transactions and prepares financial statements for the external users in accordance with generally accepted accounting principles (GAAP). GAAP, in turn, arises from the wide agreement between accounting theory and practice, and change over time to meet the needs of decision-makers.
    Financial accounting produces past-oriented reports—for example financial statements are often published six to ten months after the end of the accounting period—on an annual or quarterly basis, generally about the organization as a whole.

    Management accounting:
    Management accounting focuses on the measurement, analysis and reporting of information that can help managers in making decisions to fulfill the goals of an organization. In management accounting, internal measures and reports are based on cost-benefit analysis, and are not required to follow the generally accepted accounting principle (GAAP). In 2014 CIMA created the Global Management Accounting Principles (GMAPs). The result of research from across 20 countries in five continents, the principles aim to guide best practice in the discipline.
    Management accounting produces past-oriented reports with time spans that vary widely, but it also encompasses future-oriented reports such as budgets. Management accounting reports often include financial and non financial information, and may, for example, focus on specific products and departments.

    The major differences between them financial and managerial

    1. Financial Accounting is an accounting system that focuses on the preparation of a financial statement of an organization to provide financial information to the interested parties while managerial accounting is the accounting system which provides relevant information to the managers to make policies, plans and strategies for running the business effectively.
    2. Financial accounting Required to be published and audited by statutory auditors while managerial accounting It is not meant to be published or audited. It is for internal use only.

    QUESTION 2
    What are the qualitative attributes of accounting?

    ANSWER NO 2
    1. Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.
    2. Faithful representation
    The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.

    3. Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.
    4. Verifiability
    The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.
    5. Timeliness
    The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.
    6. Understandability
    The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. The financial reports are prepared with the assumption that its users have a ‘reasonable knowledge’ of the business and its economic activities.

    QUESTION NO 3
    Discuss the fundamental Principles of Accounting.

    ANSWER NO 3
    1. Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    2. Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.
    3. Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

  43. Avatar Dinneya Chidinma Favour says:

    Name: Dinneya Chidinma Favour
    Department: Social science Education
    Unit: Economics Education
    Reg No. 2021/241490
    Cash accounting records revenues and expenses when they are received and paid.In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size. Under cash accounting rules, the company would incur many expenses but would not recognize revenue until cash was received from the customer. It is most suitable for smaller businesses.

    Accrual Accounting: Under this method, revenue is accounted for when it is earned. Unlike the cash method, the accrual method records revenue when a product or service is delivered to a customer with the expectation that money will be paid in the future. In other words, money is accounted for before it’s received. Likewise, expenses for goods and services are recorded before any cash is paid out for them.The accrual method records accounts receivables and payables and, as a result, can provide a more accurate picture of the profitability of a company, particularly in the long term.The accrual method typically is required for companies that file audited financial statements and is accepted under the generally accepted accounting principles (GAAP) issued by the Financial Accounting Standards Boards (FASB). The accrued Accounting is most suitable for large businesses.

    Major Differences between the two categories of accounting
    1. Cash basis accounting records revenue and expenses when actual payments are received or disbursed. It doesn’t account for either when the transactions that create them occur. On the other hand, accrual accounting records revenue and expenses when those transaction occurs,Accrual accounting records revenues and expenses when they occur.
    2. Accrual accounting is a Generally accepted accounting principle ( GAAP) while the cash Accounting method is not Generally accepted accounting principle.
    3. Cash accounting is suitable for small businesses and personal businesses while the accrual accounting is suitable for large businesses.

    The Qualitative attributes of Account
    1. Relevance.
    2. Reliability.
    3. Understandability.
    4. Comparability.
    5. Consistency.
    6. Neutrality.
    7. Materiality.
    8. Timeliness.
    9. Verifiability.
    10. Conservatism.

    Fundamental principles of accounting
    1.Accrual principle
    2. Conservatism principle
    3. Consistency principle
    4.Cost principle
    5.Economic entity principle
    6.Full disclosure principle
    7.Going concern principle
    8.Matching principle
    9.Materiality principle
    10.Monetary unit principle
    11.Reliability principle
    12. Revenue recognition principle
    13. Time period principle

  44. Avatar Ezeh Clara Somtochukwu says:

    2020/246206
    EZEH CLARA SOMTOCHUKWU
    COMBINED SOCIAL SCIENCES (Economic/Psychology)

    The two major categories of accounting are:
    Financial accounting:
    The primary function of financial accounting is to track, record, and recap all daily transactions into monthly, quarterly, and yearly financial statements. From the financial statements, the owners and financial managers can perform multiple forms of financial analysis, such as Common size financial statement analysis or Ratio analysis. The result from the analysis is reported to the stakeholders later. In short, financial accounting provides a general look at business performance over a period of time in the form of financial statements – the Balance Sheet, Income Statement, and Statement of Cash Flows.

    Cost accounting:
    Cost accounting is a process of assigning costs to cost objects that typically include a company’s products, services, and any other activities that involve the company. Cost accounting is helpful because it can identify where a company is spending its money, how much it earns, and where money is being lost.

    Qualitative attributes of accounting
    Reliability: Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.

    Consistency:
    Consistency of method over a period of time is a valuable quality that makes accounting numbers more useful.
    Relevance implies that all those items of information should be reported that may aid the users in making decisions and/or predictions.
    Comparability: Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance.
    Understandability: This is the quality of information that enables users to perceive its significance.
    Fundamental principles of accounting.
    Objectivity Principle: This principle states that the accounting data should consistently stay accurate and be free of personal opinion.
    Going concern principle: This is the concept that a business will remain in operation for the foreseeable future.
    Conservatism: According to this principle, one should recognize expenses and liabilities at the early stages even if there is uncertainty about the outcome. It is a concept in accounting that mandates the recording of transactions in the time period in which they occur.
    Accrual concept: It is a concept in accounting that mandates the recording of transactions in the time period in which they occur.
    Matching Principle: Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred.

  45. Avatar Ezurueme Ogechi says:

    Name: Ezurueme Ogechi
    Reg No: 2019/251620
    Dept: Economics

    QUESTION 1
    FINANCIAL ACCOUNTING
    Financial accounting involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal management use to help make decisions.

    MANAGERIAL ACCOUNTING
    Managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team in making strategic and tactical business decisions.

    THE DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING ARE:
    A. Financial accounting looks at the entire business while managerial accounting reports at a more detailed level. Managerial accounting focuses on detailed reports like profits by product, product line, customer and geographic region.

    B. Financial accounting is focused on creating financial statements to be shared internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company.

    C. Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.

    QUESTION 2
    A. Verifiability: To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results.

    B. Understandability: Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand.

    C. Relevance: Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events.

    QUESTION 3

    1. Revenue Recognition Principle: When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    2. Cost Principle: Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    3. Matching Principle: Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    4. Full Disclosure Principle: The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    5. Objectivity Principle: The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

  46. Avatar Dike Grace Afuekwe says:

    Name:Dike Grace Afuekwe
    Matric number:2021/246042
    Department: Economics
    1. Financial accounting involves the preparation of the preparation of the performance of business.
    Standards that are widely adopted in financial accounting include G.A.A.P ,I.F.R.S, A.S.P.E.
    Managerial Accounting uses information gathered from financial accounting to achieve maximum efficiency.
    While Financial accounting means that the focusing of financial statements in order to measure the performance of a business as accurately as possible.
    Managerial Accounting involves reviewing financial accounting to know the best steps to take and then broadcasting the required details to all internal business managers.
    2. Comparability, Relevance, Faithful representation.
    3. Consistency principle: Organizations must adopt the same accounting method for reporting and documentation in every accounting period.
    b. Cost principle: Initial value of the acquired asset must be recorded in financial reports of the organization. This is necessary even when the value of an asset does not improve with time
    c. Matching principle: Businesses need to report their revenues and expenses simultaneously since they are matched on the income statements for an accounting period.
    d..Materiality principle: Businesses must record an item in financial statements that can impact the decision of an investor.
    e.Monetary unit principle: Money measurement concept is followed as per this concept. Business transactions must only be recorded when they can be expressed in currency.
    f.Reliability principle: This principle ensures the reliability of the business activities, events and transactions in a financial statement.

  47. 1ai) Financial accounting: it involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal management use to help make decisions. Accounting principles and standards, such as GAAP(Generally Accepted Accounting Principles), IFRS( International Financial Reporting Standards), or ASPE(Accounting Standars for Private Enterprises) are standards that are widely adopted in financial accounting.The accounting standards are importan important because they allow all stakeholders and shareholders to easily understand and interpret the financial statements from year to year.
    1ii) Managerial accounting: it analyzes the information gathered from financial accounting. it refers to the process of preparing reports about business operations. The reports serve to assist the management team to make tactical decisions. Managerial accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required steps to all internal business managers. An example of Managerial accounting is cost accounting. Cost accounting focuses on a detailed breakup of costs for effective cost control. Managerial accounting is very important in the decision-making process.
    1b) The major differences between managerial and financial accounting?
    i) Financial statements are the primary output of financial accounting while Managerial accounting reports often include financial statements as well as other types of financial information. ii) Financial accounting is used for external reporting purposes while Managerial accounting is used for management internally. iii) Financial accounting focuses on providing an overview of a company’s financial health while Managerial accounting provides more detailed insights into how a company is run on a day-to-day basis.

    2)The Qualitative attributes of accounting are:
    i) Reliability
    ii) Relevance
    iii) Comparability
    iv) Faithful representation

    3) Fundamental principles of accounting:
    i) Accrual principle: This is the concept that accounting transactions should be recorded in the accounting periods when they actually occur, rather than in the periods when there are cash flows associated with them. This is the foundation of the accrual basis of accounting. It is important for the construction of financial statements that show what actually happened in an accounting period, rather than being artificially delayed or accelerated by the associated cash flows. For example, if you ignored the accrual principle, you would record an expense only when you paid for it, which might incorporate a lengthy delay caused by the payment terms for the associated supplier invoice.
    ii) Conservatism principle: This is the concept that you should record expenses and liabilities as soon as possible, but to record revenues and assets only when you are sure that they will occur. This introduces a conservative slant to the financial statements that may yield lower reported profits, since revenue and asset recognition may be delayed for some time. Conversely, this principle tends to encourage the recordation of losses earlier, rather than later. This concept can be taken too far, where a business persistently misstates its results to be worse than is realistically the case.
    iii) Consistency principle: This is the concept that, once you adopt an accounting principle or method, you should continue to use it until a demonstrably better principle or method comes along. Not following the consistency principle means that a business could continually jump between different accounting treatments of its transactions that makes its long-term financial results extremely difficult to discern.
    iv) Cost principle: This is the concept that a business should only record its assets, liabilities, and equity investments at their original purchase costs. This principle is becoming less valid, as a host of accounting standards are heading in the direction of adjusting assets and liabilities to their fair values.
    v) Economic entity principle: This is the concept that the transactions of a business should be kept separate from those of its owners and other businesses. This prevents intermingling of assets and liabilities among multiple entities, which can cause considerable difficulties when the financial statements of a fledgling business are first audited.
    vi) Full disclosure principle: This is the concept that you should include in or alongside the financial statements of a business all of the information that may impact a reader’s understanding of those statements. The accounting standards have greatly amplified upon this concept in specifying an enormous number of informational disclosures.
    vii) Going concern principle:This is the concept that a business will remain in operation for the foreseeable future. This means that you would be justified in deferring the recognition of some expenses, such as depreciation, until later periods. Otherwise, you would have to recognize all expenses at once and not defer any of them.
    viii) Matching principle: This is the concept that, when you record revenue, you should record all related expenses at the same time. Thus, you charge inventory to the cost of goods sold at the same time that you record revenue from the sale of those inventory items. This is a cornerstone of the accrual basis of accounting. The cash basis of accounting does not use the matching the principle.
    ix) Materiality principle: This is the concept that you should record a transaction in the accounting records if not doing so might have altered the decision making process of someone reading the company’s financial statements. This is quite a vague concept that is difficult to quantify, which has led some of the more picayune controllers to record even the smallest transactions.
    x) Monetary unit principle: This is the concept that a business should only record transactions that can be stated in terms of a unit of currency. Thus, it is easy enough to record the purchase of a fixed asset, since it was bought for a specific price, whereas the value of the quality control system of a business is not recorded. This concept keeps a business from engaging in an excessive level of estimation in deriving the value of its assets and liabilities.
    xi) Reliability principle: This is the concept that only those transactions that can be proven should be recorded. For example, a supplier invoice is solid evidence that an expense has been recorded. This concept is of prime interest to auditors, who are constantly in search of the evidence supporting transactions.
    xii) Revenue recognition principle: This is the concept that you should only recognize revenue when the business has substantially completed the earnings process. So many people have skirted around the fringes of this concept to commit reporting fraud that a variety of standard-setting bodies have developed a massive amount of information about what constitutes proper revenue recognition.
    xiii) Time period principle. This is the concept that a business should report the results of its operations over a standard period of time. This may qualify as the most glaringly obvious of all accounting principles, but is intended to create a standard set of comparable periods, which is useful for trend analysis.

  48. Avatar UGWUANYI DUMEBI DOMINIC says:

    NAME UGWUANYI DUMEBI DOMINIC
    REG NO 2021/241948
    COURSE CODE ECO 121

    ASSIGNMENT
    1] The two main or major accounting methods are cash accounting and accrual accounting. Cash accounting records revenues and expenses when they are received and paid. Accrual accounting records revenues and expenses when they occur. Generally accepted accounting principles (GAAP) requires accrual accounting.
    Cash Accounting
    Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.

    In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size.

    If a business generates more than 25 million naira in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to Internal Revenue Service rules.
    Accrual Accounting
    Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.

    Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made.
    DIFFERENCE
    The main difference is that accrual accounting stays or lies in the timing of when revenue is recognized, on the other hand cash accounting focuses on anticipated revenue.
    2]There are six different types of qualitative characteristics of accounting information, including:

    Relevance
    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.

    Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

    Representational faithfulness
    Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.

    There are three factors that measure a company’s representational faithfulness, including:

    Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
    Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
    Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
    Verifiability
    To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financialinformation and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.

    Understandability
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.

    Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

    Comparability
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.
    3] THERE ARE FIVE FUNDAMENTAL PRINCIPLES OF ACCOUNTING THEY ARE AS FOLLOWS
    1. Revenue Recognition Principle

    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    2. Cost Principle

    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    3. Matching Principle

    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    4. Full Disclosure Principle

    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    5. Objectivity Principle

    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

  49. Avatar EMMANUEL IZUCHUKWU GODSLOVE says:

    Name : Emmanuel izuchukwu Godslove
    Department: Economics
    Reg no: 2021/241331
    Course code : eco 121
    1. Financial accounting: primarily concerned with the process of compiling information for financial reports for external reporting. We can define financial accounting as a process of recording, summarizing, and reporting various transactions that occur over a period of time during the course of business. We gather and convert all the daily transactions into financial statements, balance sheet, income statements, and cash flow statements.
    2. Cost accounting: Cost accounting is a process of recording, summarizing, analyzing, and allocating the cost over the process of manufacturing a product or providing services. It helps management to determine the cost involved in manufacturing a product or services by use of different cost accounting method. Further, it helps management to make organization cost-efficient and capable. Cost accounting acts as a controlling tool.
    DIFFERENCE BETWEEN COST ACCOUNTING AND FINANCIAL ACCOUNTING
    1. Where cost accounting is a system that keeps track of the costs incurred by a business, financial accounting focuses on the financial position of the business.
    2. Cost accounting is theinternal reporting of the business finances and financial accounting is helpful for both internal and external stakeholders to understand the position of the business to make decisions about its future.
    3. The purpose of completing cost accounting procedures is to reduce and control costs, whereas financial accounting statements help keep a record of financial transactions.

    2. Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.

    Faithful representation
    The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.

    Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.

    Verifiability
    The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.

    3. Revenue recognition principle
    Cost principle
    Matching principle
    Full disclosure principle
    Objectivity principle

    1. Revenue Recognition Principle
    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
    2. Cost Principle
    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
    3. Matching Principle
    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
    4. Full Disclosure Principle
    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.
    5. Objectivity Principle
    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results.

  50. Avatar EMMANUEL IZUCHUKWU GODSLOVE says:

    Name : Emmanuel izuchukwu Godslove
    Department: Economics
    Reg no: 2022/241331
    Course code : eco 121
    1. Financial accounting: primarily concerned with the process of compiling information for financial reports for external reporting. We can define financial accounting as a process of recording, summarizing, and reporting various transactions that occur over a period of time during the course of business. We gather and convert all the daily transactions into financial statements, balance sheet, income statements, and cash flow statements.
    2. Cost accounting: Cost accounting is a process of recording, summarizing, analyzing, and allocating the cost over the process of manufacturing a product or providing services. It helps management to determine the cost involved in manufacturing a product or services by use of different cost accounting method. Further, it helps management to make organization cost-efficient and capable. Cost accounting acts as a controlling tool.
    DIFFERENCE BETWEEN COST ACCOUNTING AND FINANCIAL ACCOUNTING
    1. Where cost accounting is a system that keeps track of the costs incurred by a business, financial accounting focuses on the financial position of the business.
    2. Cost accounting is theinternal reporting of the business finances and financial accounting is helpful for both internal and external stakeholders to understand the position of the business to make decisions about its future.
    3. The purpose of completing cost accounting procedures is to reduce and control costs, whereas financial accounting statements help keep a record of financial transactions.

    2. Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.

    Faithful representation
    The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.

    Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.

    Verifiability
    The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.

    3. Revenue recognition principle
    Cost principle
    Matching principle
    Full disclosure principle
    Objectivity principle

    1. Revenue Recognition Principle
    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
    2. Cost Principle
    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
    3. Matching Principle
    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
    4. Full Disclosure Principle
    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.
    5. Objectivity Principle
    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results.

  51. Avatar Ukpai Victoria chinenye. 2021/241964 says:

    NAME:UKPAI VICTORIA CHINENYE
    REG NO:2021/241964
    COURSE CODE: ECO 121
    DEPARTMENT: ECONOMICS

    1.Financial accounting: financial accounting involves capturing and summarizing all of a business financial transactions and creating reports to provide a clear overview of those business transactions.it can also be said to be the process of documenting, analyzing and reporting every transaction of a business or an organization
    There are two types of financial accounting.that one need to be aware of:
    Cash accounting: where the transactions entered are only recorded upon the receipt of the cash
    Accural accounting: which works on two principle, revenue, recognition and matching revenue.it records every transaction digitally

    b) DIFFERENCE BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING
    Managerial accounting is done in the view of notifying the managers, directors and authorities of an organization regarding the everyday operation,present and future trend in the market assumptions and plans to be made for the future
    While financial accounting is a documentation of every transaction for the audience outside the organization as well like competitors,investors and bankers.it has strict guidelines to be followed according to GAAP whereas managerial accounting has no mandatory guidelines
    2) Relevance
    Timeliness
    comparability
    Faithful representation
    understanding
    verifiability
    Reliability
    Neutrality
    3) Revenue recognition principle
    cost principle
    matching principle
    full disclosure principle
    objectivity principle
    Revenue recognition principle:When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    Cost principle Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    matching principle:Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    Full disclosure principle :The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    objectivity principle :The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results.

  52. Avatar Arthur Philip David says:

    Name: Arthur Philip David
    Department: economics
    Reg no: 2021/241939
    100 LEVEL
    Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals,while, Financial accounting involves recording, summarizing, and reporting the stream of transactions and economic activity resulting from business operations over a period of time to the public or regulators.

    Qualitative attributes of accounting are;
    * Reliability
    *Relevance
    *Understandability
    *Comparability
    *Faithful presentation

    The fundamental principles of accounting are;
    Consistency Principle
    Going Concern Principle
    Accrual Principle
    Conservatism Principle
    Objectivity Principle
    Matching Principle

  53. Avatar ARUA PASCHAL UGOCHUKWU REG no: 2021/244116 says:

    1) They are the financial accounting and managerial accounting
    a) Financial accounting is the preparation of financial statements. The financial accounting is used for measuring the performance of a firm , business or an organisation. Financial accounting is the process of recording, summarizing, and reporting a company’s business transactions through financial statements.This accounting stream primarily aims to represent a firm’s overall performance accurately. Moreover, this data serves as crucial information to external parties. For example, creditors, financial institutions, lenders, investors, the government, and the tax authorities depend on accounting records.

    b) Managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. These reports help and assist the management of a firm or organisation to make good decisions. It operates from the result of the financial accounting . Managerial accounting is primarily used for internal purposes and affairs. It is the practice of using accounting information from revenues to production inputs and outputs affecting the supply chain internally, in support of organization-wide efficiency and for tracking the organization’s progress toward attaining its stated goals.

    2) The qualitative attributes of accounting simulates the financial figures of accounting for a better and easy understanding and for an efficient compiling of financial results. These qualitative attributes are
    a) Comparability
    b) Understandability
    c) Relevance
    d) Faithful representation
    e) Reliability

    3) The fundamental accounting principles are all the basic concepts that any business owner needs to know before starting up or running a company or corporation. Basic accounting principles are the financial rules and economic guidelines that show you the accounting concepts that work by the generally accepted accounting principle (GAAP) and help you build accurate states about your working cost, income, and outcome.
    The accounting basic principles are;
    a) Consistency Principle
    b) Accrual Principle
    c) Going Concern Principle
    d) Objectivity Principle
    e) Full Disclosure Principle
    f) Matching Principle
    g) Conservatism Principle
    The accrual principle is an accounting concept that requires transactions to be recorded in the time period in which they occur, regardless of when the actual cash flows for the transaction are received.

  54. NAME: OKOLIE CHINWENDU THERESA
    REGISTERATION NUMBER: 11105924HJ
    COURSE: ECO 121; INTRODUCTION TO ACCOUNTING
    DETARTMENT: ECONOMICS
    FACULTY: SOCIAL SCIENCES
    BLOG: okolietheresa.blogspot.com

    ASSIGNMENT
    1. Deeply discuss the major categories of Accounting.
    The major categories of accounting are;
    1. Financial Accounting
    2. Managerial Accounting
    FINANCIAL ACCOUNTING:
    This is a specific branch of accounting that involves a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time. These transactions are summarized in the preparation of financial statements including the balance sheet, income statement and cash flow statement, that records the company’s operating performance over a specific period of time. Financial accounting is the framework that dictates the rules, processes, and standards for financial recordkeeping.
    Nonprofit organizations, corporations, and small businesses use financial accountants to prepare their books and keep records and generate their financial reports. Financial accounting may be performed under the accrual method (recording expenses for items that have not yet been paid) or under the cash method (only cash transactions are recorded).
    MANAGERIAL ACCOUNTING:
    This is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals. It is a category or branch of accounting that encompasses many facets of accounting that is aimed at improving the quality of information delivered to management about business operation metrics. It makes use of information relating to the cost and sales revenue of goods and services generated by a company. With managerial accounting, companies can track and craft spending budgets, reduce costs, manage cash flows and project sales figure, among other tasks.

    b. What are the major differences between them?
    DIFFERENCES BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING
    1. Efficiency;
    Financial accounting reports on the profitability or efficiency of a business, while managerial accounting reports on specifically what is causing problems and how to fix them. Managerial accounting reports are used in improving operations, while financial accounting reports are used by outsiders to decide whether to invest in or lend to a business.
    2. Aggregation;
    Financial accounting reports on the results of an entire business, whereas managerial accounting reports at a more detailed level, such as profits by products, product line, customer, and geographic region. Financial accounting reports are more likely to be distributed to outsiders, while the results of managerial accounting are only used by insiders or the business.
    3. Valuation;
    Financial accounting addresses the proper valuation of assets and liabilities, and so is involved with impairments, revaluations, and so on. Managerial accounting is not concerned with the value of these items, only their productivity.
    4. Time Period;
    Financial accounting is concerned with the financial results that a business has already achieved, so it has a historic orientation. Managerial accounting may address budgets and forecasts, and so can have a future orientation.
    5. Systems;
    Financial accounting pays no attention to the overall system that a company has for generating a profit, only its outcome. Conversely, managerial accounting is interested in the location of bottleneck operations, and the various ways to enhance profits by resolving bottleneck issues.
    6. Timing;
    Financial accounting requires the financial statements be issued following the end of an accounting period. Managerial accounting may issue reports much more frequently, since the information it provides is of most relevance if managers can see it right away.
    7. Standards;
    Financial accounting must comply with various accounting standards, whereas managerial accounting does not have to comply with any standard when information is compiled for internal consumption.

    2. What are the qualitative attributes of accounting?
    The qualitative characteristics of accounting information are as follows;
    1. Reliability:
    The first qualitative attribute of accounting is reliability. Reliability means that the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.
    2. Relevance:
    The second qualitative characteristics of accounting information is relevance. A relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.
    3. Understandability;
    This is the third most important quality of an accounting information. Understandability means that decision makers must interpret accounting information in the same sense as it is prepared and conveyed to them.
    4. Comparability;
    The last quantitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

    3. Discuss the fundamental principles of accounting
    Accounting principles are defined as the various guidelines and rules that companies must follow when documenting, recording, and reporting financial transactions and information. These principles are;
    • Objectivity – This is the concept that all recorded data must be based on documented information, rather than on anticipated transactions, or assumed outcomes.
    • Arm’s-length transactions – This concept dictates that parties to a transaction are unrelated to one another.
    • Going Concern Concept – This concept assumes that the business entities in the transaction will remain in business and are not subject to close in the foreseeable future.
    • Monetary Measurement – This concept states that accounting transactions must be recorded in terms of money.
    • Revenue Recognition – This concept dictates that revenue should be recorded when it is earned rather than when payment is actually received.
    • Separate Entities – This principle states that all business transactions must be recorded separately from any private transactions of the business owners or principals.

  55. Avatar Abonyi Agatha mmesomachukwu says:

    Name: Abonyi Agatha mmesomachukwu
    Registration number: 2021/241937
    Email: mmesomaagatha@gmail.com

    Answer to number 1 question
    1: Financial accounting involves capturing and summarizing all of a business transactions and creating reports to provide a clear overview of those business transactions. Financial account also generate financial records that provide valuable information about a company’s fiscal health,such as balance sheet,cash,flow statement and income statement. Financial accounting is always focused on past performance not the future.
    2: Managerial account: The management account method used by businesses to gain a greater insight on how a country’s operation. Since managerial account is strictly focused on providing account information to internal use. It doesn’t have to stick to the same strict GAAP guidelines as finical accounting. Rather it focuses on things like financial analysis, budgeting and coat analysis.
    Difference:
    The difference between financial and managerial is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.
    Answer to question number 2
    _Relevance
    _Representational faithfulness
    _Verifiability
    _Understandability
    _Comparability
    Answer to question number 3
    _Monetary unit: Accounting needs all values to be recorded in terms of single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective.
    _ Going concern: A company is said to have an external existence. Once it is formed the only way to end it is by dissolution. It does not die a natural death like human do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do it’s business as usual till the end of the next account period and there is no information to the contrary.
    _Principle of conservation: Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. One of the central tenets of accounting is the principle of conservation. According to his principle,when there is doubt about the amount of expected inflows and outflows,the organization must state the lowest possible revenue and the highest possible cost.
    _ Cost principle: This is Closely related to the principle of conservation. The cost principle advocates that companies should list everything on the financial statements at the cost price.

  56. Avatar Alumona Cynthia Ezinne says:

    11074032BG.
    1) The two types of accounting are managerial and financial accounting.
    _managerial accounting focuses on an organizations internal financial processes, while financial accounting focuses on an organizations external financial processes managerial accounting focuses on short term growth strategies relating to economic maintainance.
    Financial accounting is oriented toward the creation of financial statements which are distributed both within and outside of a company . In conclusion managerial provides information primarily intended for people inside the company, while financial provides information primarily intended for people outside the organization.
    2) attributes of accounting.
    -Understandability
    _Relevance
    – consistency
    _conparability
    _reliability
    _objectivity
    3) The principles of accounting
    Principles of Conservatism
    The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

    Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

    2. Principle of Accrual
    The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

    So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

    If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

    3. Principle of Cost
    The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation.

    Principle-of-Cost

    The exemption to this rule is whether a short-term transaction in a corporation’s capital stock has had a change in market valuation. However, this exception only happens if the securities are publicly traded on one international stock market.

    Well, if your accounting software for financial services is not working as per the principle of cost, then your organization’s financial statements might not be accurate as they should have been.

    4. Principle of Consistency
    The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.

    If the accuracy theory is properly and narrowly followed, there are many advantages for financial statement stakeholders. That applies to the use of small business financial reporting software. Software that follows the consistency principle will simplify things for you.

    5. Principle of Economic Entity
    According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

    This implies that the transactions reported in the entity accounts are just those belonging to the entity.

    For example, let us consider that you are running a cake shop. And you are picking up two cakes for your daughter’s birthday. Now, the online accounting software you are using for billing and managing the finance needs to be clear who is an entity and who is the owner to record the transaction.

    6. Matching Principle
    The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.

    Matching-Principle

    The theory ensures that profits and liabilities in the income statement are accurately measured in the timeframe in which they were sustained. If you are using accounting software for financial services that remains the same.

    When this theory is followed correctly, net profits appear in the income statement indeed and equitably. That is not due to an overestimation or underestimation of sales or expenditures.

    7. Principle of Going Concern
    Going concern is the term that means the entity can continue to operate shortly, usually twelve months from the operation date if the financial accounts are compiled based on a going concern.

    So, that’s a plus if your small business financial reporting software works on an ongoing concern principle.

    8. Principle of Full Disclosure
    The Full Disclosure Principle demands that the company publish any relevant material in its financial report. The critical theory behind this concept is that consumers of an entity’s financial statements can rely on financial statements to make decisions.

    As a result, it is essential to ensure that they have access to all relevant material using accounting software for financial services.

    As a result, this concept is implemented to guarantee the material reported in the entity’s financial report following accounting principles or mechanisms has been disclosed.

    You should obey each accounting requirement regardless of whether the condition that occurs in your entity should be revealed or not.

    Wrap Up
    The Generally Accepted Accounting Principles (GAAP) are significant since they provide reporting and bookkeeping standards. No matter if you are doing an accounting process manual or using small business finance reporting software.

    Digitalization is overtaking many manual processes in every business segment, and accounting is one of them. The accounting software for financial services is created as per the clients’ demand; Which makes the business accounting process smoother and more superficial.

  57. Avatar Ani Peace Ngozi says:

    Name:Ani Peace Ngozi
    Matric No. 2021/245427
    Department :Combine social science
    Combination :Economics and Political science
    1, Accounting can be classified into two major categories;I, Cash accounting is an account
    that reports revenues and expenses as they are received and paid through cash inflows and outflows
    II, Accrual accounting reports revenues and expenses as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable.

    2,the qualitative attributes of accounting are;Relevance, Faithful representation, Comparability, Verifiability, Timeliness, Understandability.

    3,the fundamental Principles of Accounting are set of guidelines that govern how a company should manage their business accounting. To ensure consistency and accountability, all accountants shall adhere to those standards while doing their duties.

  58. Avatar Ani Peace Ngozi says:

    1, Accounting can be classified into two major categories;I, Cash accounting is an account
    that reports revenues and expenses as they are received and paid through cash inflows and outflows
    II, Accrual accounting reports revenues and expenses as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable.

    2,the qualitative attributes of accounting are;Relevance, Faithful representation, Comparability, Verifiability, Timeliness, Understandability.

    3,the fundamental Principles of Accounting are set of guidelines that govern how a company should manage their business accounting. To ensure consistency and accountability, all accountants shall adhere to those standards while doing their duties.

  59. Avatar Chukwuma Victory Chibuike says:

    1 what are the categories of financial accounting

    Financial Accounting: involves the preparation of accurate financial statement. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statement are for external use, they may be also be for internal management use to help make decisions.

    Managerial accounting: managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team to mke tactical decisions.
    Managerial accounting is a process that allow an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required steps to all internal business managers.

    2 what are the qualitative attributes of account

    Qualitative attributes of accounting
    The fundamental nature of financial statement is to provide true and fair view of the state of affairs and profit or loss for the period. Qualitative attributes simiplifies and expands on the financial figures to ensure easy understanding and comparability of results. The Qualitative Attributes that describe the Nature of Accounting are as follows’
    1 Reliability
    2 Relevance
    3 Understandability
    4 Comparability
    5 Faithful respire station etc.

    3 What are the fundamental principles of account

    1.Accounting Process
    2.Reconciliation Statement
    3.Accounting for Depreciation
    4.Preparation of Final Accounts
    5.Accounting for Special Transactions

  60. Avatar Igwe ebubechukwu victor says:

    Igwe Ebubechukwu Victor
    10375074EB
    Rgduniverse370@gmail.com

    Answer 1
    Accounting can be classified into two categories
    (a). Financial Accounting
    (b). Managerial Accounting

    (a). Financial Accounting involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal management use to help make decisions.

    (b). Managerial Accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team to make tactical decisions.

    Managerial accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required steps to all internal business managers.

    Major Differences Between Financial And Managerial Accounting.
    (a). Financial accounting reports are prepared for outside parties (external), while managerial reports is for inside parties (internal).
    (b). Managerial accounting is focused on the future while financial accounting summarizes past transactions.
    (c). Financial accounting has to follow the GAAP(General Accepted Accounting Principles) while managerial does not.

    Answer 2
    (a). Reliability
    (b). Relevance
    (c). Understandability
    (d). Comparability
    (e). Faithful representation

    Answer 3

    (a). Monetary unit: Accounting needs all values to be recorded in terms of a single monetary unit. It cannot
    account for goods like the barter system. Assigning values to goods and items therefore becomes a problem because its subjective. However, accounting has prescribed rules to deal with the same.
    .
    (b). Going Concern: A company is said to have an eternal existence once it is formed, the only way to do it is by dissolution. It does not die like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future
    and charge depreciation assumin.g that the machine will be used for many years.
    In case, the management has information that the company will be suspended in the near future, normal accounting ceases. A special type of account meant for dissolution purpose is used.

    (c). Principle of conservatism: Accountants are said to be very conservative by nature. They want to hope for the best and prepare for the worst. This is displayed in the rules that they have created for their profession. One of the central principle of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possuble costs.
    This can be seen in the facts that accountants value inventory at lower cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    (d). Cost Principle: Closely related to the principle of conservatism is the cost Principle. The cost principle advocates that company should list everything in the financial statements at the cost price. Usually assets like land, building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till its realized.
    Accountants believe that the market value of anything its just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence, accounting works on cost Principle and therefore on facts.

  61. Avatar Ugwoke ukamaka confidence says:

    Name Ugwoke ukamaka confidence
    Reg no 2021/245467
    Course eco 121/ principles of Accounting
    Dept/unit Social science education/economics education
    Answers

    1 Accounting which is often just called “accounting,” is the process of measuring, processing, and sharing financial and other information about businesses and corporations.

    What is accounting?
    Accounting is the processor keeping the accounting books of the financial transactions of the company. The accountants summarize the transactions in the form of journal entries. These entries are used in bookkeeping. The books of accounts are prepared by the accountants as per the regulation of the auditors and various regulating bodies. The accountants might follow the Generally Accepted Accounting Principles (GAAP) or the IFRS (International Financial Reporting Standards) principle

    How does accounting work?
    Accounting is one of the most important things a business does.

    2 The two fundamental qualitative characteristics of financial report are relevance and faithful representation
    relevance and faithful representation. The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.

    Fundamental qualitative characteristics:
    Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.
    Faithful representation
    The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.
    Enhancing qualitative characteristics:

    Comparability
    It is very useful quality of the accounting. The financial statement should contain the figures of previous year along with the figures of current year so that the current performance can be compared with the past performance
    Understandability
    Accounting information should be presented in such a simple and logical manner that they are understand easily by their users such as investors, lenders, employees, etc. A person who does not have any knowledge of accounting terminology should also be able to understand them without much difficulty.
    Reliability implies that the information must be factual and verifiable. The accounting information has said to have verifiability if such information can be verified from source documents such as cash memos, purchase invoices, sales invoices, correspondence, agreement, property deeds and other similar documents
    In other to be replied upon, the financial information requires the following attribute
    Neutrality
    Substance over form i.e.accounting should base on financial reality and not merely on legal form.
    Prudence
    Completeness.

    3 What are the fundamental accounting principles?
    Fundamental accounting principles are basic rules and guidelines to record and report financial information.

    These principles include both Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

    These principles are important because they help to ensure that financial statements are accurate and provide a true picture of a company’s financial health. Without these principles, companies could manipulate their financial statements to make themselves look more financially healthy than they actually are.

    Fundamental accounting principles are important because they provide investors with the information they need to make informed investment decisions and help to ensure that financial statements are accurate.

    Accounting principles contribute to bridging the divide and attempting to achieve someproviding accounting information for internal use, it doesn’t have to stick to the same strict GAAP guidelines as financial accounting. Rather, it focuses on things like financial analysis, budgeting, and cost analysis.

    By analyzing past financials and forecasting future outcomes—for example, how much a company could cut expenditures by switching software providers—managerial accountants provide business owners with the data they need to make savvy business decisions. Generally, the emphasis is on strategic management, risk management, or performance management. It depends on what kind of data business owners and investors want.

    Techniques commonly used by management accountants include margin analysis, capital budgeting, and constraint analysis. Trend analysis—which identifies patterns in business expenditures over time—is also useful. Ultimately, the primary goal of managerial accounting is to improve business outcomes by ramping up profits and minimizing losses.

  62. Avatar CHUKWUDILE CHINOMSO WENDY says:

    Chukwudile Chinomso Wendy
    2021/245480
    Chukwudilewendy@gmail.com
    Accounting can be classified into two major categories, which are??
    1). FINANCIAL ACCOUNTING: This is a specific branch of accounting which involves the process of recording, summarising and reporting the myriad of transactions resulting from business operations over a period of time. These transaction history are summarized in the preparation of financial statements including balance sheet, income statements and cash flow statements or history, that are kept in the company’s records or the operating format performance of the company over a certain period of time. This category of accounting utilises a series of established accounting principles to use during the course of financial accounting analysis depending on the regulatory and reporting requirements the enterprise faces.
    The financial statements used in financial accounting present the five main classifications of financial data: revenues, expenses, assets, liabilities and equity. Revenues and expenses are accounted for and reported on the income statement. They can include everything from R&D to payroll.

    Financial accounting results in the determination of net income at the bottom of the income statement. Assets, liabilities and equity accounts are reported on the balance sheet. The balance sheet utilizes financial accounting to report ownership of the company’s future economic benefits.
    2). MANAGERIAL ACCOUNTING: This category of accounting can be also known as management accounting This is a method of accounting that creates statements, reports, and documents that help management in making better decisions related to their business’ performance. Managerial accounting is primarily used for internal purposes such as; analysing data, providing adequate data, aids meaningful company decisions, helps yield productive goals, use qualitative informations etc.
    Managerial accounting may define the pace and process of development of an organisation yet it has its set of drawbacks. Managerial decisions is dependent on financial statements. Due to this, the strength or weakness of accounting decisions made depends solely on the quality of basic records. Meanwhile, different managers may interpret the same information in different ways depending on their capacity and experience in the field. That way there might be bias in decision-making process.

    The difference between FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING: The financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

    2). The qualitative attributes of accounting are:
    -Comparability
    -Verifiability
    -Timeliness
    -Understandability

    3). Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.
    The ultimate goal of any set of accounting principles is to ensure that a company’s financial statements are complete, consistent, and comparable.
    These are few basic accounting principles that helps in analysis of company data:
    -Accrual principle
    -Conservatism principle
    -Consistency principle
    -Cost principle
    -Economic entity principle
    -Full disclosure principle
    -Going concern principle
    -Matching principle
    -Materiality principle
    -Monetary unit principle
    -Reliability principle
    -Revenue recognition principle
    -Time period principle etc.

  63. Avatar Ireoba Gideon Chikamjieke says:

    NAME: Ireoba Gideon Chikamjieke
    DEPARTMENT: Economics
    MATRICULATION NUMBER: 2021/244132
    EMAIL: chikamjieke@gmail.com

    1a. major categories of accounting are;
    •Accural Accounting
    •Cash Accounting
    b. Accural Accounting – Accrual accounting is a financial accounting method that allows a company to record revenue before receiving payment for goods or services sold and record expenses as they are incurred.
    In other words, the revenue earned and expenses incurred are entered into the company’s journal regardless of when money exchanges hands. Accrual accounting is usually compared to cash basis of accounting, which records revenue when the goods and services are actually paid for.
    •Cash Accounting – Cash accounting is an accounting methodology under which revenue is recognized when cash is received and expenses are recognized when cash is paid. It is most commonly used by smaller businesses, since it is easy to understand and does not require someone with an advanced knowledge of accounting practices. A larger business will use accrual accounting, where revenue is recognized when earned and expenses are recognized when incurred. The IRS requires a larger organization to use accrual accounting as the basis for its tax returns.
    1c. The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.
    Key Points
    •Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed.
    •Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.
    •Accrual accounting provides a more accurate view of a company’s health by including accounts payable and accounts receivable.
    •The accrual method is the more commonly used method by large companies, especially by publicly-traded companies, as it smooths out earnings over time.
    •The cash basis method typically is used by sole proprietors and smaller businesses.

    2. Qualitative attributes of accounting assist management, investors and accountants in making important decisions and predicting financial outcomes. Learning the different characteristics can help you understand how to produce accurate, reliable financial documents that can improve your company’s financial well-being. In this article, we list different types of qualitative characteristics of accounting information, provide steps on how to use these characteristics and share an example of these characteristics so you can see how one would use them in the decision-making process.

    3 Some fundamental principles of accounting including;
    •Cost Principle
    •Objectivity Principle
    •Consistency Principle
    •Accural Principle
    •Conservatism Principle
    •Matching Principle

    •Cost Principle – Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
    •Objectivity Principle – The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.
    •Consistency Principle – Any working entity should set economic principles to work by it to record all the revenue, cost, and exchange. Moreover, these standards should be saved and continue working by it till find something that is 100% better than the previously used methods.
    This consistency principle avoids balance problems, activities reporting, or bill confusion.
    •Accrual Principle – A basic accounting principle that highlights the importance of making a complete accounting bookkeeping statement by the time of the action and deal, not by the period of the cost and revenue entry, this accrual principle helps you to know your money flow statics better and attach it to different times, so, here you are highlighting the financial static rather than the monetary flow.
    •Conservatism principle – As per the conservatism principle, accounting faces two alternatives – one, report a more significant amount, or two, report a lesser amount. To understand this in detail, let’s take an example. Let’s say that Company A has reported that it has machinery worth $60,000 as its cost. Now, as the market changes, the selling value of this machinery comes down to $50,000. Now the accountant has to choose one from two choices – first, ignore the loss the company may incur on selling the machinery before it’s sold; second, report the loss on machinery immediately. As per the conservatism principle, the accountant should go with the former choice, i.e., to report the loss of machinery even before the loss would happen. Conservatism principle encourages the accountant to report more significant liability amount, lesser asset amount, and also a lower amount of net profits.
    •Matching principle – The matching principle is the basis of the accrual principle we have seen before. As per the matching principle, it’s said that if a company recognizes and records revenue, it should also record all costs and expenses related to it. So, for example, if a company records its sales or revenues, it should also record the cost of goods sold and also other operating expenses.

  64. Avatar ORJIUDE NNAORJI IZUCHUKWU says:

    NAME: ORJIUDE NNAORJI IZUCHUKWU
    REG NO: 2021/241360
    EMAIL: norjiude@gmail.com

    Accounting can be classified into two major categories. Deeply discuss what the categories are?

    The two major categories of accounting are financial accounting and managerial accounting.
    Financial accounting is the process of preparing financial statements that are intended to provide information to external stakeholders, such as investors, creditors, and regulators. The main purpose of financial accounting is to provide transparency and accountability by reporting the financial performance and position of a company. Financial statements include the balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity. The information in these statements is based on generally accepted accounting principles (GAAP) and is intended to be neutral, verifiable, and relevant to the users’ decision-making process.

    Managerial accounting, on the other hand, provides internal information to the company’s management for planning, decision-making, and control purposes. The information generated by managerial accounting is not intended for external stakeholders, but rather for internal use only. Managerial accounting provides information such as cost analysis, budgeting, and performance evaluation to help management make informed decisions. The information generated by managerial accounting is typically more flexible and adaptable to the specific needs of the company, and is not bound by the same strict rules and standards as financial accounting.

    What are the major differences between them?
    There are two main categories of accounting: financial accounting and managerial accounting. Here are five differences between the two:
    Purpose: Financial accounting is focused on providing information to external parties such as investors, creditors, and regulators, while managerial accounting provides information to the company’s internal management team for decision-making purposes.
    User audience: Financial accounting is intended for external stakeholders, while managerial accounting is intended for internal stakeholders.
    Time frame: Financial accounting focuses on historical data and provides information about a company’s financial performance over a specific period of time (e.g., the past year), while managerial accounting focuses on future-oriented data and provides information to help managers plan and control operations.
    Level of detail: Financial accounting provides a high-level overview of a company’s financial position and performance, while managerial accounting provides a much more detailed analysis of specific business processes and operations.
    Focus: Financial accounting is concerned with the overall financial health of a company, while managerial accounting is focused on providing information for specific decisions related to product costs, pricing, and budgeting.

    What are the qualitative attributes of accounting?
    The qualitative attributes of accounting refer to the characteristics or properties that make accounting information useful and relevant for decision making. The following are considered as the key qualitative attributes of accounting:
    Relevance: Accounting information must be relevant to the decision being made, which means it must have the potential to make a difference in the decision.
    Reliability: Accounting information must be reliable, which means it must be free from material error and bias, and must be verifiable.
    Comparability: Accounting information must be comparable, which means it must be presented in a consistent manner across different periods, entities, or industries.
    Consistency: Accounting information must be consistent, which means it must be presented in the same manner from period to period, so that changes in the financial statements can be properly understood.
    Understandability: Accounting information must be understandable, which means it must be presented in a clear and concise manner, using language that is easily understood by users.
    Materiality: Accounting information must be material, which means it must be significant enough to affect a decision.
    Timeliness: Accounting information must be timely, which means it must be available in a timely manner to be useful for decision making.

    Discuss the fundamental Principles of Accounting
    The fundamental principles of accounting form the basis for financial reporting and provide a framework for preparing and presenting financial statements. The following are the most important principles:
    The historical cost principle: This principle states that assets and liabilities should be recorded at their original cost, adjusted for any subsequent changes in value.
    The revenue recognition principle: This principle states that revenue should be recognized when it is earned, regardless of when it is received.
    The matching principle: This principle states that expenses should be matched with the related revenues in the same accounting period, so that the true financial performance of the entity can be properly understood.
    The full disclosure principle: This principle requires that all material information relevant to financial statements be disclosed in the notes to the financial statements, so that users can make informed decisions.
    The objectivity principle: This principle requires that accounting information be based on objective evidence, and that personal judgments or biases not influence the preparation of financial statements.
    The consistency principle: This principle requires that accounting methods and policies be consistently applied from period to period, so that changes in financial statements can be properly understood.
    The going concern principle: This principle assumes that an entity will continue to operate for the foreseeable future, unless there is evidence to the contrary.
    The materiality principle: This principle states that only material information should be disclosed, as immaterial information can distract from the important information that is necessary for decision making

  65. Avatar Tse Mnedoo Rita says:

    1. The two main categories of accounting are cash and accrual accounting. Cash accounting reports revenues
    and expenses as they are received and paid through cash inflows and outflows while accrual accounting
    reports them as they are earned and incurred through sales and purchases on credit and by using accounts
    receivable & accounts payable. Generally accepted accounting principles (GAAP) requires accrual accounting.
    The main difference between accrual and cash accounting lies in the timing of when revenue and expenses are
    recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual
    method focuses on anticipated revenue and expenses.

    2. The qualitative attributes of accounting are comparability, verifiability, timeliness and understandability.
    Accounting is comparable in the sense that users of financial statements must be able to compare aspects of an
    entity at one time and over time, and between entities at one time and over time. It is verifiable meaning that it
    provides assurance that the information faithfully represents what it purports to be representing. Timeliness
    means that the accounting information is available to all stakeholders in time for decision-making purposes. It is
    understandable meaning that that preparers of information have classified, characterized and presented the
    information clearly and concisely.

    3. The fundamental principles of accounting include:
    1. Consistency Principle:
    Any working entity should set economic principles to work by it to record all the revenue, cost, and
    exchange. Moreover, these standards should be saved and continue working by it till find something that is
    100% better than the previously used methods. This consistency principle avoids balance problems,
    activities reporting, or bill confusion.

    2. Going Concern Principle:
    It works on the rule of believing in the business and the fact that it has the liabilities to last for years to come.
    As these accounting principle concepts help a corporate divide the permanent, the general, and the ongoing
    cost in a better method without any suffocation in a specific period, this principle also builds explicit
    recognition for all the considered systems.

    3. Accrual Principle:
    A basic accounting principle that highlights the importance of making a complete accounting bookkeeping
    statement by the time of the action and deal, not by the period of the cost and revenue entry, this accrual
    principle helps you to know your money flow statics better and attach it to different times, so, here you are
    highlighting the financial static rather than the monetary flow.

    4. Conservatism Principle:
    A two-step accounting principle separates the financial balance into immediate credits that contain costs and
    needs. In contrast, the second step records the revenues, transactions, and assets when they happen and
    become a real profit in your budget. In other words, this principle gives you a more realistic look into your firm
    accounting principle without any assumptions.

    5. Objectivity Principle:
    In this principle, all the entity’s accounting and cost details should always be realistic and separate from any
    personal assumption or the need to create a well-drawn image for your firm materiality ledger. Thus, you
    must build this basic financial accounting principle on statements basis on data, research, and proper
    formation without including any personal opinions.

    6. Matching Principle:
    By setting an archive for your entity’s revenue and cash income accounts, you should create a record for the
    related expenses by this principle. Moreover, connect this financial statement by number and time to know
    each project or transaction’s small or big value on your basic known accounting principles.

    7. Full Disclosure Principle:
    It is a vast accounting concept within the basic accounting principles, particularly if you have stockholders, as
    announcing complete information and details will help you reach them better with verifiable transparency and
    maintaining integrity. Thus, the entire disclosure principle will build a fantastic public image for your entity and
    public relationships.

  66. Avatar Akachukwu Jezreel Great 2021/241305 says:

    1. The two categories of accounting are Financial & managerial accounting

    A) Financial Accounting: Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business. This involves the preparation of accurate financial statements available for public use
    The focus of financial accounting is to measure the performance of a business as accurately as possible

    B) Managerial Accounting: Managerial accounting accounting analyzes the information gathered from financial accounting. It is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals.

    1b. The major differences between them are;

    1. Managerial accounting differs from financial accounting because the intended purpose of managerial accounting is to assist users internal to the company in making well-informed business decisions.

    2. Managerial accounting involves the presentation of financial information for internal purposes to be used by management in making key business decisions. While The focus of financial accounting is to measure the performance of a business as accurately as possible

    3. Techniques used by managerial accountants are not dictated by accounting standards, unlike financial accounting in which they are regarded as necessary for easy understanding and interpretation by the users.

    2) The qualitative attributes of accounting are;
    a) Reliability
    b) Relevance
    c) Understandability
    d) Comparability
    e) Faith-full representation

    3) The Fundamental principles of accounting are;
    i) Accrual principle: The accrual principle is an accounting concept that requires transactions to be recorded in the time period in which they occur, regardless of when the actual cash flows for the transaction are received.

    ii) Conservative principle: The Conservatism Principle states that gains should be recorded only if their occurrence is certain, but all potential losses, even those with a remote chance of incurrence, are to be recognized.

    iii) Going concern Principle: The going concern principle is the assumption that a business will continue to exist in the near future, in other words, that it will not liquidate or be forced out of business.

    iv) Cost principle: The cost principle is an accounting principle that records assets at their respective cash amounts at the time the asset was purchased or acquired. The amount of the asset that is recorded may not be increased for improvements in market value or inflation, nor can it be updated to reflect any depreciation.

    v) Matching principle: The matching principle is an accounting concept that dictates that companies report expenses at the same time as the revenues they are related to. Revenues and expenses are matched on the income statement for a period of time (e.g., a year, quarter, or month)

    vi) Materiality principle: Materiality is an accounting principle which states that all items that are reasonably likely to impact investors’ decision-making must be recorded or reported in detail in a business’s financial statements using GAAP standards

    vii) Revenue recognition principle: The revenue recognition principle states that you should only record revenue when it has been earned, not when the related cash is collected. For example, a snow plowing service completes the plowing of a company’s parking lot for its standard fee of $100. It can recognize the revenue immediately upon completion of the plowing, even if it does not expect payment from the customer for several weeks. This concept is incorporated into the accrual basis of accounting.

  67. Avatar Onah Chisom Evelyn says:

    Onah Chisom Evelyn
    Reg number: 10958609Jc
    onahchisomevelyn@gmail.com

    No.1. The two categories of Account are
    (a) Managerial accounting
    (b) Financial accounting
    (a) Managerial accounting is used by managers and directors to make decisions regarding the daily operations of a company. A distinguishing feature of a managerial accounting is that it is not based on past performance but on current and future trends. For example, determining how much your business should charge for a new product and analysing how much revenue a future products line is capable of generating are both examples of business problems within the field of a managerial accounting.
    (b) Financial accounting is used to present the financial health of a company to external stakeholders. this allows the board of directors, stakeholders, potential investors, creditors and financial institutions to see how the company has performed during a specific period of time in the past. These these reports are filed on an annual basis. if a business is considered a publicly traded company on the stock market, the reports must be made part of the public record. In financial accounting course, help students learn how to prepare, read and analyse statements.

    THE DIFFERENCES BETWEEN MANAGERIAL AND FINANCIAL ACCOUNTING

    There are two primary differences between financial and managerial accounting. The first difference is that managerial accounting is presented to a company’s internal community, while financial accounting is prepared for an external audience. The second difference is that financial accounting is exact and the must adhere to Generally Accepted Accounting Principles (GAAP), While managerial accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.

    NO.2 The qualitative attributes of accounting are:

    (a) Verifiability: to create accurate financial predictions, a company ensures that it’s financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results.

    (b) Comparability: It’s an essential part of accounting accounting information because it helps professional differentiate and analyse financial reports. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance.

    (c) Timeliness: Timelines involves how rapidly accounting information is available to professionals. There is often a period of a time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is.aif information teaches a company quickly, ut allows an accounting team to make timely decisions.

    (d) Relevance , in regards to accounting information it a quality that can help individuals make decisions related to a business finances. For accounting information to have relevance, its first requires confirmatory value, which provides information about past financial events and then predictive value which can provide predictions about future financial events a business should have both confirmatory and predictive value to develop accurate accounting information

    NO.3. The fundamental Principles of Accounting are

    (a) Revenue Recognition Principle

    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company in order for your revenues to be recognized in the period that the services were provided if you are on accrual basis, if you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    (b) Cost Principle

    Recording your assets when you purchase a product or service helps keep your business expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    (c) Match Principle
    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services then the cost of those things should also be recogniszed

    (d) Full Disclosure principle
    The information on financial statements should be complete so that nothing is misleading, with this intention, important partners or clients will be aware of relevant information concerning your company .

    (e) Objectivity Principle
    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipt and invoices. Having an objective viewpoint, in this case, helps rely on financial results for example your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with his clearance might skew your work.

  68. Avatar Caleb Princess Adaeze says:

    Caleb Princess Adaeze
    2021/241313
    calebadaeze22@gmail.com
    Answer 1
    The two major categories of accounting are cash accounting and accrual accounting.
    Cash accounting: is an accounting method where payment receipts are recorded during the period in which they are received,and expenses are recorded in the period in which they are actually paid.In other words, revenues and expenses are recorded when cash is received and paid, respectively.
    Accrual accounting: is an accounting method that recognizes revenue in the period in which it’s earned and realizable, but not necessarily when the cash is actually received. Similarly, expenses are recognized in the period in which the related revenue is recognized rather than when the related cash is paid.The accrual method of accounting is based on the matching principle, which states that all revenue and expenses must be reported in the same period and “matched” to determine profits and losses for the period. It’s often compared against cash accounting.

    The difference between cash and accrual accounting lies in the timing of when sales and purchases are recorded in your accounts. Cash accounting recognizes revenue and expenses only when money changes hands, but accrual accounting recognizes revenue when it’s earned, and expenses when they’re billed (but not paid).

    Answer 2
    1.Faithful representation
    The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.
    2.Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.
    3.Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.
    4.Understandability
    The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. The financial reports are prepared with the assumption that its users have a ‘reasonable knowledge’ of the business and its economic activities
    5.Timeliness
    The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.

    Answer 3
    1.Revenue recognition is a generally accepted accounting principle (GAAP) that identifies the specific conditions in which revenue is recognized and determines how to account for it. Typically, revenue is recognized when a critical event has occurred, when a product or service has been delivered to a customer, and the dollar amount is easily measurable to the company.
    2.The matching principle is an accounting concept that dictates that companies report expenses at the same time as the revenues they are related to. Revenues and expenses are matched on the income statement for a period of time (e.g., a year, quarter, or month).For example, if a business pays a 10% commission to sales representatives at the end of each month. If the company has $50,000 in sales in the month of December, the company will pay the commission of $5,000 next January.
    3.The consistency principle states that business should maintain the same accounting methods or principles throughout the accounting periods, so that users of the financial statements or information are able to make meaningful conclusions from the data.
    Consistency principle is useful for measuring trends in the business which is spread across many accounting periods. If the business keeps on changing accounting methods, it will create confusion and the financial statements will not be comparable across accounting periods.
    4.The principle of materiality is essential in preparing financial statements, as it helps companies determine what information to include and what to exclude to prepare the entity’s financial reports. Materiality is one of the four constraints of GAAP (Generally Accepted Accounting Principle). Companies use the materiality principle when accounting and measuring their transaction and expense in a year.

  69. Avatar Agbafo Kamsicho Chidinma. 2021/241951. 100 level, Economics department says:

    Name: Agbafo Kamsicho
    Reg No.: 2021/241951
    Department: Economics
    Level: 100 level
    Course: ECO 121
    Date: 12th of February 2023

    Question 1:
    Financial accounting: This is to track, record and recap all daily transactions into monthly quarterly, and yearly financial statements. From this financial statements, the owners and financial managers can perform multiple forms of analysis. Financial accounting provides a general look at business performance over a period of time in the form of financial statements e.g Balance Sheets, Income Statements and Statement of Cash Flows.

    Managerial accounting: This is the process of organising financial data and reporting financial status to managers. This in essence helps business managers to make optimal operating decisions and grasp the issues as soon as possible if there is any. Managerial accounting unlike financial accounting information is shared exclusively with others in an organisation due to sensitive nature of the information.

    Question 2:
    COMPARABILITY: This refers to a company’s ability to compare its financial statements to its competitor’s own. This can offer insight. It is an essential part of accounting information because it helps professionals differentiate and analyse financial reports that help make decisions e.g Balance Sheets, Cash Flow Statements or Income Reports.
    RELEVANCE: In regards to accounting information, this is a characteristic that can help individuals make decisions related to a business’s finances. It requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events.
    UNDERSTANDABILITY: This is the measure of how easily an individual can comprehend a company’s financial report or accounting information.
    RELIABILITY: This is the first attribute of qualitative accounting. It means that users should be able to depend on the information given. It must be error free and bias free. It should also faithfully represent what it is meant to represent.
    NEUTRALITY: It does not give biased information when evaluating its finances. Whether positive or negative, in order to give an accurate report.

    Question 3:
    COST PRINCIPLES: Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It is crucial that the price of anything spent be properly recorded. Depreciate should also be properly recorded.
    MATCHING PRINCIPLE: Expenses should be matched to the revenues recognised in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time when revenue was recognised on sold products or services, then the cost of those things should also be recognised.
    REVENUE RECOGNITION PRINCIPLE: This states that revenue must be reported on the income statement in the period it is earned.
    FULL DISCLOSURE PRINCIPLE: All relative information about the bus and it’s importance to a lender or investor must be disclosed in the content of the company’s financial statements.
    TIME PERIOD PRINCIPLE: The business activities may be reported in short, distinct time intervals which may be weeks, months, quarters, a calendar year, or a fiscal year. It has to be identified in the headings of the financial statements such as the Income Statements.

  70. Avatar Adebayo Excel says:

    Name : Adebayo Excel
    Reg No: 2021/246242

    PRINCIPLE OF ACCOUNTING
    1. Accounting is majorly categorized into 2 namely;
    A. Cash accounting: cash accounting enables you to focus only on corporate transactions involving cash. Other economic events — those with no monetary input — don’t matter because they don’t make it into financial statements.It is used largely by small businesses that need to keep track of their cash flow at all times. It tends to be easier as there generally is less to track.

    B. Acrual accounting; “Accruing” which means accumulating an item and recording it as legally binding even though no cash payment takes place, it is more popular among larger businesses but is typically more complicated and, at times, more labor-intensive. accounting type incorporates the cash accounting method, but goes beyond it to take into account all transactions making up a corporation’s operating activities

    Differences between Cash and Acrual accounting
    a. Cash accounting is used by small business, Acrual accounting is used by larger business
    b. Cash accounting is easier to track cash flow, Actual accounting can be more complicated to track cash flow
    c. Cash accounting records exactly when the cash enters or leaves your bank account, Acrual accounting records expenses and revenue when they are incure or earned.

    2. What are the qualitative attributes of accounting ?
    a. Understandability: The ability to comprehend .
    b. Relevance : implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions
    c. Comparability: users of financial statements must be able to compare aspects of an entity at one time and overtime.
    d. Reliability: Information should be free from error and bias and faithfully represents what it is meant to represent.

    3. The fundamental principles of accounting are
    A. Accrual principles :Transactions are recorded in the accounting periods when they actually occur, rather than in the periods when there are cash flows associated with them.
    B. Conservatism principle: Expenses and liabilities as soon as possible, it encourages the recordation of losses earlier, rather than later
    C. Consistency principle: This is the process of maintaining method of accounting adopted.
    D. Going-concern: means that you believe that a company is going to keep on keeping on far into the future.
    E. Separate entity principle: states that no matter what you do as a business owner, you must keep your personal dealings completely separate from your company dealings.
    F. Revenue recognition principle: Revenue is realized when it is earned, regardless of when it is received.

  71. (A) cost management and financial accounting

    Financial accounting is primarily concerned with the process of compiling information for financial reports for external reporting.

    Cost management accounting is for finance professionals and business managers or owners whose role it is to maintain records to identify where to cut costs for increased profitability.

    Purpose: Ascertain business costs for day-to-day planning, cost control, and internal decision making while
    Financial accounting is for accountants whose role it is to record all transactions and accurately report the entire financial picture and performance of a business.

    Purpose: Secure overall business financial information and report on performance and position.

    Cost management professionals book actual transactions and compare them to estimates. They then base reports on the estimation of cost and on the recording of actual transactions.

    Purpose: Cost of sale of product(s), addition of a profit margin and determination of selling price of the product. Do

    Financial accounting professionals evaluate actual transactions only and do not use estimation in recording financial transactions.

    Purpose: Journal entries, ledger accounts, trial balance, cash flow and financial statements.

    (B) 1 Relevance
    2. Reliability
    3. Understandability
    4. Comparability
    5. Consistency

    (C) Revenue Recognition Principle

    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    2. Cost Principle

    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    3. Matching Principle

    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    4. Full Disclosure Principle

    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    5. Objectivity Principle

    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results

  72. Avatar Nnoruka Benedicta Chinecherem says:

    Name: Nnoruka benedicta chinecherem
    Reg no: 2021/241348
    The two categories of accounting are :

    Cash Basis of Accounting

    The basis of accounting in which revenues and expenditures are recognized when cash is received or disbursed.
    Accrual Basis of Accounting

    This is the basis of accounting in which transactions are recognized in the fiscal year they occur, regardless of when cash is received or disbursed. Revenue is recognized in the fiscal year earned, and expenses are recognized when incurred. This is also referred to as the full accrual basis of accounting.

    Proprietary and fiduciary type funds use the accrual basis of accounting to recognize and report financial activities.

    Major differences between cash and accural accounting.
    The main difference between accrual and cash basis accounting is the timing of when revenue and expenses are recorded and recognized. Cash basis method is more immediate in recognizing revenue and expenses, while the accrual basis method of accounting focuses on anticipated revenue and expenses.

    2.
    Qualitative attributes of accounting are:
    Fundamental qualitative characteristics:

    Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.
    Faithful representation
    The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.
    3.
    Fundamental principles of accounting

    Following are the basic fundamental principles of Accounting:

    Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  73. Avatar Okonkwo bright chukwuebuka says:

    NAME: Okonkwo bright chukwuebuka
    REG NUMBER: 2021/243689
    EMAIL: bokonkwo2004@gmail.com
    BLOG ADDRESS: ebukabright.blogspot.com

  74. Avatar Onyeocha Blessing Chinyere says:

    Name: Onyeocha Blessing Chinyere. Matric no:2021/246563. Department: Economic. Email: OnyeochaBlessing2@gmail.com. Course code: Eco121 principle of accounting. (1a) Accounting can be classified into two major categories. (i) Management accounting or managerial accounting. (b) Financial accounting. (1b) Deeply discuss what the categories are? (I) Financial accounting is a process of recording, summarizing, and reporting various transactions that occurs over a period of time during the course of business. Management accounting is a process that allows an Enterprise to achieve maximum efficiency by reviewing accounting information, deciding on the best next, management accounting is the practice of using according information for revenues it is for small business like profit and loss account, balance sheet, cash flow statement and a short report. (1c) What are the major differences between them? (i) Managerial accounting focuses on organization’s internal financial processes while financial accounting focuses on organization exterior.financial processes. (ii). Managerial accountants focus on Short-term growth strategies relating to Economic while financial accountant focus on long-term financial strategies relating to organizational growth. (III) Financial accountant must prepare reports for share holder and potential investors while managerial accountant the prepare their reports for internal audiences. (iv) Managerial accountant typically command higher saleries than financial accountants (2). What are qualitative attributes of accounting. (I). It must be understandable.
    (ii). It must be financial reliability.
    (III). It will be relevance.
    (iv) It must be verifiable (v) It must be recorded on a book or on a computer system. (3). Discuss the fundamental principel of accounting. (I). Cost principle mean items need to be recorded as the actual price paid.the cost principle advocate is a case where companies should everything on the financial statement at the cost price.usually assets like land and buildings,gold. (ii). Principle of conservatism this is an account where there is a double about the amount of expected in flows and out flow, the organization must state the lowest possible revenue and the highest possible cost. (III). Monetary unit it take record in terms of a single monetary unit and also do not account for goods like the barter system this is a standard unit of value of a currency, of which the value of coins or notes are multiple. (iv) Going concern this principal implies that the firm will continue to do it’s business as usual till the end of next according period and there is no information to the contrary.

  75. Avatar Omeje Sharon Amarachi says:

    1 Cash Accounting
    Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.

    In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size.

    If a business generates more than $25 million in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to Internal Revenue Service rules.
    Accrual Accounting
    Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.
    Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made.
    the Main Difference Between Cash and Accrual Accounting.
    The main difference between accrual and cash basis accounting is the timing of when revenue and expenses are recorded and recognized. Cash basis method is more immediate in recognizing revenue and expenses, while the accrual basis method of accounting focuses on anticipated revenue and expenses.

    Here are some examples that apply these concepts:

    Revenue Recognition

    A company sells $20,000 of product to a customer in August. The customer pays that invoice in September. With the cash basis method, the company recognizes the sale in September, when cash is received. Whereas with the accrual basis accounting, the company recognizes the sale in August, when it is issued the invoice.

    Expense Recognition

    A company buys $700 of office supplies in March, which it pays for in April. With the cash basis method, the company recognizes the purchase in April, when it pays the bill. Whereas with the accrual basis accounting, the company recognizes the purchase in March, when it received the supplier invoice.
    2.Qualitative characteristics of accounting information assist management, investors and accountants in making important decisions and predicting financial outcomes. Learning the different characteristics can help you understand how to produce accurate, reliable financial documents that can improve your company’s financial well-being. In this article, we list different types of qualitative characteristics of accounting information, provide steps on how to use these characteristics and share an example of these characteristics so you can see how one would use them in the decision-making process.
    Get the latest trending stories, job search tips, career advice and more!
    What are qualitative characteristics of accounting information?
    Qualitative characteristics of accounting information are traits that allow financial professionals to more easily understand and make decisions on accounting reports.

    Relevance
    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.

    Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

    Representational faithfulness
    Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.

    There are three factors that measure a company’s representational faithfulness, including:

    Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
    Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
    Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
    Verifiability
    To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.

    Understandability
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.

    Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

    Comparability
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.

    Comparability can also refer to a company’s ability to compare its financial statements to its competitors. This can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.
    Timeliness
    Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions
    3.Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  76. Avatar Basil chidimma Esther says:

    The two major categories of accounting are: Financial accounting and managerial accounting.
    financial accounting: this involves the preparation of an accurate financial statements to enable both share holders and stake holders to make use of the information, it is mostly recorded in monetary terms. Accounting principles and standard, such as GAAP( Generally Accepted Accounting Principles), IFRS(International Financial Reporting Standards) are standard that are widely adopted in financial accounting.
    Managerial accounting: this analyes the information gathered from financial accounting. The reports serve to assist the management team to make tactical decision. it allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required step to all internal business managers. an example of managerial accounting is Cost accounting. it focuses on a detailed break-up of costs for effective cost control. it is very vital in decision making
    2.Qualitative attributes simplifies and expands on the financial figures to ensure easy understanding and comparability of results.
    Reliability: this implies that the information must be factual and verifiable. The documents that aids verifiability are source documents such as cash memos purchase invoice, sales invoices correspondence, agreement, property deeds and other similar documents.
    Faithful Representation: Accounting aims at preparing those financial statements that depict the true and fair view of profitablity, liquidity and solvency position of an enterprise.
    Comparability: comparability reveals the strong and weak points of the business entity. comparison is possible when the different firms in the same industry adopt the same accounting principles from year to year. if diminishing balance method of charging depreciation is selected, it should not be changed from year to year.
    Relevance: accounting information depicted by financial statements must be relevant to the objectives of enterprise. (IASB) says that information is relevant when it influence the economic decisions of users by helping them evaluate past, present or future events or confirming or correcting their past evaluations
    Understandability: Accounting information should be presented in such a simple and logic manner that they are understood easily by their users such as investors, lenders, employee.
    3 . fundamental principles in accounting
    principle of conservatism: accountant are said to be very conservative by nature. They want to hope for the best and the prepared for the worst. This is displayed in the rules that they had created for their profession one of the central tenets of accounting is the principle of conservatism accounting to this principle, when there is doubt about the amount of expected inflows and outflow, the organization must state the lowest possible revenue and the highest possible cost. it help company to prepare for any forthcoming financial crises
    ii)Cost principle: closely related to the principle of conservatism is the cost principle. The cost principle advocate that companies should list everything on the financial settlement at the cost price usually assets like land and building gold etc, appreciate . However, the accountant will not allow this application to be reflected on the financial statements of the company till it is realized. Accountant believe that the market value of anything is just an opinion. Accountants cannot on the basis of opinions because there are many of them.
    iii) Monetary unit: Accounting needs all values to the recorded in terms of a single monetary unit. it cannot account for goods like the barter system. Assigning value to goods and items therefore becomes a problem since it is subjective.
    iv) Going concern: A company is said to have an eternal existence. once it is formed, the only way to end it is by dissolution. it does assume the going concern principle. This principle implies that the firm will continue to do it’s business as usual till the end of the next accounting period and that there is no information to the contrary .

  77. Avatar 2021/246041 says:

    An Assignment on Eco 121 (introduction to principle of Accounting )

    Name: OGBONNA ISAIAH CHEKWUBE.
    Reg. Number: 2021/246041
    Department: Economics.
    Date: 13/02/2023

    Discuss deeply the categories of accounting.
    Accounting is referred to as the process of recording financial transactions pertaining to a business. Accounting is the recording, classifying and summarizing of financial transactions or events in terms of money and reporting the result to management and other users of accounting information. (S Lola 2003). This process of recording financial transactions involves summarizing, analyzing and reporting financial data to oversight agencies, regulators and tax collection entities.
    However there are different categories of accounting, each with its own objectives but basically are grouped into two and understanding of these categories can help in boasting financial health of any business. These categories are financial accounting, managerial accounting, cost accounting, tax accounting and auditing.
    Financial Accounting: this involves capturing and summarizing all business’s financial transactions and creating reports to provide a clear overview of the business transactions. Financial accounting also deals with the financial records that provide valuable information about a company’s fiscal health, such as balance sheets, cash flow statements and income statement. It is always focused on past performance, not the future and thereby drawing some importance in the smooth running of the business such as:
    Providing business executives with a clear snapshot of a company’s performance.
    Aids easy audition by creditors who has loaned business money and tax authorities like internal revenue services (IRS)
    Provides useful financial statements for internal purpose.

    Managerial Accounting. This categories deals with the method used by different businesses to gain greater insight into a company’s operations. It strictly focus on providing accounting information for internal use and things like financial analysis, budgeting and cost analysis. It also analyze past financials and future outcomes thereby providing business owners with the data they need to make savvy business decisions.
    The primary goal of managerial accounting is to improve business outcomes by ramping up profits and minimizing losses using the following techniques, margin analysis, capital budgeting constraint analysis and trend analysis.

    Cost Accounting: cost accounting technically focuses on a company’s cost of doing business. It is specifically considered subcategory of management accounting because of its explicitly importance as thus;
    Helping in determining how to reduce cost and increase profit margins.
    Its uses mostly in internal purposes.
    Uses in manufacturing environments.
    Takes into consideration various expenditures; including fixed cost and variable cost to ensure the cost needed to produce a goods reasonable.
    Cost accounting is further sub-divided into different categories as; activity based cost accounting, lean accounting, standard cost accounting and marginal cost accounting which calculates fluctuations in the cost of productions.
    Tax Accounting: tax accounting ensures that business, non-profit or individual is abiding by all relevant tax laws and regulation that may apply to them.
    A tax accountant primary aim is to ensure the entity is accurately calculating and reporting its tax liabilities. Proper tax preparation can help a company avoid errors on the tax paper works, which can result in getting an audit from the internal revenue services (IRS). A tax accountant can also support future tax planning, finding ways to avoid unnecessary tax burdens.

    Auditing: this is a category of accounting that provide an independent analysis of a businesss financial activity, by objectivity tracking and reporting all activities. Auditing ensures that the company is abiding by relevant regulation and best practices. The primary aim of auditing accounting is to be creating an in-depth audit report detailing the findings after reviewing financial records.
    An audit can be external auditing which involves reviewing a companys formal financial statements and internal auditing which helps in determining how effective a businesss current accounting processing are.

    1b. What are the major differences between them?
    All categories of accounting are basically categories into two; financial accounting and managerial accounting and are differentiated as thus;
    Financial accounting looks at the big picture as a whole while managerial accounting looks at business in segments, commonly known as center.
    Financial accounting reports only those events which can be described in monetary terms while managerial accounting record reports on both financial and non-financial events.
    Financial Accounting uses the monetary records of past financial activities, so it is historically oriented, but managerial accounting is future oriented, as it provides both present and future information in the form of forecasts and budgets.
    Financial Accounting is a discipline that deals with the preparation of financial statement and communication of the information with the user while managerial account is all about the provision of information useful to the management.

    What are the qualitative attributes of accounting?

    The qualitative attributes of accounting are thus;

    Relevance: Relevance in accounting means an account can help individuals make decision related to a businesss finances. For an account to be relevance it requires a confirmatory value which provides information about the past financial event and predict the future financial events.
    Representational Faithfulness: This means financial reliability which properly indicates a companys transactions, resources and overall financial assets through completeness, neutrality and free from error.
    Verifiability: This involves authenticating financial informations and calculations by using several independent sources to develop the same results.
    Understandability: This is the measure of how easily an individual can comprehend a companys financial report or accounting information.
    Comparability: This involves the process of evaluating one financial period with another to understand a companys trends and overall financial performance.
    Timeliness: This involves how rapidly accounting information is available to professionals.

    Discuss the fundamental principles of accounting.

    The fundamental principle of accounting are thus;
    Revenue Recognition Principle: This principle open that there should be a period of time when revenues are recognized through the income statement of the company.
    Cost Principle; This principle entails that recording of assets when purchased a product or services helps keep business’s expenses orderly. It is important to record the acquisition price of anything spend money on and proper record depreciation for those assets.
    Matching Principle: Expenses should be matched to the various revenues recognized in the same accounting period and be recorded in the period the expenses was incurred.
    Full Disclosure Principle: This principle has it that information on financial statements should be complete so that nothing is misleading. With the intention, important partners or client will be aware of relevant information concerning th business.
    Objectivity principle: the accounting data should consistently stay accurate and be free of personal opinions. Having an objective view point helps rely on financial result.

  78. Avatar Okorafor Sophie Ogonnaya...2021/241957 says:

    1. CATEGORIES OF ACCOUNTING AND THEIR DIFFERENCES
    Financial accounting is a branch of accounting that deals with the recording, classifying, summarizing analyzing and reporting transactions resulting from business operations over a period of time. These are summarized in the preparation of financial statements like the balance sheet, income statement, cost flow statement and statement of retained earnings.
    Managerial accounting is a category of accounting that is concerned with the analysis and interpretation of accounting information from revenue to production inputs etc in order to boost organization’s efficiency, help track the organization’s process and help the management in making better decisions relating to the business performances, Examples of Managerial Accounting is product costing and valuation.
    Differences:
    A. Purpose: Financial accounting emphasizes on giving accurate and fair view on the financial status of a business to various parties such as investors, creditors etc while managerial accounting aims at giving both quality and quantity information to managers in order to enable them make important decisions that’ll help in minimizing cost and maximizing profit.
    B. Audience: The primary use and audience of the Financial accounting is potential and existing investors, creditors etc while for that of managerial accounting is the managers and shareholders.
    C. Users: Both external and internal users make use of financial statements while managerial accounting is meant for internal users only. D. Publishing and Auditing: It is requirements for financial account to published and audited by statutory auditors while that is not required of managerial accounting because it meant only for internal users. E. Rules: Generally Accepted Accounting Principles (GAAP) is required to be followed when preparing financial accounting while there are no fixed rules for the preparation of managerial reports. F. Time span: Financial statements are prepared for a period of time, usually one year while management reports are prepared whenever needed.

    2. QUALITATIVE ATTRIBUTES OF ACCOUNTING
    Timeliness
    Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is.
    Comparability
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information.
    Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
    Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
    Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
    Verifiability
    To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events.

    3. PRINCIPLES OF ACCOUNTING
    A. Principle of Accrual: This principle state that expenses should be recorded as they are incurred and not as they are paid i.e in amount they occur not when cash flow is correlated with them.This concept recognizes revenue and expenses when the sale/purchase is completed, regardless of whether it is a cash or credit sale/purchase.
    B. Principle of conservatism: This is a concept in accounting which refers to the idea that expenses and liabilities should be recognised as soon as possible in a situation where there is uncertainty about the possible outcome and in contrast record assets and revenues only when they are assured to be received.In other words, the principle of conservatism states that, if an accountant has two possible outcomes for any accounting issue, then the accountant must choose that outcome which is most conservative or has the least possible chance of profit. C. Principle of cost: the cost theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. this theory says that the quantities reported cannot be modified for market value increases or inflation i.e the assets are recorded as the actual price they were at the time it was purchased or acquired and this amount would not be updated or improved due to inflation, depreciation etc. D. Principle of Consistency: This accounting concept states that an organization is to use the same accounting system practices and standards for publishing its financial statements. Once the business adopts an accounting principle or method, they must continue to follow it consistently in future accounting periods. Only change an accounting principle or method if the new version in some way improves reported financial results.
    E. Matching Principle: The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.It dictates that companies report expenses at the same time as the revenues they are related to. Revenues and expenses are matched on the income statement for a period of time (e.g., a year, quarter, or month).
    F. Going concern principle: This concept is one of the accounting principles that states that a business entity will continue running its operations in the foreseeable future and will not be liquidated or forced to discontinue operations for any reason. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. G. Principle of revenue recognition; This principle is a feature of accrual accounting which requires that revenues are recognized on the income statement in the period when realized and earned not necessarily when cash is received.
    H. Materiality principle: In accounting, this refers to the concept that all the material items should be reported properly in the financial statements. Material items are considered as those items whose inclusion or exclusion results in significant changes in the decision making for the users of business information. It also allows for the provision of ignoring other accounting principles if doing so doesn’t have an impact on the financial statements of the business concerned.

  79. Avatar Asiegbunam Destiny Ebubechukwu says:

    1(i) Managerial accounting is the practice of using accounting information from revenues to production inputs and outputs affecting the supply chain internally, in support of organization-wide efficiency and for tracking the organization’s progress toward attaining its stated goals.
    (ii) Financial accounting is the process of recording, summarizing, and reporting a company’s business transactions through financial statements. These statements are: the income statement, the balance sheet, the cash flow statement, and the statement of retained earnings. Financial Accounting is the process of recording, summarizing and reporting transactions and revenue-expense generations in a time period. For example, investors or sponsors need to verify an account statement before showing interest in associating with the business.
    The major differences between managerial accounting and financial Accounting:
    Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.
    Managerial accountants focus on short-term growth strategies relating to economic maintenance. For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product. While financial accountants focus on long-term financial strategies relating to organizational growth.
    2, attributes of accounting are comparability, verifiability, timeliness and understandability
    3, Scarcity principle: having more of one good thing usually means having less of another
    ii, Cost benefit principle: Take no action unless its marginal benefit is at least as great as its marginal cost
    III, Incentive principle: Cost benefit comparison are relevant not only for identifing the decisions that rational people should make, but also for predicting the actual decisions they do make.
    IV, Principle of cost advantage: everyone does best when each concentrates on the activity for which he or she is relatively most productive.
    V, principle of increasing opportunity cost: Use the resources with the lowest opportunity cost before turning to those with higher opportunity costs.
    Vi, efficiency principle: efficiency is an important social goal because when the economic pie grows larger, everyone can have a larger slice
    Vii, equilibrium principle: a market in equilibrium leaves no unexploited opportunities for individuals but may not exploit all gains achievable through collective action.

  80. Avatar FELIX FAVOUR CHIDUMEBI says:

    Felix Favour Chidumebi
    Matric no: 2021/241943
    Accounting can be classified into two, namely, Financial accounting and managerial accounting.
    Financial accounting involves the preparation of accurate financial statements. It measures the performance of a business as accurately as possible .

    Managerial accounting analyses the information gathered from financial accounting. it prepares report about business operation.
    The major difference between them is, financial accounting deals with money and financial transactions while managerial accounting deals with planning and strategizing.

    THE QUALITATIVE ATTRIBUTE OF ACCOUNTING
    The fundamental nature of financial accounting is to give true and fair view of the state of affairs and profit and loss over a stipulated period of time. It is reliable, authentic, accurate, understandable, relevant amongst others.

    THE FUNDAMENTAL PRINCIPLES OF ACCOUNTING

    According to investopedia, they are the accrual principle, conservatism principle , consistency principle, cost principle and objectivity principle

    Consistency principle deals with the consistent feature of an accounting system.

    Cost principle deals with cost as a factor in which an accountant determine the minimum cost in order to maximize profit.

    Accrual principle deals with increase in either cost or profit.

  81. 1. single and double entry

    The single entry system in accounting is an accounting method in which each accounting transaction is recorded with only one entry in the accounting recordsThe accounting system of double entry accounting, often known as double entry bookkeeping, mandates that every company transaction or event be documented in at least two accounts

    The bookkeeping system in which only one aspect of a transaction is recorded, i.e. either debit or credit, is known as Single Entry System. Double Entry System, is a system of keeping records, whereby both the aspects of a transaction are captured.

    Single Entry Transaction is simple and easy whereas Double Entry System is complex as well as it requires expertise in accounting for maintaining records.In single entry system, incomplete records are maintained while in double entry system complete recording of transactions is there.In single entry system comparison between two accounting periods is very difficult. Conversely, we can easily compare two accounting periods in the double entry system.Single Entry System maintains personal and cash accounts. On the other hand, personal, real and nominal accounts are kept in Double Entry System.The Single Entry system is best suited for small enterprises, but big organisations prefer Double Entry System.Frauds and embezzlement are easy to identify in double entry system which cannot be located in single entry system.

    2. Qualitative attributes of accounting:
    Comparability
    Comparability is the degree to which accounting standards and policies are consistently applied from one period to another. Financial statements that are comparable, with consistent accounting standards and policies applied throughout each accounting period, enable users to draw insightful conclusions about the trends and performance of the company over time
    Representational faithfulness, is the extent to which information accurately reflects a company’s resources, obligatory claims, transactions, etc
    Relevance refers to how helpful the information is for financial decision-making processes.
    Reliability is described as one of the two primary qualities (relevance and reliability) that make accounting information useful for decision-making.
    Understandability is the quality of information that enables users to perceive its significance.
    3
    i) Business Entity Concept:Business entity states that the business is separate from the persons who provide the required capital to it. This concept can be expressed through an accounting equation, viz., Assets = Liabilities + Capital.
    i
    Money Measurement Concept: In accounting all events and transactions are recode in terms of money.
    Going Concern Concept: It says, the transactions are recorded assuming that the business will exist for a longer period of time.
    Accrual Concept: According to this concept the revenue is recognized on its realization and not on its actual receipt. Similarly the costs are recognized when they are incurred and not when payment is made.
    Matching Concept: The essence of the matching concept lies in the view that all costs which are associated to a particular period should be compared with the revenues associated to the same period to obtain the net income of the business.

  82. Avatar Omeje Chisom Peace says:

    Name: Omeje Chisom Peace
    Reg number: 2021/241965
    Email: mhizchisky@gmail.com

    1) Cash accounting reports revenues and expenses as they are received and paid through cash inflows and outflows; accrual accounting reports them as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable. Generally accepted accounting principles (GAAP) requires accrual accounting.
    Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.

    In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size.

    If a business generates more than $25 million in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to Internal Revenue Service rules.

    Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.

    Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made.
    The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

    2) Timelines
    Understandability
    Verifiability
    Relevance
    Faithful representation
    Comparability.

    3). Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

  83. Avatar Obiora Chukwuemeka Precious. 2021/243059 says:

    Obiora Chukwuemeka Precious. 2021/243059

    1.The two main categories of accounting are cash accounting and accrual accounting.
    Cash accounting records revenues and expenses when they are received and paid
    While
    Accrual accounting records revenues and expenses when they occur

    2. Reliability-The first qualitative characteristic of accounting information is reliability. Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.
    Relevance-The second qualitative characteristic of accounting information is relevance. It is believed that relevant, information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.
    Understandability- Understandability is the third most important qualitative characteristic of accounting information. Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them.
    Comparability-The last qualitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity.

    3. Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary

    Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism.

    Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Objectivity Principle:
    In this principle, all the entity’s accounting and cost details should always be realistic and separate from any personal assumption or the need to create a well-drawn image for your firm materiality ledger. Thus, you must build this basic financial accounting principle on statements basis on data, research, and proper formation without including any personal opinions.

    Full Disclosure Principle:
    It is a vast accounting concept within the basic accounting principles, particularly if you have stockholders, as announcing complete information and details will help you reach them better with verifiable transparency and maintaining integrity. Thus, the entire disclosure principle will build a fantastic public image for your entity and public relationships.

    Matching Principle:
    By setting an archive for your entity’s revenue and cash income accounts, you should create a record for the related expenses by this principle. Moreover, connect this financial statement by number and time to know each project or transaction’s small or big value on your basic known accounting principles.

  84. Avatar Ozioko Edith Ogechi says:

    THE TWO CATEGORIES OF ACCOUNTING
    (a) Cash accounting : This is an accounting category that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.

    In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for business up to a certain size.

    If a business generates more than $ 25 million in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to internal Revenue Service rules.

    Under cash accounting rules, the company would incur many expenses but would not recognize revenue until cash was received from the customer. So, the accounting book of the company would look weak until the revenue actually came in. If this company was looking for debit financing from a book, for example, the cash accounting method makes it look like a poor bet because it is incurring expenses but no revenue.

    (b) Accrual accounting : Accrual accounting is based on the matching principle, which is intended to match timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.

    Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded even though no payment has been made.

    Example : The value of accrual accounting becomes more evident for large, complex business. A construction company, for example, may undertake a long-term project and may not receive complete cash payment until the project is complete.

    DIFFERENCES
    The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

    The accrual accounting provides a more accurate view of company’s health by including accounts payable and accounts receivable while cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.

    The accrual method is the more commonly used method by large companies, especially by publicly -traded companies, as it smooths out earnings over time. The cash basis method typically is used by sole proprietor and smaller businesses.

    2. QUALITATIVE ATTRIBUTES OF ACCOUNTING
    (a) Relevance
    (b) Representational faithfulness
    (c) Understandability
    (d) Comparability
    (e) Timelines

    3. FUNDAMENTAL PRINCIPLES OF ACCOUNTING
    (a) Revenue Recognition Principle : When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenue are recognized through the income statement of your company. In order for revenue to be recognized in the period that the services were provided if you are on the accrual basis. If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
    (b) Cost principle : Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    (c) Matching Principle : Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    (d) Full Disclosure Principle : The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    (e) Objective principle : The accounting date should consistently stay accurate and be free of personal opinion. Make sure the data is also supported by evidence that can include vouchers, receipts and invoices. Having an objective viewpoint, in this case, helps rely on financial results.

  85. Avatar Nwankwo chinecherem benedictha says:

    Name: Nwankwo chinecherem benedictha.
    Reg no:2021/243695.
    Email: nwankwobeneditha02@gmail.com.
    Answers.
    1: financial accounting is a specific branch of accounting involving a process of recording, summarising and reporting the myriad of transactions resulting from business operations over a period of time.These transaction are summarised in the preparation of financial statement and cash flow statement, they record the company’s operating performance over a specific period.
    Managerial accounting: is the practice of identifying, accounting, analysing, interpreting and communicating financial information to managers for the pursuit of an organisation goals.It assist users internal to the company in making well informed business decisions.
    1b: Difference between managerial and financial accounting.
    a: Managerial accounting provides information primarily intended for managers and other inside the company.While financial accounting provides information primarily intended for people outside the organisation.
    b:. Managerial accounting is the internal processing used to account for business transaction.While financial accounting is the collection of accounting data to create financial statements.
    C:. Managerial accounting no set of standard. While financial accounting needs to follow various accounting standards.

    2: comparability
    Verifiability
    Timeliness
    Understandability.

    3: objectivity principle: The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

    Full disclosure principle: The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    Matching principles: Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    Cost principle: Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    Revenue Recognition principle: When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

  86. Avatar Okafor Kenechi Bella says:

    1) The two major types of accounting are Cash accounting and Accrual accounting
    Cash accounting records revenues and expenses when they are received and paid.Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received. In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is of course the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size. Let us say that you purchased furniture worth $20,000 to the furniture store in july, according to the cash accounting method, you will be recording the transaction (of cash paid)in july because that is exactly when the cash was paid to the furniture store even though you received furniture a month prior.
    Accrual accounting records revenues and expenses when they occur. Accrual accounting is based on the matching principle which is intended to match the timing of revenue and expense recognition. By matching revenue with expenses, the accrual method hives a more accurate picture of a company’s true financial condition. Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made. A construction company may undertake a long term project and may not receive cash payment untill the project is complete under accrual accounting, the construction company would recognize a percentage of revenue and expenses corresponding to the portion of the project that was complete.This is known as the percentage of completion method.

    The differences between cash and accrual accounting are as follows;
    1) Cash accounting requires the transaction to occur before it is recorded as an expense or income while accrual accounting involves recording a transaction when the activity has taken place even if it means the expense or income will be incurred in the future.
    2) Cash accounting is used by micro-businesses and small businesses and those using the single-entry accounting method while accrual accounting can be used by all types of businesses including large enterprises, corporations and those using the double entry accounting method.
    3) Cash accounting cannot be used by businesses that have inventory because this type of accounting cannot handle it while accrual accounting can be used by every business with some or large amount of inventory.
    4) Cash accounting is easy to learn and minimal training is required to record transactions using this method while accrual accounting is comparatively difficult and requires some form of training in the beginning once you gey a hang of it, it becomes easier
    5) Cash accounting shows the present situation of how much cash is available at hand. This gives a clearer picture of how much cash is present while accrual accounting shows when the transaction occured rather than when cash changed hands.it shows money received before it is received.
    6) Cash accounting reduces tax liability and makes it easier to file returns while accrual accounting increases tax liability because you are paying for income that is yet to be received.
    7) Cash accounting does not show liabilities which means you mighf think you have more than you have.This can lead to wrong decision making while accrual accounting provides a bettter outlook on performance and it paves the way for smarter decisions to be made.

    2) The qualitative characteristics of accounting information are as follows;

    Reliability: The first qualitative characteristic of accounting information is reliability. Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.

    Relevance: The second qualitative characteristic of accounting information is relevance. It is believed that a relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.

    Understandability: Understandability is the third most important qualitative characteristic of accounting information. Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.

    Comparability: The last qualitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

    3)The fundamental principles of accounting are;

    Monetary unit principle
    Going concern principle
    Conservatism principle
    Cost principle

    Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

    Okafor kenechi bella
    2021/243713
    Combined social science(Economics\political science)

  87. Avatar Okeke Priscilla Chinecherem . Matric no: 2021/244771. Department: Economics says:

    1) Accounting can be classified into two major categories. Deeply discuss what the categories are: Ans: 1) Financial accounting
    2) Managerial accounting
    1) Financial accounting is a process of recording, summarising and reporting various transactions that occur over a period of time during the course of business through financial statements. These statements are 1) the income statement. 2) the balance sheet. 3) the cash flow and 4) the statement of retained earnings.
    2) Managerial Accounting is the practice of identifying, measuring, analysing, interpreting, and communicating financial information to managers for the pursuit of an organisation’s goals.
    1b) what are the major differences between them?
    Ans: Managerial Accounting differs from financial accounting because the intended purpose of of managerial accounting is to assist user’s internal to the company in making well informed business decisions.
    *Techniques used by managerial accountants are not dictated by accounting standard unlike financial accounting that uses GAAP.
    * Managerial Accounting focuses on an organisation’s internal financial processes while financial accounting focuses on organisation’s external financial processes.
    2. What are the qualitative attributes of accounting?
    Ans: * Relevance
    *Faithful representation
    *Comparability
    *Verifiability
    *Timeliness
    * Understandability
    3. Discuss the fundamental principles of accounting.
    Ans: * Consistency Principles- states that business should maintain the same accounting methods or principles throughout the accounting periods.
    *Accrual Principles- recognised income when it is earned & expenses when they are incurred.
    *Conservatism Principles- accountants are said to be very conservative by nature. They want to hope for the best and prepared for the worst.
    *Matching Principles- recording revenues and expenses.
    *Objectivity Principles- the concept that the financial statements of an organisation be based on solid evidence.
    *Full Disclosure Principle- suggests that a business should report all the necessary information in their financial statements.

  88. Avatar Ogbu chukwuebuka Emmanuel says:

    Eco121 Assignment
    1: Accounting can be classified into Namely; Deeply discuss What the categories are and their difference’s
    i Cash Method
    Cash method of accounting is a method of accounting used by many individuals and some small businesses to record their liabilities and income. When using the cash method, transactions are recorded only when the payments have been made or received.
    ii Accrual Method
    When transactions are recorded in the books of accounts as they occur even if the payment for that particular product or service has not been received or made, it is known as accrual based accounting. This method is more appropriate in assessing the health of the organisation in financial terms.
    B. Major Differences between Cash Method and Accrual Method.
    Cash accounting records revenues and expenses when they are received and paid. Accrual accounting records revenues and expenses when they occur. Generally accepted accounting principles (GAAP) requires accrual accounting.
    2: What are the qualitative attributes of accounting
    enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.
    3 Discuss The fundamental principles of accounting

    Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  89. Avatar Ike Blessing Onyinye says:

    Name :Ike Blessing Onyinye
    Email: ikeblessingonyinye@gmail.com
    Reg no: 2021/241946

    Accounting can be classified into two major categories, Deeply discuss what the categories are?

    1: Personal Accounts
    Ledger accounts that contain transactions related to individuals or other organizations with whom your business has direct transactions are known as personal accounts. Some examples of personal accounts are customers, vendors, salary accounts of employees, drawings and capital accounts of owners, etc.

    Real Accounts
    The ledger accounts which contain transactions related to the assets or liabilities of the business are called Real accounts. Accounts of both tangible and intangible nature fall under this category of accounts, i.e. Machinery, Buildings, Goodwill, Patent rights, etc. These account balances do not come to zero at the end of the financial year unless there is a sale of the asset or payment made towards a liability or closure or acquisition of the business. These accounts appear in the Balance Sheet and the balances get carried forward to the next financial year.

    i: What are the major difference between them

    – Personal Accounts.
    The golden rule for personal accounts is: debit the receiver and credit the giver.

    Example: Payment of salary to employees

    In this example, the receiver is an employee and the giver will be the business. Hence, in the journal entry, the Employee’s Salary account will be debited and the Cash / Bank account will be credited.

    – Real Account.
    The golden rule for real accounts is: debit what comes in and credit what goes out.

    Example: Payment made for a loan

    In this transaction, cash goes out and the loan is settled. Hence, in the journal entry, the Loan account will be debited and the Bank account will be credited.

    2: what are the qualitative attributes of Accounting?

    Understandability. This implies the expression, with clarity, of accounting information in such a way that it will be understandable to users – who are generally assumed to have a reasonable knowledge of business and economic activities.

    -Relevance.
    -Consistency.
    -Comparability.
    -Reliability.
    -Objectivity.

    3: discuss the fundamental principles of Accounting.

    The fundamental principles are the basic concepts that accountants can assume to be true from financial statement-to-financial statement and company-to-company. Each fundamental of accounting is like a rule for the language accountants speak. There are five accounting concepts known as principles. Along with several important assumptions and concepts, these make up the most important things to know about accounting.

  90. Avatar Onwe Stella says:

    Name: Onwe Stella
    Reg. No.: 10003697DA
    Email address: onwestella79@gmail.com

  91. Avatar Onwe Stella says:

    1. The two major categories of accounting are managerial accounting and financial accounting
    Managerial accounting is the process of preparing reports about business operations. These reports are used to assist the management team in making strategies and business decisions.
    Financial accounting involves the preparation of accurate financial statements. It’s focus is to measure the performance of an enterprise as accurately as possible. It allows stakeholders and shareholders to easily understand and interpret the reported financial statements from year to year.
    The differences between financial accounting and managerial accounting are:
    A. Managerial accounting is prepared for an enterprise’s internal body while financial accounting is prepared for an external audience.
    B. Financial accounting is exact and must adhere to a generally accepted principle of accounting, while managerial accounting can be based on an estimate or guess.
    C. Managerial accounting is focused on short-term growth strategies, while financial accounting is focused on long-term financial strategies.

    2. The qualitative attributes of accounting are:
    A. Comparability: this implies that a financial statement must be comparable to another at one time or over a period of time.
    B. Verifiability: this implies that the information on the financial statement accurately represents the information it is representing.
    C. Timeliness: this means that an accounting information must be readily available to all stakeholders in time for decision-making purposes.
    D. Understandability: this implies that the information should be clear and concise so it can be easily understood.
    E. Relevance: this implies that a financial report should include all information which is material to a particular entity.
    3. Fundamental principles of accounting
    A. Revenue Recognition Principle
    This is the recognition of revenues through the income statement of the enterprise in a particular period of time. It can be recognized through an accrual basis if services were provided but if cash was received, it would be recognized on a cash basis.
    B. Cost principle
    This implies that enterprises should list everything on the financial statements at the cost price.
    C. Matching principle
    This implies that expenses should match the revenue recognized in the same accounting period and be recorded in the period the expense was incurred.
    D. Full Disclosure Principle
    This implies that information on financial statements should be complete so nothing is missing. In this way, partners and clients will be aware of relevant information.
    E. Objectivity Principle
    This implies that data should consistently stay accurate and be free of personal opinions. It must be supported by evidence/s. This helps rely on financial results.

  92. Avatar Chikezie Maureen Chidera says:

    Name: Chikezie Maureen Chidera
    Course: ECO 121
    Department: Economics
    Reg. No.: 244773

    The two types of accounting includes financial and managerial accounting.

    Financial accounting involves capturing and summarizing all of a business’s financial transactions and creating reports to provide a clear overview of those business transactions. Financial accountants also generate financial records that provide valuable information about a company’s fiscal health, such as balance sheets, cash flow statements, and income statements. Financial accounting is always focused on past performance, not the future. It is primarily concerned with the process of compiling information for financial reports for external reporting. Financial accountants work with their colleagues and managers to strategize how a company can be more profitable. Also, they track all financial activity recorded in a ledger in addition to ensuring that internal procedures are being followed and that all financial activity appears on relevant financial statements.
    Financial accountants will generally work with revenues and disbursements, which include overseeing or participating in general ledger accounting, accounts payable, accounts receivable, payroll, grant management and fixed assets. A financial accountant will be concerned with accurately recording and reporting financial transactions that have already occurred.
    The primary function of financial accounting is to track, record, and recap all daily transactions into monthly, quarterly, and yearly financial statements. From the financial statements, the owners and financial managers can perform multiple forms of financial analysis, such as Common size financial statement analysis or Ratio analysis. The result from the analysis is reported to the stakeholders later. In short, financial accounting provides a general look at business performance over a period of time in the form of financial statements – the Balance Sheet, Income Statement, and Statement of Cash Flows.
    Remember public companies in the U.S must follow the Generally Accepted Accounting Principles (GAAP) when compiling their financial reports for investors.

    Accounting Cycle
    Financial accounting for a business is based on the accounting cycle which is a series of steps that companies take every accounting time period in order to manage their financial transactions. Here are the steps to follow:
    Recording daily financial transactions in chronological in the accounting journal
    Transferring financial transactions to the company’s general ledger
    at the end of the accounting cycle.
    Classifying financial transactions by account, according to the firm’s Chart of Accounts.
    Performing Trial balance and adjusting entries as specified by the accounting equation
    Preparing financial statements such as the income statement, the balance sheet, and the statement of cash flows by using the financial information from the general ledger
    The statement created by financial accountants are useful for internal purposes, providing business executives with a clear snapshot of a company’s performance. Creditors who have loaned business money and tax authorities like the Internal Revenue Service (IRS) may also request such statements in audits. Finally, companies that are traded publicly must issue statements in line with the International Financial Reporting Standards (IFRS) that investors can access.
    Since a company’s financial statements can be used for official purposes, financial accounting experts must stick to strict guidelines as outlined by the Generally Accepted Accounting Principles (GAAP). These guidelines ensure consistent financial reporting across companies and are set by the Financial Accounting Standards Board (FASB).

    Managerial Accounting

    Managerial accounting can be easily mistaken for financial accounting, but actually, they are two different aspects. Managerial accounting is the process of organizing financial data and reporting financial status to managers. Thereby helping business managers make optimal operating decisions and grasp the issues as soon as possible if there are any. Management accounting information is especially important in operating an enterprise, and at the same time serves to control and evaluate that business. While financial accounting can be publicly shared with stakeholders, management accounting information is shared exclusively with others in an organization due to the sensitive nature of the information.
    This type of accounting documents, monitors and assists in the financial planning of an organization. Their documentation is typically meant for internal stakeholders rather than the public. A managerial accountant must be careful in communicating confidential information and to whom. They work with their managers to analyze and create a budget to meet the needs of the short- and long-term goals of the organization. Managerial accountants are concerned with analyzing past performance in order to make predictions about future performance.
    Also known as management accounting, this type of accounting provides data about a company’s operations to managers
    The focus of managerial accounting is to provide data. This is what managers need to make decisions about a business’s operations, not comply strictly with GAAP.
    Managerial accounting includes budgeting and forecasting and cost analysis. As well as financial analysis, reviewing past business decisions and more.

    Cost accounting  is a type of managerial  accounting

    Accrual Principle

    It is a concept in accounting that mandates the recording of transactions in the time period in which they occur. It is regardless of the time when actual cash flows for the transactions are received. Through this principle, one can gain an accurate insight into the financial status of a business. Most large-scale businesses adopt an accrual system to determine the cash flow of the business operations. Along with this, revenues and related expenses are recorded in the same time period of reporting. Both IFRS and GAAP support this concept. In case, a business has more than $5 million in revenue, then such businesses must adopt this system for the purpose of taxation. 
    This is the concept that accounting transactions should be recorded in the accounting periods when they actually occur, rather than in the periods when there are cash flows associated with them. This is the foundation of the accrual basis of accounting. It is important for the construction of financial statements that show what actually happened in an accounting period, rather than being artificially delayed or accelerated by the associated cash flows. For example, if you ignored the accrual principle, you would record an expense only when you paid for it, which might incorporate a lengthy delay caused by the payment terms for the associated supplier invoice

    2. Consistency principle
    According to this principle, when an organisation adopts a specific accounting method of reporting or documentation, then it should stay consistent with the method. The aim of this basic accounting principle is to make financial statements  comparable across industries and companies. This principle has two issues associated with it. First, the principle is not properly followed when many people are recording data and compiling reports. To combat this issue, organizations need to have a set method internally. The second issue is related to switching between the financial reporting methods. Some organizations do this in order to manipulate the data to their advantage.
    This is the concept that, once you adopt an accounting principle or method, you should continue to use it until a demonstrably better principle or method comes along. Not following the consistency principle means that a business could continually jump between different accounting treatments of its transactions that makes its long-term financial results extremely difficult to discern.

    3. Conservatism Principle
    The principle gives you a realistic perspective of unexpected situations. According to this principle, one should recognize expenses and liabilities at the early stages even if there is uncertainty about the outcome. However, the principle recognizes revenues and assets when there is an assurance of its receival. This principle can be applied to recognizing the estimates. The conservatism principle is the foundation of lower cost or market rule. As per this rule, one should record inventory at a lower end of its current market value or at its acquisition cost. 
    This is the concept that you should record expenses and liabilities as soon as possible, but to record revenues and assets only when you are sure that they will occur. This introduces a conservative slant to the financial statements that may yield lower reported profits, since revenue and asset recognition may be delayed for some time. Conversely, this principle tends to encourage the recordation of losses earlier, rather than later. This concept can be taken too far, where a business persistently misstates its results to be worse than is realistically the case.

    4. Cost Principle
    Whenever a business acquires an asset, its initial value is recorded in its financial reports of the business. This value might not be improved in the market value of inflation. It is also not updated to reflect any depreciation or even appreciation. This value is known as the cost principle. As per the principle, companies keep a record of their tangible assets without reflecting the market value. Through this principle, companies can assess the actual cost of using financial services for calculating the historical cost principles of the assets of the company.
    This is the concept that a business should only record its assets, liabilities, and equity investments at their original purchase costs. This principle is becoming less valid, as a host of accounting standards are heading in the direction of adjusting assets and liabilities to their fair values.

    5. Economic Entity Principle
    This is a concept of accounting that requires businesses to be treated as a separate financial and legal entity. This means that the recorded activities of the business entity must be kept separate from the recorded activities of the owner and other entities. These may include either a sole trader, limited liability partnership, or general partnership matching principles
    This is the concept that the transactions of a business should be kept separate from those of its owners and other businesses. This prevents intermingling of assets and liabilities among multiple entities, which can cause considerable difficulties when the financial statements of a fledgling business are first audited.

    6. Matching principle
    The matching principle is a concept in accounting that states that companies must report their expenses and revenues simultaneously. The revenues and expenses are matched on income statements for a specific time period. It is a part of the accrual accounting method that provides an accurate representation of operations on the income statement. This principle is quite useful for investors as investors can match revenue and expenses to get a better sense of the finances of a business. Along with the income statement, there is a need to assess the cash flow statement as well. 
    This is the concept that, when you record revenue, you should record all related expenses at the same time. Thus, you charge inventory to the cost of goods sold at the same time that you record revenue from the sale of those inventory items. This is a cornerstone of the accrual basis of accounting. The cash basis of accounting does not use the matching the principle.

    7. Materiality Principle
    As per the materiality principle, any item that may impact the decision-making process of an investor must be recorded. These details must be recorded in length in the financial statements using Generally Accepted Accounting Principles (GAAP). The material principle states that the accounting standard can be ignored if the end result is small. It is an important principle for deciding if a transaction should be recorded as a part of closing process. 
    This is the concept that you should record a transaction in the accounting records if not doing so might have altered the decision making process of someone reading the company’s financial statements. This is quite a vague concept that is difficult to quantify, which has led some of the more picayune controllers to record even the smallest transactions.

    8. Full Disclosure Principle
    As per the principle, each piece of information should be included in the financial statement of an entity. This is necessary since it might affect the reader’s perspective of understanding the statement. It is important to only disclose information about events that have a material impact on the financial position of an entity. As per the full disclosure principle, it may also include those items that cannot be quantified. Businesses are also liable to report existing accounting policies and any changes in them as well. 
    This is the concept that you should include in or alongside the financial statements of a business all of the information that may impact a reader’s understanding of those statements. The accounting standards have greatly amplified upon this concept in specifying an enormous number of informational disclosures.

    9. Going Concern Principle
    According to this accounting principle, a company will complete its recent plans, meet its financial obligations and use its existing assets. This process of continuing operations indefinitely must go on until the company has any evidence on the contrary. Through this principle, the company continues to make money to avoid going bankrupt. In case, the company is unable to adopt this principle properly, the chance of liquidation and bankruptcy increases. Going concern concept is also known as the continuing concern concept. A company continues to be a going concern till the time the sale of assets does not hamper its operations. If a company is no longer a continuing concern, it needs to start reporting specific information on financial statements. Through this principle, accountants can make decisions related to which information should be reported on financial statements.

    10. Revenue Recognition Principle
    This is a part of GAAP that identifies certain conditions in which the revenue is recognized. The revenue is recognized when a critical event has occurred. This principle uses the accrual method of accounting. According to this, revenues are recognized when realised and earned. It is a straightforward principle when revenue is recognized when customers make payments. Whenever the production takes longer, the accounting for revenue becomes more complicated. This is one of the standard accounting principles in the industry. 
    This is the concept that you should only recognize revenue when the business has substantially completed the earnings process. So many people have skirted around the fringes of this concept to commit reporting fraud that a variety of standard-setting bodies have developed a massive amount of information about what constitutes proper revenue recognition.

    11. Time Period Principle
    There are two main regulatory bodies that develop the principles based on accounting concepts. GAAP and IFRS develop these principles. US-based companies follow GAAP principles whereas, outside the US, most countries follow IFRS guidelines. GAAP is static in comparison with the IFRS. IFRS builds principles to address the evolving financial condition in the world.
    This is the concept that a business should report the results of its operations over a standard period of time. This may qualify as the most glaringly obvious of all accounting principles, but is intended to create a standard set of comparable periods, which is useful for trend analysis.
    These principles are incorporated into a number of accounting frameworks, from which accounting standards govern the treatment and reporting of business transactions.

    12. Reliability principle. This is the concept that only those transactions that can be proven should be recorded. For example, a supplier invoice is solid evidence that an expense has been recorded. This concept is of prime interest to auditors, who are constantly in search of the evidence supporting transactions.Reliability Principle
    This principle ensures that every transaction, business activity, event, etc is reliable when presented in the financial statement. Information should be associated with objective evidence and it can be checked, reviewed, and verified. This makes the information more reliable. Along with this, the information should be accurate and have a transparent representation. This makes the information reliable for its users. This principle ensures every financial statement and business accounting records are accurate.

    13. Monetary unit principle. This is the concept that a business should only record transactions that can be stated in terms of a unit of currency. Thus, it is easy enough to record the purchase of a fixed asset, since it was bought for a specific price, whereas the value of the quality control system of a business is not recorded. This concept keeps a business from engaging in an excessive level of estimation in deriving the value of its assets and liabilities.
    According to this principle, business transactions should be recorded only when they can be expressed as currency. Accountants should avoid recording non-quantifiable entities in the financial accounts. Whenever a transaction or an event occurs, it is first converted into money. After that, it is recorded into financial accounts of a business. It ensures that every accounting record is measurable in monetary terms by currencies.

    3.
    Recording : It is concerned with the recording of financial transactions in an orderly manner, soon after their occurrence In the proper books of accounts.

    Classifying : It Is concerned with the systematic analysis of the recorded data so as to accumulate the transactions of similar type at one place. This function is performed by maintaining the ledger in which different accounts are opened to which related transactions are posted.

    Summarising : It is concerned with the preparation and presentation of the classified data in a manner useful to the users. This function involves the preparation of financial statements such as Income Statement, Balance Sheet, Statement of Changes in Financial Position, Statement of Cash Flow, Statement of Value Added.

    Interpreting : Nowadays, the aforesaid three functions are performed by electronic data processing devices and the accountant has to concentrate mainly on the interpretation aspects of accounting. The accountants should interpret the statements in a manner useful to action. The accountant should explain not only what has happened but also (a) why it happened, and (b) what is likely to happen under specified conditions

    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.
    Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

    Representational faithfulness: sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.
    There are three factors that measure a company’s representational faithfulness, including:

    Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.

    Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.

    Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.

    Verifiability:
    To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.

    Understandability
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.
    Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.
    Comparability can also refer to a company’s ability to compare its financial statements to its competitors. This can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.
    Related: Understanding Cash Flow Statements: A Complete Guide With Steps, Methods and Examples

    Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions.

  93. Avatar Obumneme Cynthia Mmesoma says:

    Name: Obumneme Cynthia Mmesoma
    Reg No: 2021/243696
    Email: ommesomacynthia@gmail.com
    1A. The two major categories of accounting are;
    i. Managerial or Management accounting– This type of accounting helps managers to make and implement business policies for better results. Financial accounting information is used to achieve this purpose. An example of management accounting is cost accounting. Cost accounting helps managers to determine the cost involved in manufacturing a product or services by use of different cost accounting methods.
    ii. Financial accounting is defined as a process of recording, summarizing, and reporting various transactions that occur over a period of time during the course of business. Daily transactions are gathered and converted into financial statements, balance sheet, income statements, and cash flow statements.
    Accounting Principles and standards,such as GAAP(Generally Accepted Accounting Principles), IFRS(International Financial Reporting Standards),or ASPE(Accounting Standards for Private Enterprises), are standards that are widely adopted in financial accounting. The accounting standards are important because they allow all stakeholders and shareholders to easily understand and interpret the reported financial statements from year to year.

    B. The differences between financial accounting and managerial accounting are;
    i. Financial accountants prepare reports for shareholders and potential investors as well as executives whereas managerial accountants prepare their reports for internal audiences.
    ii. Financial accountants focus on long-term financial strategies relating to organizational growth, whereas managerial accountants focus on short-term growth strategies relating to economic maintenance.
    iii. Financial accountant only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accountants looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.
    iv. Financial accounting looks at the entire business while managerial accounting reports at a more detailed level e.g. profits by product, product line, customer and geographic region.

    2. The qualitative attributes of accounting are;
    a. Comparability– This involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance.
    b. Understandability– This is the measure of how easily an individual can comprehend a company’s financial report or accounting information.
    c. Relevance– For accounting information to have relevance,it first requires confirmatory value,which provides information about past financial events,and then predictive value,which can provide predictions about future financial events.
    d. Timeliness– This involves how rapidly accounting information is available to professionals. If information reaches a company quickly, it allows an accounting team to make timely decisions.
    e. Verifiability– This involves authenticating financial information and calculations by using several independent sources to develop the same results.

    3. The fundamental principles of accounting are;
    a. Consistency Principle states that once a business chooses one accounting method,this method should be used consistently going forward. For example,if you use the cash basis of accounting this should be applied to your cash flow statement,balance sheet,and income statements.
    b. Revenue Recognition Principle is a generally accepted accounting principle which states that companies’ revenue are recognized when the service or product is considered delivered to the customer not when the cash is received.
    c. Matching Principle– This is an accounting concept that dictates that companies report expenses at the same time as the revenues they are related to.
    d. Materiality Principle– This is a key accounting principle which states that all items that are reasonably likely to impact investors’ decision making must be recorded or reported on detail in a business’s financial statements using GAAP standards.

  94. Avatar Okoro Emmanuel Chukwubuikem says:

    Name: Okoro Emmanuel Chukwubuikem
    Reg no: 10777812FJ
    Department: Economics

    Two major accounting categories are Financial accounting and Managerial accounting.
    Financial accounting is the process of recording, summarizing and reporting a company’s business transactions through financial statements. These statements are the income statement, the balance sheet, the cash flow statement and statement of retained earnings.
    Financial acounting is used to present the financial health of a company to external stakeholders. This allows the board of directors, potential investors, creditors and financial institutions to see how the company has performed during a specific period of time in the past. These reports are field on an annual basis. If a business is considered a publicly traded company on the stock market, the reports must be made part of the public record.
    Financial acounting is the collection of accounting data to create financial statements. It involves the preparation of accurate financial statements. It’s focus is to measure the performance of a business as accurately as possible.
    While financial statements are for external use, they may also be for internal management use to help make decisions.
    Managerial accounting is a category of accounting which creates statements, reports and documents that help management in making better decisions related to their business performance. Managerial accounting is used for internal purposes. It is used by managers and directors to make decisions regarding the daily operations of a company. It analyzes the information gathered from financial accounting.
    Managerial accounting also called management accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing accounting information, deciding on the best next steps to internal business managers. An example is cost accounting, which focuses on a detailed break-up of costs for effective control.

    Major differences Managerial accounting and Financial accounting
    1. Financial accounting is the collection of accounting data to create financial statements, while Managerial accounting is the internal processing used to account for business transactions.
    2. Managerial accounting information is aimed at helping managers within the organization make well informed business decisions, while financial accounting is aimed at providing financial information to parties outside the organization. Even though financial accounting is of great importance to current and potential investors, Managerial accounting is necessary for managers to make current and future financial decisions for their business. Example, determining how much your business should charge for a new product and analyzing how much revenue a future product line is capable of generating are both examples of business problems within the field of managerial accounting.
    3.Financial accounting is exact and must adhere to Generally Accepted Accounting Principles (GAAP) while management accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.
    4.Financial acounting must comply with various standards whereas mangerial accounting does not have to comply with any standards when information is compiled for internal consumption.
    5. Financial accounting is concerned with the financial results that a business has already achieved, so it has a historical orientation While mangerial accounting may address budgets and forecasts, and so can have a future orientation.
    6. People with the certified Public Accountant designation have been trained in financial accounting, while those with the certified Management Accountant designation have been trained in managerial accounting

    Qualitative Attributes of Accounting
    Reliability; it is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent. The information must be factual and verifiable.
    Relevance; it is believed that relevance information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner. Accounting information depicted by financial statements must be relevant to the objectives of the enterprise.
    Understandability ; decision makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the Understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.
    Comparability; it is believed that it is not sufficient that the financial information is relevant and reliable at a particular reporting entity. But it is equally important that the users of general purpose financial reports are able to compare various aspects of an entity over different time, period and with other entities.

    Fundamentals principles of accounting
    Accounting Principles are required rules and guidelines that companies are required to follow when producing its financial information.
    1. Principle of Conservatism
    Accountants are said to be very conservative by nature. According to this principle, when there is doubt about the amount of expected inflows, the organization must state the lowest possible revenue and the highest possible cost.
    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crisis.
    2. Cost Principle
    The cost principle advocates that companies should list everything on the financial statements at the cost price.
    Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
    3. Principle of Going Concern
    This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle , organization can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years
    4. Principle of Accrual
    The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.
    5. Principle of Consistency
    The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle. If the accuracy theory is properly followed, there are many advantages for financial statement stakeholders.

  95. Avatar Ibiam Nkemdilim Clara says:

    Name: Ibiam Nkemdilim Clara
    Reg. no: 2021/241336
    Email address: nkemibiam24@gmail.com

    1. (i) Cash accounting: enables one to focus only on corporate transactions involving cash. Under the cash accounting method, a corporate bookkeeper always debits or credits the cash account in each journal entry, depending on transactions.
    (ii) Accrual accounting: A company records all transactional data, regardless of monetary inflows or outflows. “Accruing” Means accumulating an item and recording it as legally binding even though no cash payment takes place.

    2. (i) relevance (ii) Reliability (iii) comparability (iv) consistency

    3. (i) Revenue recognition principle: this happens at the time of execution of the transaction, irrespective of receipt of payment or cash. The sale of goods and services should be complete, and payment should be due for it.
    (ii) Historical cost principle: this principle directs that all assets will be reported at the actual cost of acquisition and not at their current market value.
    (iii) Matching principle: directs that income earned during an accounting period is compared with corresponding expenditure.
    (iv) Full disclosure principle: states that an entity’s books of accounts should fully disclose all relevant information to its users. There should be no deliberate concealment of information.
    (v) Objectivity principle: states that all information in the books of accounts should be objective, reliable and accurate. They should be free from the personal bias of the reporting persons.

  96. Avatar Ozuluigbo Hope Ekenedilichukwu says:

    Name: Ozuluigbo Hope Ekenedilichukwu
    Reg. No.: 11193799AD
    Email: hopedili2023@gmail.com
    1a. The two major categories of accounting are:
    i. Financial Accounting
    Ii. Managerial Accounting
    i. Financial Accounting:
    Financial accounting involves the preparation of accurate financial statements. It is used to present the financial health of a company to external stakeholders. This allows the board of directors, creditors, stockholders, potential investors and financial institutions to see how the company has performed over a period of time.
    These reports are filled on a daily basis.

    Ii. Managerial Accounting:
    Managerial accounting analyzes the information gathered from financial accounting.
    It is the process of preparing reports about business operations. The reports assist the management team in making strategies and tactful business decisions.
    1b. The major differences between financial accounting and managerial accounting are:
    A. Managerial accounting is presented to a company’s internal community, while financial accounting is prepared for an external audience. Though it is also used by managers to make current and future financial decisions for their business
    B. Financial accounting is exact and must adhere to the principles of accounting, while managerial accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.
    C. Managerial accounting focuses on short-term growth strategies relating to economic maintenance, while financial accounting focuses on long-term financial strategies relating to organizational growth
    2. The qualitative attributes of accounting are:
    A. Comparability: this implies that users of financial statements must be able to compare aspects of an entity at one time and over a period of time.
    B. Verifiability: this is the assurance to that the information faithful represents what it purports to be representing.
    C. Timeliness: this is the availability of accounting information to all stakeholders in time for decision-making purposes
    D. Understandability: this implies that the preparers of the financial information have classified, characterized and presented the information clearly and concisely so it can be understood.
    E. Relevance: this implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions.
    F. Faithful representation: this implies that financial information faithfully represents the information without errors.

    3. Fundamental Principles of Accounting:
    A. Revenue Recognition Principle:
    This is the recognition of revenues through the income statement of the company in a particular period of time.
    If it is a period when services are provided, it will be recorded on accrual basis but If it is the period when cash was received, the revenue will be recognized on the cash basis.
    B. Cost principle:
    this advocates that companies should list everything on the financial statements at the cost price. It is important to record the acquisition price of anything you spend money on.
    C. Matching principle:
    Expenses should match the revenues recognized in the same accounting period and be recorded in the period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
    D. Full closure principle:
    The information on financial statements should be complete so that nothing is misleading. In this way, partners and clients will be aware of relevant information concerning the company.
    E. Objectivity Principle:
    The accounting data should consistently stay accurate and be free of personal opinions. The data must be supported by evidence that include vouchers, receipts and invoices.

  97. Avatar Okoro Emmanuel Chukwubuikem says:

    Name: Okoro Emmanuel Chukwubuikem
    Reg no: 10777812FJ
    Department: Economics

    Two major accounting categories are Financed accounting and Managerial accounting.
    Financial accounting is the process of recording, summarizing and reporting a company’s business transactions through financial statements. These statements are the income statement, the balance sheet, the cash flow statement and statement of retained earnings.
    Financial acounting is used to present the financial health of a company to external stakeholders. This allows the board of directors, potential investors, creditors and financial institutions to see how the company has performed during a specific period of time in the past. These reports are field on an annual basis. If a business is considered a publicly traded company on the stock market, the reports must be made part of the public record.
    Financial acounting is the collection of accounting data to create financial statements.It involves the preparation of accurate financial statements. It’s focus is to measure the performance of a business as accurately as possible.
    While financial statements are for external use, they may also be for internal management use to help make decisions.
    Managerial accounting is a category of accounting which creates statements, reports and documents that help management in making better decisions related to their business performance. Managerial accounting is used for internal purposes. It is used by managers and directors to make decisions regarding the daily operations of a company. It analyzes the information gathered from financial accounting.
    Managerial accounting also called management accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing accounting information, deciding on the best next steps to internal business managers. An example is ost accounting, which focuses on a detailed break-up of costs for effective control.

    Major differences Managerial accounting and Financial accounting
    1. Financial accounting is the collection of accounting data to create financial statements, while Managerial accounting is the internal processing used to account for business transactions.
    2. Managerial accounting information is aimed at helping managers within the organization make well informed business decisions, while financial accounting is aimed at providing financial information to parties outside the organization. Even though financial accounting is of great importance to current and potential investors, Managerial accounting is necessary for managers to make current and future financial decisions for their business. Example, determining how much your business should charge for a new product and analyzing how much revenue a future product line is capable of generating are both examples of business problems within the field of managerial accounting.
    3.Financial accounting is exact and must adhere to Generally Accepted Accounting Principles (GAAP) while management accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.
    4.Financial acounting must comply with various standards whereas mangerial accounting does not have to comply with any standards when information is compiled for internal consumption.
    5. Financial accounting is concerned with the financial results that a business has already achieved, so it has a historical orientation While mangerial accounting may address budgets and forecasts, and so can have a future orientation.
    6. People with the certified Public Accountant designation have been trained in financial accounting, while those with the certified Management Accountant designation have been trained in managerial accounting

    Qualitative Attributes of Accounting
    Reliability; it is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent. The information must be factual and verifiable.
    Relevance; it is believed that relevance information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner. Accounting information depicted by financial statements must be relevant to the objectives of the enterprise.
    Understandability ; decision makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the Understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.
    Comparability; it is believed that it is not sufficient that the financial information is relevant and reliable at a particular reporting entity. But it is equally important that the users of general purpose financial reports are able to compare various aspects of an entity over different time, period and with other entities.

    Fundamentals principles of accounting
    Accounting Principles are required rules and guidelines that companies are required to follow when producing its financial information.
    1. Principle of Conservatism
    Accountants are said to be very conservative by nature. According to this principle, when there is doubt about the amount of expected inflows, the organization must state the lowest possible revenue and the highest possible cost.
    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crisis.
    2. Cost Principle
    The cost principle advocates that companies should list everything on the financial statements at the cost price.
    Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
    3. Principle of Going Concern
    This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle , organization can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years
    4. Principle of Accrual
    The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.
    5. Principle of Consistency
    The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle. If the accuracy theory is properly followed, there are many advantages for financial statement stakeholders.

  98. Avatar Nwadike Franklin Uchenna says:

    Nwadike Franklin Uchenna. 2021/244769
    nixonnwadike04@gmail.com
    1a) Financial accounting
    Financial accounting involves capturing and summarizing all of a business’s financial transactions and creating reports to provide a clear overview of those business transactions. Financial accountants also generate financial records that provide valuable information about a company’s fiscal health, such as balance sheets, cash flow statements, and income statements. Financial accounting is always focused on past performance, not the future.

    The statements created by financial accountants are useful for internal purposes, providing business executives with a clear snapshot of a company’s performance. Creditors who have loaned business money and tax authorities like the Internal Revenue Service (IRS) may also request such statements in audits. Finally, companies that are traded publicly must issue statements in line with the International Financial Reporting Standards (IFRS) that investors can access.

    Since a company’s financial statements can be used for official purposes, financial accounting experts must stick to strict guidelines as outlined by the Generally Accepted Accounting Principles (GAAP). These guidelines ensure consistent financial reporting across companies and are set by the Financial Accounting Standards Board (FASB).
    2. Managerial accounting
    The management accounting method is used by businesses to gain greater insights into a company’s operations. Since managerial accounting is strictly focused on providing accounting information for internal use, it doesn’t have to stick to the same strict GAAP guidelines as financial accounting. Rather, it focuses on things like financial analysis, budgeting, and cost analysis.

    By analyzing past financials and forecasting future outcomes—for example, how much a company could cut expenditures by switching software providers—managerial accountants provide business owners with the data they need to make savvy business decisions. Generally, the emphasis is on strategic management, risk management, or performance management. It depends on what kind of data business owners and investors want.

    Techniques commonly used by management accountants include margin analysis, capital budgeting, and constraint analysis. Trend analysis—which identifies patterns in business expenditures over time—is also useful. Ultimately, the primary goal of managerial accounting is to improve business outcomes by ramping up profits and minimizing losses.
    b)
    The difference between financial and managerial accounting is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

    The certification for each of these types of accounting is different as well. People who have been trained in financial accounting have a Certified Public Accountant designation, while those with a Certified Management Accountant designation are trained in managerial accounting.

    The perception that more training is required for financial accounting might be reflected in the higher pay rates of financial accountants over managerial accountants.Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.

    2) Relevance
    Representation faithfulness
    Verifiability
    Understandability
    Comparability
    Timeliness

    3) It’s essential for any business to have basic accounting principles in mind to ensure the most accurate financial position. Your clients and stakeholders maintain trust within your company, so recording reliable and certified information is key. What are the 5 basic principles of accounting? To better understand the principles, let’s take a look at what they are.

    1. Revenue Recognition Principle

    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    2. Cost Principle

    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    3. Matching Principle

    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    4. Full Disclosure Principle

    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    5. Objectivity Principle

    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

  99. Avatar IBEANU KOSISOCHUKWU FAITH says:

    Name: IBEANU KOSISOCHUKWU FAITH
    Reg no.:2021\241337
    1. The two major categories of accounting are cah and accrual accounting.
    Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received,and expenses are recorded in the period in which they are actually paid . In other words, revenues and expenses are recorded when cash is received and paid , respectively.When transaction are recorded on a cash basis , they affect a company’s book upon exchange of consideration; therefore,cash basis accounting is less accurate than accrual accounting in the short term.
    Accrual accounting is a financial accounting method that allows a company to record revenue before receiving payment for goods or services sold and record expenses as they are incurred. In other words,the revenue earned and expenses incurred are entered into the company’s journal regardless of when money exchange hands .Accrual accounting is usually compared to cash basis of accounting, which records revenue when the goods and services are actually paid for.
    b.The main difference between accrual accounting and cash accounting lies in the timing of when revenue and expenses are recognized.The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.
    2. The qualitative attributes of accounting are understandability,consistency,reliability, objectivity,comparability,relevance, verifiability and timeliness.
    3. Fundamental principles of accounting are cost principles,matching principle, full disclosure principle, revenue recognition principle, going concern assumption, economic entity assumption,and so on .In this context, principles of accounting refers to the broad underlying concept which guide accountants when preparing financial statements.

  100. Avatar Bassey Micheal Ekanem says:

    NAME : BASSEY MICHEAL EKANEM
    REG NO : 2021/244123
    EMAIL : basseymicheal30@gmail.com
    LEVEL : LEVEL 100

    ANSWERS:
    1. Accounting can be classified into two major categories namely Managerial Accounting and Financial Accounting.

    a) Managerial Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of information that is being used by the management of an organization to plan, evaluate, control and make decisions within that organization and to assure appropriate use of and good accountability for its resources”. It also refers to accounting information developed for managers within an organization. Furthermore, it is the phase of accounting concerned with providing information to managers for use in planning and controlling operations and in decision making.

    b) Financial Accounting on the other hand involves recording, summarizing, and reporting the stream of transactions and economic activity resulting from business operations over a period of time to the public or regulators. Financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an organization. Financial accounting provides the scorecard by which a company’s past performance is judged.

    Major Differences between Managerial Accounting and Financial Accounting:
    Despite many similarities in approach and usage, there are significant differences between the financial and managerial accounting. These differences primarily center around compliance, accounting standards, and target audiences.

    The intended purpose of managerial accounting is to assist users internal to the company in making well-informed business decisions while that of financial accounting is to assist external users or investors of the organization to know the condition or progress of the organization.
    Managerial accounting statements helps the organization’s internal management to make decisions while Financial accounting helps auditors, Investors and creditors create forecasts of their own to know how well to trade with the company or withdraw from it.
    Reports generated through managerial accounting are only circulated internally. Each company is free to create its own system and rules on managerial reports. This means there is no centralized system regulating reports, and it can often take much longer to find what you need. In contrast, financial accounting reports are highly regulated, especially the income statement, balance sheet, and cash flow statement. Since this information is released for public consumption and is highly anticipated by investors, companies must be very careful about how they make calculations, how figures are reported, and in what order those reports are constructed.
    Financial accounting reports tend to be aggregated, concise, and generalized. Information is simultaneously more transparent and less revealing while Managerial accounting reports are highly detailed, technical, specific, and often experimental.

    2. Qualitative attributes or characteristics of accounting are traits that should be found in accounting informations that allow financial professionals to more easily understand and make decisions on accounting reports. There are six qualitative characteristics of accounting information. Two of the six qualitative characteristics are fundamental (must have), while the remaining four qualitative characteristics are enhancing (nice to have). They include :
    Fundamental attributes; Relevance and Faithful Representation.
    Enhancing attributes; Verifiability, Understandability, Comparability, Timeliness.

    3. The Fundamental principles of Accounting are defined as the various world recognized guidelines, rules or standards that companies must follow when documenting, recording, and reporting financial transactions and information. These rules help to ensure uniformity and accuracy in reporting and analyzing financial data. The ultimate goal of any set of accounting principles is to ensure that a company’s financial statements are complete, consistent, and comparable. Also having companies record and report their financial data using the same standards allows for the easy and accurate comparison and analysis of data and information. It allows investors to gain an accurate picture of a company’s financial health, and it allows for transparency in identifying fraud and inaccuracies in the data.
    There are two primary systems of accounting principles. The United States uses an accounting system known as Generally Accepted Accounting Principles (GAAP), which is established and overseen by the Financial Accounting Standards Board (FASB). On an international scale, the standards and rules, known as the International Financial Reporting Standards (IFRS), are set by the International Accounting Standards Board (IASB).
    The International Financial Reporting Standards (IFRS) are the key accounting principles that are applied worldwide. Several methodological differences exist between the two systems. For instance, GAAP allows companies to use either first in, first out (FIFO) or last in, first out (LIFO) as an inventory cost method. LIFO, however, is banned under IFRS.
    Whether it’s GAAP in the U.S. or IFRS elsewhere, the overarching goal of these principles is to boost transparency and basically make it easier for investors to compare the financial statements of different companies.

    Some of the most fundamental accounting principles include the following:
    Accrual principle
    Conservatism principle
    Consistency principle
    Cost principle
    Economic entity principle
    Full disclosure principle
    Going concern principle
    Matching principle
    Materiality principle
    Monetary unit principle
    Reliability principle
    Revenue recognition principle
    Time period principle.
    The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle. Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements. Consistency refers to a company’s use of accounting principles over time.

  101. Avatar Amaechina chidindu Roseline says:

    1. The two major categories of Accounting are the financial accounting and managerial accounting.
    Financial accounting is the process of recording, summarizing and reporting various transactions that occur over a period of time during the course of business. it is prepared in accordance with Generally Accepted Accounting Principal (GAAP). it is created mainly for investors, creditors, industry regulator, suppliers and those outside the company.
    it converts transaction into financial statement, balance sheet, income statement, cash flow statement and statement of retained earning. it classifies, store, records and analyze financial statement and present an accurate financial picture for stakeholders. its aim is to improve business profitability and increase transparency.
    Financial accounting is of two types: the Accural Accounting method and the cash accounting method
    Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are actually paid. In other words, revenues and expenses are recorded when cash is received and paid, respectively. it is also called cash-basis of accounting method. it is simple and straightforward and transactions are recorded only when money goes in or out of an account, with a clear picture of how much money the business actually has on hand. for example, A company who order computer from another company and will only record transaction once the goods arrives and payment is made. it is ideal for small businesses.
    Accrual accounting is a financial accounting method that allows a company to record revenue before receiving payment for goods or services sold and record expenses as they are incurred.it provide more realistic idea of income and expenses during a period of time. it also provides a long-term picture of business that cash accounting cannot provide i.e with a careful monitoring of cash flow.
    One of the major difference between financial accounting and managerial accounting is the intended users of information. financial accounting provide financial data to third parties outside the company i.e investors, creditors, etc regarding the company’s welfare. While
    Managerial accounting provides important information that allows managers within the organization or company to make a well-informed business decisions. decision making concerning the cash flow, and other necessary factors encountered in the course of business.

    2. The Qualitative attributes of Accounting are the fundamental or primary principles and the enhancing or secondary principles.
    The fundamental or primary principles include:
    i. Relevance
    ii. Representative faithfulness or reliability
    *. Relevance: means that information can influence the economic decisions made by users. it shows how helpful the information is for financial decisions making process. for example, A company experiencing a strong quarter and presenting the results to creditors is relevant to the creditors decision making process. for accounting to be relevant, it must possess:
    Confirmatory value and predictive value
    * Reliability is the extent to which information accurately reflects a company’s resources, obligatory claims and transactions etc. for accounting information to be reliable, it must be: Complete, Neutral ( the degree to which information is free from bias) and free from error.

    The enhancing attributes of Accounting include:
    i. Verifiability is the extent to which information is reproducible, i.e using the same method to attain similar results. example, if a shareholder owns equipment worth £500 and told the accountant the purchase cost, deprecation method, the accountant should be able to reproduce the same results.
    ii. Timelines is how quickly information is available to users of accounting information. the less timing, the less useful information is for decision making. for example, if a company issues its financial statement a year after its accounting period, users of financial statement would find it difficult to know how well the company is doing presently.
    iii. Understandability is the degree to which information is easily understood. a highly desirable information is one clearly understood by the accountant.
    iv. Comparability is the degree to which accounting standards and policies are consistently applied from one period to another. financial statement are comparable with consistent accounting standards and policies applied throughout each accounting period, enables user/ accountant to draw insightful conclusion about the trends and performances of the company over time.
    v. Materiality is the extent to which information can be omitted, misstated or grouped with other information without misleading the report or statement when making economic decisions.
    vi. Consistency involves using the same accounting principles method year after year.

    3. The fundamental principles of Accounting is defined as the various guidelines and rules that companies must follow whenn documenting, recording and reporting financial transaction and information. it helps to ensure uniformity and accuracy in reporting and analysing financial data. it also allows investors to gain an accurate picture of a company’s financial health and It allows for transparency In identifying fraud and inaccuracies in the data.
    The two primary system of accounting include
    the Generally Accepted Accounting Principal (GAAP) used by united states and are established and overseen by the Financial Accounting Standards Board (FASB). the international accounting standards board (IASB) sets the standards for international business known as the International financial reporting standards (IFRS).
    There are several basic principles set by the IASB that are common to most accounting models which are international standards that are generally followed by all companies. some of the principle Include, separate entity principle states that business funds and transactions must be kept separate from the personal finance of all owners and principles in the business. the monetary measurements principle requires that all transactions must be recorded in monetary form.
    The fundamental principles of Accounting are:
    • Principles of conservatism – according to this principles, when there is doubt about the amount of expected inflow and outflow, the organization must state the lowest possible revenue and highest possible cost. this principles enables the company to prepare for any forthcoming financial crises.
    • Principle of cost- it is closely related to conservatism principles. it advocate that company should list everything on the financial statement at the cost price. usually asset like land, building etc appreciate. however, the accountant will not allow this appreciation to be reflected on the financial statement of the company till it is realized.
    • Principle of consistency- this principle allows organization to use the same accounting system practices and standards for publishing its financial statements.
    • Principle of going concern- this principle implies that the firm will continue to do it’s business as usual till the end of the next accounting period and that there is no information to the contrary. because of this principle, organization can function on credit, account for account, receivable and payables with intend to receive and pay in the future and charge for deprecation assuming that the machine will be used for many years.
    • Matching principle- A principle that governs how cost and receipt are recorded and recognized. it ensures that profit and liabilities in the income statement are accurately measured in the timeframe in which they are sustained. it also ensure that net profit appears in the income statement, indeed and equitable i.e not due to an overstimulation and underestimation of sales expenditure.
    • Principle of full disclosure– this principle demands that the company publish any relevant material in its financial report. the critical theory is that consumers of an entity financial statement can rely on financial statement to make decisions.
    • Principle of economic entity–A Business company operator has separate legal liability.must distinguish purchase from its owners, shareholders and other business. this implies that transaction reported in the entity account are just belonging to the entity.
    • Principle of Accrual theory states that all expenses should be recorded in the amount they occur when cash flow is correlated with them.

  102. Avatar OKOCHA FELICITA IFECHUKWUDE. Reg no. 2021/241945 says:

    1.
    I.) Two major categories of accounting;

    a.) cash accounting
    b.) accrual accounting

    a.) CASH ACCOUNTING is the art and science of recording, classifying, summarizing, and analyzing costs to help management make prudent business decisions. It focuses on business transactions involving cash. Cost accounting is helpful because it can identify where a company is spending its money, how much it earns, and where money is being lost.

    b.) ACCRUAL ACCOUNTING is an accounting method in which payments and expenses are credited and debited when earned or incurred. It records transactional data. The cash accounting method is used, but accrual accounting accounts for all transactions that make up company’s operating activities.

    II.) Differences between cost and accrual accounting:

    a.) Cash accounting records revenue and expenses when actual payments are received or disbursed. It doesn’t account for either when the transactions that create them occur. On the other hand, accrual accounting records revenue and expenses when those transactions occur and before any money is received or paid out.

    b.) Cost accounting is a sub field in accounting whereas Accrual accounting is a method of recognizing business transactions.

    c.) Cost accounting can use the concept of Accrual accounting but Accrual accounting cannot use the concept of Cost accounting.

    2. The qualitative attributes of accounting?

    a.) UNDERSTANDABILITY: The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. Information too difficult to understand should not be excluded, complex situations should be included.

    b.) RELEVANCE: The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. Information should be; accurate, neutral, prudent and complete.

    c.) RELIABILITY: it should not be misleading, informations should be free from error and bias.

    d.) COMPARABILITY: The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. You should be able to compare information with other periods.

    3. FUNDAMENTAL PRINCIPLES OF ACCOUNTING
    Fundamental principles of accounting can be referred to the rules and guidelines followed by companies while reporting their financial data. These principles ensure that the quality of the financial information reported by companies is improved. The aim of accounting fundamental principles is to compare multiple financial statements on the same level. Some of the most fundamental accounting principles include the following:
    * Accrual principle.
    * Conservatism principle.
    * Consistency principle.
    * Cost principle.
    * Economic entity principle.
    * Full disclosure principle.
    * Going concern principle.
    * Matching principle.

  103. Avatar AUGUSTINE OKECHI CHUKWU says:

    NAME: AUGUSTINE OKECHI CHUKWU
    MATRIC NO: 2021/244766
    DEPARTMENT: ECONOMICS
    COURSE : ECO 121
    FACULTY: SOCIAL SCIENCE

    1 ANSWER
    a. Financial accounting: Financial accounting is the process of recording, summarizing, and reporting a company’s business transactions through financial statements.
    These transactions are summarized in the preparation of financial statements, including the balance sheet, income statement and cash flow statement, that record the company’s operating performance over a specified period.
    b. Managerial Accounting: Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals. This is usually focused on internal reporting to aid decision making.
    Difference
    Financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

    2.
    i. Verifiability
    ii. Timeliness
    iii. Comparability
    iv. Understanding

    3.
    Economic entity principle
    Cost principle
    Accrual principle
    Consistency principle
    Matching principles
    Full disclosure principles
    Going concern principle

  104. Avatar Isu Nneoma Deborah says:

    1.) Accounting can be classified into two major categories which are cash and accrual accounting. Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are actually paid. while Accrual accounting is an accounting method that recognizes revenue in the period in which it’s earned and realizable, but not necessarily when the cash is actually received. Cash basis lets businesses record income and expenses only when cash is actually received or paid. Accrual accounting involves tracking income and expenses as they are incurred instead of when money actually changes hands. Cash basis accounting records revenue and expenses when actual payments are received while accrual basis accounting is an account method that records revenue and expenses before payments are received. Cash basis is simple in nature while accrual basis is complex in nature. Cash basis of accounting is suitable for micro to small business while accrual basis of accounting is suitable for large corporations. Cash basis of accounting has low accuracy while accrual basis of accounting is more accurate than the cash basis of accounting .

    2.) The qualitative attributes of accounting are comparability, consistency,neutrality,Relevance,Understandability,Reliability.

    3.) The most notable principles of accounting include the revenue recognition principle, matching principle, materiality principle and consistency principle .Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements.

  105. Avatar Chike-ijei chiwendu victoria says:

    Name: Chike-ijei Chiwendu Victoria
    Registration number:2021/243693
    Email: chiwenduchikeijei@gmail.com
    1a(I) Financial accounting:it is the process of reading, summarizing and reporting a company’s business transactions through financial statements.These statement are income statement, balance sheet,cash flow statement and the statement of retained cash.
    (ii) Managerial accounting:it is the practice of identifying, measuring, analyzing, interpreting and communication financial information to managers for the pursuit of an organizations goals.
    1b Managerial accounting is concerned with providing information to managers (people that direct and control the operations of a firm or organization). While financial accounting is concerned with providing information to stockholders, creditors and others,who are an organization.
    (2)a Comparability
    b Relevance
    c Understandability
    d Reliability
    (3)a Monetary unit: Accounting needs all values to be recorded in terms of a single monetary unit.it cannot account for goods and items therefore becomes a problem since it is subjective.
    b Going concern: This principle implies that the firm will continue to do it’s business as usual till the end of the next accounting period and that there is no information to the contrary.Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

  106. Avatar Raymond Chiamaka Sylvia says:

    Name: Raymond Chiamaka Sylvia
    Reg no:2021/243700
    Email: sylviachiamaka208@gmail.
    1. What is Cash accounting?
    Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are actually paid. In other words, revenues and expenses are recorded when cash is received and paid, respectively. Transactions are recorded only when money goes in or out of an account.Small businesses often use cash accounting because it is simpler and more straightforward and it provides a clear picture of how much money the business actually has on hand.

    What is Accrual accounting?
    When transactions are recorded in the books of accounts as they occur even if the payment for that particular product or service has not been received or made, it is known as accrual based accounting. This method is more appropriate in assessing the health of the organisation in financial terms.
    In accrual accounting, revenue is recognized when it is earned, regardless of when the payment is received. This means that if a company provides a service to a customer in December, but does not receive payment until January of the following year, the revenue from that service would be recorded in December, when it was earned. Similarly, expenses are recorded when they are incurred, regardless of when they are paid. For example, if a company incurs expenses in December for a service that will be received in January, the expenses would be recorded in December, when they were incurred.

    1b.What are the major difference between them?
    1.Cash accounting does not track long term liabilities,loans and inventory while Accrual accounting tracks long term liabilities,loans and inventory.
    2.Cash accounting records expenses when you pay and income when you receive it while Accrual accounting records income when the transaction takes place and expenses when the bill is received.
    3.Cash accounting is suitable for small business and accrual accounting is suitable for large organization.
    4.The objective of cash accounting Is to know the cash balance of the business while Accrual accounting is to know the actual profit or loss of the business in the particular business period.
    5.Cash accounting doesn’t follow international accounting standard while Accrual accounting follows the international accounting standard

    2 What are the Qualitative attributes of accounting ?
    Answer:
    a.Understandability:
    Understandability is the quality of information that enables users to perceive its significance. The benefits of information may be increased by making it more understandable and hence useful to a wider circle of users.

    b.Comparability:
    Comparability implies to have like things reported in a similar fashion and unlike things reported differently.

    c.Consistency:
    Consistency of method over a period of time is a valuable quality that makes accounting numbers more useful. Consistent use of accounting principles from one accounting period to another enhances the utility of financial statements to users by facilitating analysis and understanding of comparative accounting data.
    d.Verifiability:
    The quality of verifiability contributes to the usefulness of accounting information because the purpose of verification is to provide a significant degree of assurance that accounting measures represent, what they purport to represent.
    e.Reliability:
    Reliability is described as one of the two primary qualities (relevance and reliability) that make accounting information useful for decision-making. Reliable information is required to form judgments about the earning potential and financial position of a business firm. Reliability differs from item to item.
    3 The fundamental principles of accounting

    a.Consistency Principle:
    Any working entity should set economic principles to work by it to record all the revenue, cost, and exchange. Moreover, these standards should be saved and continue working by it till find something that is 100% better than the previously used methods.

    This consistency principle avoids balance problems, activities reporting, or bill confusion.

    b.Going Concern Principle:
    It works on the rule of believing in the business and the fact that it has the liabilities to last for years to come.

    As these accounting principle concepts help a corporate divide the permanent, the general, and the ongoing cost in a better method without any suffocation in a specific period, this principle also builds explicit recognition for all the considered systems.

    c.Accrual Principle:
    A basic accounting principle that highlights the importance of making a complete accounting bookkeeping statement by the time of the action and deal, not by the period of the cost and revenue entry, this accrual principle helps you to know your money flow statics better and attach it to different times, so, here you are highlighting the financial static rather than the monetary flow.

    d.Conservatism Principle:
    A two-step accounting principle separates the financial balance into immediate credits that contain costs and needs. In contrast, the second step records the revenues, transactions, and assets when they happen and become a real profit in your budget.

    In other words, this principle gives you a more realistic look into your firm accounting principle without any assumptions.

    e.Objectivity Principle:
    In this principle, all the entity’s accounting and cost details should always be realistic and separate from any personal assumption or the need to create a well drawn image for your firm materiality ledger. Thus, you must build this basic financial accounting principle on statements basis on data, research, and proper formation without including any personal opinions.

    f.Matching Principle:
    By setting an archive for your entity’s revenue and cash income accounts, you should create a record for the related expenses by this principle. Moreover, connect this financial statement by number and time to know each project or transaction’s small or big value on your basic known accounting principles.

    g.Full Disclosure Principle:
    It is a vast accounting concept within the basic accounting principles, particularly if you have stockholders, as announcing complete information and details will help you reach them better with verifiable transparency and maintaining integrity. Thus, the entire disclosure principle will build a fantastic public image for your entity and public relationships.

  107. Avatar Ndiomarake Ngozi Judith says:

    Name: Ndiomarake Ngozi Judith
    Department: Economics
    Registration number: 2021/244127
    Course: Eco 121 principles of accounting

    1.). Cash accounting and acurral accounting
    Cash accounting records revenue and expenses when they are received and paid in cash respectively. Cash accounting is an accounting method where payment receipt are recorded during the period in which they are received and expenses recorded in the period in which they are actually paid. Examples: you paid 20,000 to a furniture store in July. According to cash accounting method,you will be recording the transaction of cash paid in July because that is exactly when the cash was paid to the furniture store though u received furniture a month prior.
    Acurral accounting is an accounting method in which payment and expenses are credited and debuted when earned or incurred. It helps when the company records revenue not when the company collects the money. Example: if a company provides a service to a customer in December,but doesn’t receive payment until January of the following year, the revenue from that service would be recorded as an acurral in December, when it was earned.

    Differences
    1.). Cash accounting records income and expenses only when cash is actually received or paid while acurral accounting involves tracking income and expenses as they are incurred.
    2.). In cash accounting, income is recorded when they are received while in acurral accounting, income is received when goods are shipped or service is provided.
    3.). Cash accounting is simpler in nature while acurral accounting is complex in nature

    2.). Comparability
    Verifiability
    Timeliness
    Understandability

    3.). Revenue Recognition Principle means the companies revenue are recognized when the service or product is considered delivered to the customer.

    Cost principle means items needs to be recorded as the actual price paid for each transaction.

    Matching principle means that a business records expenses alongside revenue earned. It m means that businesses must incur expense to earn revenue.

    Full disclosure principle suggest that a business should report all the necessary information in their financial statements.

    Objectivity principle means that the financial statements of an organisation must be based on solid evidence.

  108. Avatar Okonkwo Emmanuella Isioma, regno:2021/241944 says:

    1. Major categories in accounting
    Financial Accounting
    Financial accounting involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal management use to help make decisions.

    Managerial Accounting
    Managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team in making strategic and tactical business decisions.
    An example of managerial accounting is cost accounting. Cost accounting focuses on a detailed break-up of costs for effective cost control. Managerial accounting is very important in the decision-making process.

    Differences
    • Financial accounting reports on the results of an entire business. Managerial accounting almost always reports at a more detailed level, such as profits by product, product line, customer, and geographic region
    • Financial accounting requires that records be kept with considerable precision, which is needed to prove that the financial statements are correct. Outside auditors rely on this information when auditing a firm’s financial statements. Conversely, managerial accounting frequently deals with estimates, rather than proven and verifiable facts.
    • Financial accounting reports on the results of an entire business. Managerial accounting almost always reports at a more detailed level, such as profits by product, product line, customer, and geographic region
    • Financial accounting reports on the profitability (and therefore the efficiency) of a business, whereas managerial accounting reports on specifically what is causing problems and how to fix them.

    2. Qualities attributes of accounting
    • Comparability:Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions
    • Relevance:Relevance, regarding accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. 
    • Timeliness:Timeliness involves how rapidly accounting information is available to professionals. There is often a period before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. 
    • Reliability:Reliability is described as one of the two primary qualities (relevance and reliability) that make accounting information useful for decision-making. Reliable information is required to form judgments about the earning potential and financial position of a business firm. Reliability differs from item to item.
    • Consistency:Consistency of method over some time is a valuable quality that makes accounting numbers more useful. Consistent use of accounting principles from one accounting period to another enhances the utility of financial statements to users by facilitating analysis and understanding of comparative accounting data.
    3. Fundamentals principles accounting
    • Full disclosure principle. This is the concept that you should include in or alongside the financial statements of a business all of the information that may impact a reader’s understanding of those statements. The accounting standards have greatly amplified this concept by specifying an enormous number of informational disclosures.

    • Going concern principle. This is the concept that a business will remain in operation for the foreseeable future. This means that you would be justified in deferring the recognition of some expenses, such as depreciation, until later periods. Otherwise, you would have to recognize all expenses at once and not defer any of them.

    • Matching principle. This is the concept that, when you record revenue, you should record all related expenses at the same time. Thus, you charge inventory to the cost of goods sold at the same time that you record revenue from the sale of those inventory items. This is a cornerstone of the accrual basis of accounting. The cash basis of accounting does not use the matching principle.

    • Materiality principle. This is the concept that you should record a transaction in the accounting records if not doing so might have altered the decision-making process of someone reading the company’s financial statements. This is quite a vague concept that is difficult to quantify, which has led some of the more picayune controllers to record even the smallest transactions.

    • Monetary unit principle. This is the concept that a business should only record transactions that can be stated in terms of a unit of currency. Thus, it is easy enough to record the purchase of a fixed asset, since it was bought for a specific price, whereas the value of the quality control system of a business is not recorded. This concept keeps a business from engaging in an excessive level of estimation in deriving the value of its assets and liabilities.

    • Reliability principle. This is the concept that only those transactions that can be proven should be recorded. For example, a supplier invoice is a solid evidence that an expense has been recorded. This concept is of prime interest to auditors, who are constantly in search of evidence supporting transactions.

    • Revenue recognition principle. This is the concept that you should only recognize revenue when the business has substantially completed the earnings process. So many people have skirted around the fringes of this concept to commit reporting fraud that a variety of standard-setting bodies have developed a massive amount of information about what constitutes proper revenue recognition.

    • Period principle. This is the concept that a business should report the results of its operations over a standard period. This may qualify as the most glaringly obvious of all accounting principles but is intended to create a standard set of comparable periods, which is useful for trend analysis.
    • Cost principle. This is the concept that a business should only  its assets, liabilities, and equity investments at their original purchase costs. This principle is becoming less valid, as a host of accounting standards are heading in the direction of adjusting assets and liabilities to their fair values.
    • Economic entity principle. This is the concept that the transactions of a business should be kept separate from those of its owners and other businesses. This prevents intermingling of assets and liabilities among multiple entities, which can cause considerable difficulties when the financial statements of a fledgling business are first audited
    • Accrual principle. This is the concept that accounting transactions should be recorded in the accounting periods when they occur, rather than in the periods when there are cash flows associated with them.

  109. Avatar Christian Ifechukwu thankGod says:

    Name: christian Ifechukwu thankGod
    Reg number: 2021/245589
    Department: Economics
    Course: Eco 121 (principles of accounting)
    Date: 13 February, 2023

    1i) the 2 categories of accounting
    a: Cash accounting- reports revenues and expenses as they are received and paid through cash inflows and outflows. Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received. Under the cash accounting method, a corporate bookkeeper always debits or credits the cash account in each journal entry, depending on the transaction
    In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size.
    If a business generates more than $25 million in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to Internal Revenue Service rules.
    b: Accrual accounting- reports them as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable. Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.
    Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made. In a financial dictionary, “accruing” means accumulating an item and recording it as legally binding even though no cash payment takes place. The phrases “accounts payable” and “accounts receivable” perfectly illustrate the concept of accrual. Accounts payable — also known as vendor payables — represent money a business owes vendors at a given point in time. The entity accrues the payables until it settles the underlying debts. The same analysis applies to customer receivables — the other name for accounts receivable — which represents money clients owe a business.
    1ii) the major difference between cash and accrual accounting is:
    The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

    2) what are the qualitative attributes of accounting
    The two fundamental qualitative characteristics of financial reports are relevance and faithful representation. The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.
    Fundamental qualitative characteristics:
    1* Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.
    2* Faithful representation
    The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.
    Enhancing qualitative characteristics:
    1* Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.
    2* Verifiability
    The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.
    3* Timeliness
    The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.
    4* Understandability
    The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. The financial reports are prepared with the assumption that its users have a ‘reasonable knowledge’ of the business and its economic activities.

    3) discuss the fundamental principles of accounting
    a) Revenue Recognition Principle
    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
    b) Objectivity Principle
    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.
    c) Revenue recognition
    This is a generally accepted accounting principle (GAAP) that identifies the specific conditions in which revenue is recognized and determines how to account for it. Typically, revenue is recognized when a critical event has occurred, when a product or service has been delivered to a customer, and the dollar amount is easily measurable to the company.
    d) Full Disclosure Principle
    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.
    e) Cost Principle
    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
    f) Going concern principle:
    As per the going concern principle, a company would operate for as long as it can in the near or foreseeable future. Therefore, by following the going concern
    principle, a company may defer its depreciation or similar expenses for the next period.
    g) Conservatism principle:
    As per the conservatism principle, accounting faces two alternatives – one, report a more significant amount, or two, report a lesser amount. To understand this in detail, let’s take an example. Let’s say that Company A has reported that it has machinery worth $60,000 as its cost. Now, as the market changes, the selling value of this machinery comes down to $50,000. Now the accountant has to choose one from two choices–first, ignore the loss the company may incur on selling the machinery before it’s sold; second, report the loss on machinery immediately. As per the conservatism principle, the accountant should go with the former choice, i.e., to report the loss of machinery even before the loss would happen. Conservatism principle encourages the accountant to report more significant liability amount, lesser asset amount, and also a lower amount of net profits.
    h) Conservatism
    When there is more than one acceptable way to determine an amount, it is better to record a transaction in a way that understates assets or income rather than overstates either. This is to prevent accountants from making a business look more profitable or stable than it is. This principle protects investors.
    i) Accrual principle
    The accrual principle encourages accountants to record a transaction during the period in which it takes place, rather than when it affects the cash flow of the organization. For example, if a furniture store sells a couch to a customer on credit, it may take months or longer for the customer to pay for the couch in full.
    To adhere to the accrual principle, the store’s accountant records the accrued revenue from the sale when the sale occurs. This is instead of waiting to receive the full payment before recording the transaction.
    J) Accountability
    This is the amount of money that company is indebted to the investor against the resources.

  110. Avatar Agbo ifeanyi Samuel says:

    Name : Agbo ifeanyi Samuel
    Department: economics
    Course:eco 121
    Reg no: 2021/244128
    Date: 12-02-23

    (1) accounting are classified into two categories which is :
    1 Financial accounting
    2 managerial accounting

    ( 1) FINANCIAL ACCOUNTING: financial accounting involves the the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. while financial statements are for external use, they may also be for internal management use to help make decisions.
    Financial accountants produce documents such as income statements and balance sheets , which external parties (investors, industry regulators)use . The statements documents an organizations financial performance over a period of time, as well as it’s overall financial health. agencies such as the securities and exchange commission (SEC) regulates the work of financial accountants who produce these statements.
    Accounting principles and standard, such as GAAP(generally accepted accounting standard), or ASPE(accounting standard for private enterprises), are standard that are widely adopted in financial accounting. The accounting standard are important because they allow all stake holders and shareholders to easily understand and interpret the reported financial statements from year to year.
    (2) MANAGERIAL ACCOUNTING: managerial accounting analyzes the information gathered from financial accounting. it refers to the process of preparing reports about business operations. The reports serve to assist the management team to make tactical decisions. Managerial accounting is a process that allows an Enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take and then broadcasting the required steps to all internal business managers.
    DIFFERENCE BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING.
    (1) financial accounting focuses on statements based on financial information, to be shared with both internal and external shareholders while managerial accounting focuses on operational reporting and looks to the future by using forecasting. These reports are shared internally within the company, typically with managers and senior employees.
    (2) financial accounting need to follow various accounting standards , financial accounting are tightly regulated especially when it comes to company’s balance sheet, income statement and cash flow statements. While managerial are purely for internal use, there is no specific set of accounting standards they need to adhere to.
    (3) financial accounting look at the past by examining financial information while managerial accounting looks to the future using forecasting.
    (4) financial accountants needs to prepare reports at designated time of the year, typically quarter and annually, while managerial accountants prepare reports much more frequently but the frequency is highly dependent on the company’s needs.

    QUESTION 2
    Qualitative attribute of accounting are:
    (1) RELIABILITY: this implies that the information must be factual and verifiable.
    (2) RELEVANCE: information depicted by financial statements must be relevant to the objectives of enterprise , unnecessary and irrelevant information should not be included in the financial statements
    (3) UNDERSTANDABILITY: accounting information should be presented in such a simple and logical manner that they are understood easily by their users such as investors , lenders, employees etc . A person who does not have any knowledge of accounting terminology should be able to understand them without much difficulty.
    (4) COMPARABILITY: comparability is very useful quality of accounting. The financial statements should contain the figure of previous year along with the figure of current year so that the current performance can be compared with the past performance.
    (5) FAITHFUL REPRESENTATION: accounting aims at preparing those financial statements that depict the true and fair view of profitability, liquidity and solvency position of an Enterprise.
    QUESTION 3
    FUNDAMENTAL PRINCIPLES OF ACCOUNTING
    Fundamental principles of accounting refers to common rules or guidelines for accounting financial transactions and preparing financial statements. Accounting principles are the foundational guidelines for recording and preparing financial statements.the accounting principles are commonly referred to as generally accepted accounting principles (GAAP)
    Accounting principles helps to bring the uniformity in accounting and preparing financial statements and it is followed world wide. The regulators and authorities of each country may have their own accounting principles like UK GAAP, USA GAAP, IFRS etc. But at the core , the fundamental and objectives accounting principles remain the same.
    Some of the most Fundamental accounting principles includes the following:
    1 , accurual principles
    2, conservatism principles
    3,consistent principles
    4, cost principles
    5 ,economic entity principles
    6,Matching principles
    7, revenue and recognition principles ,e.t.c

  111. Avatar Abuchi Akachukwu Testimony reg number2021/241950 says:

    1)”Cash accounting”:it is the cash basis method which transaction is recorded only when cash is received/paid.it is only when cash is paid that the accounting can be can be carried out, this type of accounting is usually carried out by small businesses/firms while the “Accrual accounting” is the record of revenue a company/firm has earned but has yet to receive payment for and expenses that have been incurred but the company has yet to pay .it is important because it shows all revenue, expenses and profit/loss in a period of time.
    2i) the information must be “relevant” which means it’s influence can be seen in the economy, the information must be “relevant”to help decision makers consider past decision.
    ii) the record taken /given must be”understandable” for easy access.
    iii) the information given must be reliable without being bias.
    3) Accounting has principles guiding/relating to it one of the principle is the “principle of consistency”,it means the record & information must co-relate each time record is carried out.another is the “cost principle”which talks about expenses and record of assets acquired during recording of information and there must be a matching principle which means expenditure must correspond with the revenue generated.

  112. Avatar Ogbedeh Chukwudalu Frances says:

    NAME: Ogbedeh Chukwudalu Frances
    REG.NO.:2021/241352
    EMAILADDRESS:franceschukwudalu@gmail.com

    1: Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the major differences between them?

    Answer: Financial accounting and Managerial accounting
    Financial Accounting is a specific branch of accounting involving a process of recording, summarizing and reporting the myriad of transactions resulting from business operations over a period of time.
    Managerial accounting also called management accounting, is a method of accounting that creates statements, reports,and documents that help management in making better decisions related to their business performance. Managerial accounting is primarily used for internal purposes.

    The difference is that Managerial accounting focuses on an organizations internal financial processes, while financial accounting focuses on an organization’s external financial processes.

    2:What are the qualitative attributes of account?

    Answer:The four enhancing qualitative characteristics are comparability, verifiability, timelines and understandability.

    3:Discuss the fundamental principles of Accounting:

    Answer:
    A: Accrual Principle: it is an accounting method where revenue or expenses are recorded when transaction occurs and when payment is received or made. The method follows the matching principle, which says that revenues and expenses should be recognized in the same period.

    B: Conservatism Principle: This is a principle that requires company accounts to be prepared with caution and high degrees of verification. All probable losses are recorded when they are discovered, while gains can only be registered when they are fully realized.

    C: Consistency Principle: This means that once your organization, or more specifically, your book keeper or accounting department, adopts an accounting principle or method of documenting and reporting information, that method has to be used consistency moving forward.

    D: The Cost Principle: It means items need to be recorded as the actual price paid. It is the same way when a buyer buys products and the recording is done based on the price paid. In short, the cost Principle is equal to the amount paid for each transaction.

    E: The Economic Entity Principle: It is an accounting principle that states that a business entity’s finances should be kept separate from those of the owner, partners, shareholders, or related businesses.

    F: The Full Disclosure Principle : It states that all information should be included in an entity’s financial statements that would affect a readers understanding of those statements.

    G: Going Concern Principle: It is an accounting term for a company that has the resources needed to continue operating indefinitely until it provides evidence to the contrary.

    H: The Matching Principle: It is an accounting concept that dictates that companies report expenses at the same time as the revenue they are related to.

  113. Avatar ANAGHARA ESTHER CHIBUZOR says:

    NAME : ANAGHARA ESTHER CHIBUZOR
    REG NO. :2021/241940
    COURSE : ECO 121 ACCOUNTING
    EMAIL : anagharachibuzor205@gmail.com
    DEPT : ECONOMICS
           
               CATEGORIES OF ACCOUNTING

               –  MANAGERIAL ACCOUNTING
           Managerial accounting is a process that enables a business organization to attain a maximum efficiency, by reviewing the financial statements/ accounting they are able to make decisions on the best steps to follow. This category of accounting is mainly concerned with operational reports which are only distributed within the company.

                –  FINANCIAL ACCOUNTING
    This category of accounting aid business organizations to keep track of their financial transactions enabling them to make sound decisions. Financial accounting is oriented towards the creation of financial statements which are distributed both within and outside of a company.

    MAJOR DIFFERENCES OF FINANCIAL AND MANAGERIAL ACCOUNTING:

    1. Financial accounting looks at the entire business while managerial accounting reports at a more detailed level. Managerial accounting focuses on detailed reports like profits by product, product line, customer and geographic region.

    2.Financial accounting is focused on creating financial statements to be shared internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company.

    3.Financial statements are due at the end of an accounting period, while managerial reports may be issued more frequently, to provide managers with relevant information they can act on immediately.

    4.A business’ profitability and efficiency are reported through financial accounting. Managerial accounting reports on what is causing a problem and how to fix that problem.

                 QUALITATIVE ATTRIBUTES   OF         
                            ACCOUNTING

    COMPREHENSIBLE: Accounting informations ought to be presented in a logical and simple manner in a way that it will be easily understood by the users i.e investors,lenders e.t.c.

    RELIABILITY: This means that the informations must be factful,verifiable,neutral and complete.

    COMPARABILITY: This is very useful in accounting because the accounting statements should contain the figures of the past years and that of the current year so that the performance of the current year will be compared with that of the past year and this enables the company to know if they are progressing or liquidating.

    RELEVANCE:  Unnecessary information shouldn’t be included in the financial statements as the information depicts the company’s objective. The financial information influences the decision of the users and this is more reason why it should contain relevant information.
              
               FUNDAMENTAL PRINCIPLES OF    . ACCOUNTING :
    Accounting principles refer to the rules and guidelines followed by companies while reporting their financial data. Through these rules, experts can examine the financial data by standardizing accounting methods. These principles ensure that the quality of the financial information reported by companies is improved. Let us discuss the concept and principles of accounting in the next section.
    The aim of accounting principles is to compare multiple financial statements on the same level. For this comparability, it is mandatory that these accounting principles have been followed to same set of standards.

  114. Avatar Tabansi Johnbosco chijindu says:

    NAME: Tabansi Johnbosco chijindu
    REGISTRATION NUMBER: 2021/245662
    Questions
    Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the Major differences between them.
    Answers
    1) we have two major categories of Accounting which is
    Cash Accounting and Accrual accounting
    Cash accounting is the simplest and most basic method of accounting which focuses on cash inflows and outflows . It is predominantly used by individuals for personal accounting as well as by small business . In a cash based accounting system, revenues and expenditures are recognized only when money is exchanged. Irrespective of when goods and services are delivered. This means that this method does not introduce the additional complexities of accounts payables, receivables, or current assets and liabilities . It also means that any sale or expenses aren’t reflected in the financial statements untill the amount is realized, again investments in inventory are shown as expenses until they can be sold for cash. With cash Accounting, it’s more difficult to accurately assess your business financial performance..
    B) Accrual accounting…
    Is used in moste professional organizations and business around the world, accrual accounting recognizes income only when goods and services are delivered, and expenses are recorded especially when they are incurred. For example. If you were hired to construct a house, you would record revenues from the project as it was completed, irrespective of when the customer paid the money. The same applies for expenses. Which are reported when they are incurred not when you pay them. Again, Accrual accounting also uses double entry accounting with accounts for receivables, payables and inventories.
    DIFFERENCE BETWEEN COST ACCOUNTING AND ACCRUAL ACCOUNTING .. In cost basis of Accounting .. it is where any income or expenses is recognized only when there is an inflows or outflows of cash … While Accrual accounting is the basis of Accounting where any income or expenses is recognized when it is earned/ incurred, irrespective of the time when it is paid/ collected.
    ii) cash basis of Accounting is simple in naruy wheres the Accrual accounting is complex in nature.
    III) Cash basis of Accounting follows the single entry system that records either inflow or outflow of cash. While Accrual accounting follows a double entry system of Accounting where each transaction has two outcomes in the form of debit and credit.
    III) income statement will show a relatively lower income under Cash basis of Accounting .. while income statement will show higher income levels under the accrual basis of Accounting..
    iv) Cash basis of Accounting has low Accuracy while Accrual basis of Accounting is more accurate than the Cash basis of Accounting..
    V) Cash basis of Accounting is suitable for micro to small business while Accrual basis of Accounting is suitable for large corporation..
    Question 2
    What are the qualitative attributes of Accounting . answers
    a) relevance (b) Reliability (c) understandability (d) comparability (e) consistency (f) representation faithfulness.
    Question 3
    Discuss the fundamentals of principles of Accounting..
    Answers
    Fundamentals of principles of Accounting includes the monetary unit… Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with it…
    B) principles of conservatism… accountants aree said to be very conservative by nature. They want to hope fore the best and be prepared for the worst. This is displayed in the rules that they have created fore their profession. One of the central tenets of Accounting is the principle of conservatism, According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must State the lowest possible revenue and highest possible costs.
    iii) cost principle .. closely related to the principle of conservatism ..
    Is cost principle .
    It advocates that companies should list everything on the financial statements at the cost price usually assets like Land , building, gold etc.

  115. Avatar Akoru Augustina Akam / 2021/245674 says:

    Q1) two major categories accounting and their differences
    Financial accounting: is the process of recording, classifying, and summarizing financial transactions to provide information that is useful in making business decisions. Financial statement are the primary output of financial accounting, and they include the balance sheet, income statement, and cash flow statement.
    Financial accounting is used for a variety of reasons including measuring an organization performance, assessing it liquidity, and predicting it’s future Cash flow. It provides information that can be used to make decisions about how to allocate resources an manage risks.
    Managerial accounting: is the process of identifying, analyzing, interpreting, and communicating financial information to Managers so that they can make informed decisions about to run their business. Managerial accounting reports often include financial information, such as cost of goods sold, budget variances and financial ratios.
    Differences
    i) Financial accounting is the original form of accounting that deals with recording business transactions and summarizing the data into reports, which are presented to the users so that financial decisions can be made rationally.
    While managerial accounting is a new field of accounting that studies management aspects. It deals with the provision of financial data to the company management so that they can make rational economic decisions.
    ii) financial accounting emphasize on giving true and a fair view of the financial position of the company to various parties. On the contrary, managerial accounting aims at providing both qualitative information to the managers, so as to assist them in decisions making and thus maximizing the profit.
    Q2) qualitative attributes of accounting
    i) Relevance
    ii) Representational faithfulness
    iii) Verifiability
    iv ) Timelines
    v) Understandability
    vi) Comparability
    Q3) Fundamental principles of accounting
    i) Revenue Recognition principle: when you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenue are recognized through the income statement of your company in order for your revenue to be recognized in the period that the service is were provided if you are on the cash basis, then the revenue need to be recognized in the period the cash is received.
    ii) Cost Principle: Recording your assets when you purchase a product or service help keep your business expenses orderly. It is important to record the acquisition price on anything you spend money on and properly record depreciation for those assets.
    iii) Matching Principle: expenses should be matched to revenue recognized in the same accounting period and recorded in the period of time where revenue was recognized on sold product or services, then the cost of those things should also be recognized
    iv) Full Disclosure Principle: The information on financial statement should be complete so that nothing is misleading. With this intention, important partner or clients will be aware of relevant information concerning your company.
    v) Objectivity Principle: The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers receipts and invoices. Having an objective view points in this case, helps rely on financial result.

  116. Avatar Anyanwu Chinwe Hephzibah says:

    Name: Anyanwu Chinwe Hephzibah
    Department: Economics
    Reg number: 2021/241307
    Question 1. Accounting can be classified into two major categories deeply discuss what the categories are? What are the major differences between them.
    Answer: Financial accounting is a specific branch of accounting involving a process of recording, summarizing and reporting transactions resulting from business operation over a period of time. While cost accounting is a process of assigning cost to cost objects that typically include a company’s projects, services, and any other activities that involves the company.
    Where cost accounting is a system that keeps tracks of the costs incurred by a business, financial accounting focuses on the financial position of the business
    Question 2. What are the qualitative attributes of accounting
    Answer: Relevance: This means that the information can influence the economic decisions made by users. Information is also relevant is it is able to help decision makers evaluate past decision.
    Reliability: This means that the user is assured that the information presented represents, faithfully without bias the transactions and event being reported
    Question 3. Discuss the fundamental principles of accounting
    Monetary principle: Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system.

    Going Concern Concept: A company is said to have an external existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do.

    Principle of Conservation: Accountants are said to be very conservative by nature. They went to hope for the best and prepared for the worst. This is displayed in the rules that they have created for their profession.

  117. Avatar Chibuzor Godson Chikwesiri says:

    NAME: Chibuzor Godson Chikwesiri
    REG NO.: 2021/244133.
    EMAIL ADDRESS: godson13heir@gmail.com
    COURSE: ECO 121.

    Accounting, is the process of measuring, processing, and sharing financial and other information about businesses and corporations. It is the process of keeping the accounting or record books of the financial transactions of the company or organization.
    What Is an Accounting Method?
    An accounting method refers to the rules a company follows in reporting revenues and expenses.

    1.Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the major differences between them?
    –The Categories Of Accounting
    The categories of accounting are:
    a. Cash accounting
    b. Accrual accounting

    A.Cash Accounting
    Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.
    In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size.For example,if a business generates more than $25 million in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to Internal Revenue Service rules.

    B. Accrual Accounting
    Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.
    Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made.

    –Major differences between them.
    The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.
    Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed.
    Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.
    Accrual accounting provides a more accurate view of a company’s health by including accounts payable and accounts receivable.
    The accrual method is the more commonly used method by large companies, especially by publicly-traded companies, as it smooths out earnings over time.
    The cash basis method typically is used by sole proprietors and smaller businesses.

    2. . What are the qualitative attributes of accounting?

    A. Fundamental (Primary) Qualitative Characteristics
    Qualitative characteristics of accounting information that must be present for information to be useful in making decisions:
    i.Relevance
    ii.Representational faithfulness

    B. Enhancing (Secondary) Qualitative Characteristics
    Qualitative characteristics of accounting information that impact how useful the information is:

    i.Verifiability
    ii.Timeliness
    iii.Understandability
    iv.Comparability

    To Expatiate,

    Relevance
    Relevance refers to how helpful the information is for financial decision-making processes. For accounting information to be relevant, it must possess:
    Confirmatory value – Provides information about past events
    Predictive value – Provides predictive power regarding possible future events
    Therefore, accounting information is relevant if it can provide helpful information about past events and help in predicting future events or in taking action to deal with possible future events. For example, a company experiencing a strong quarter and presenting these improved results to creditors is relevant to the creditors’ decision-making process to extend or enlarge credit available to the company.

    Representational Faithfulness
    Representational faithfulness, also known as reliability, is the extent to which information accurately reflects a company’s resources, obligatory claims, transactions, etc. To help, think of a pictorial depiction of something in real life – how accurately does the picture represent what you see in real life? For accounting information to possess representational faithfulness, it must be:
    Complete – Financial statements should not exclude any transaction.
    Neutral – The degree to which information is free from bias. Note that there are subjectivity and estimation involved in financial statements, therefore information cannot be truly “neutral.” However, if a company polled 1,000 accountants and took the average of their answers, that would be considered neutral and free from bias.
    Free from error – The degree to which information is free from errors.
    Verifiability
    Verifiability is the extent to which information is reproducible given the same data and assumptions. For example, if a company owns equipment worth $1,000 and told an accountant the purchase cost, salvage value, depreciation method, and useful life, the accountant should be able to reproduce the same result. If they cannot, the information is considered not verifiable.

    Timeliness
    Timeliness is how quickly information is available to users of accounting information. The less timely (thus resulting in older information), the less useful information is for decision-making. Timeliness matters for accounting information because it competes with other information. For example, if a company issues its financial statements a year after its accounting period, users of financial statements would find it difficult to determine how well the company is doing in the present.

    Understandability
    Understandability is the degree to which information is easily understood. In today’s society, corporate annual reports are in excess of 100 pages, with significant qualitative information. Information that is understandable to the average user of financial statements is highly desirable. It is common for poorly performing companies to use a lot of jargon and difficult phrasing in its annual report in an attempt to disguise the underperformance.

    Comparability
    Comparability is the degree to which accounting standards and policies are consistently applied from one period to another. Financial statements that are comparable, with consistent accounting standards and policies applied throughout each accounting period, enable users to draw insightful conclusions about the trends and performance of the company over time. In addition, comparability also refers to the ability to easily compare a company’s financial statements with those of other companies.

    The qualitative characteristics of accounting information are important because they make it easier for both company management and investors to utilize a company’s financial statements to make well-informed decisions.

    3.Discuss the fundamental Principles of Accounting.

    The fundamental principles of accounting are:

    Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.
    standards. We’ll notify you of any limitations in our capabilities regarding any task that you’d inquire from us and whether we can do it with professionalism and diligence.

    Confidentiality
    Confidentiality not only means to keep all information private but to do everything within our power to keep the information private. Some professional accountants work differently, but for us, the mere fact of you hiring us is considered private information. We don’t disclose any information outside of the individuals and/or parties involved and we don’t use any confidential information to our advantage or the advantage of a third-party. Also, as professional accountants, we’re not allowed to state any information as false or untrue, if from another source, we found the truth. When that happens, we shall take the proper procedures and enquire within the company to corroborate the information. We maintain confidentiality even after our work is done.

    Professional Behavior
    We shall not engage with any behavior that doesn’t follow the law and the ethical guidelines that all accountants must follow. We should treat all parties associated with respect and courtesy at all times during the time of our work and afterward. Even in the event of promoting ourselves, we shall not make any exaggerated claims about the qualification and experience we have gained for the services we offer or compare ourselves with the work of others.

  118. Avatar Udeh Beatrice Chinaza says:

    Name:Udeh Beatrice Chinaza.
    Reg No:2021/244045
    Department:Economics.

    1)Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business.This involves the preparation of financial statements available for public use. Stockholders, suppliers, banks, employees, government agencies, business owners, and other stakeholders are examples of people interested in receiving such information for decision making purposes.
    Financial accountancy is governed by both local and international accounting standards. Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting used in any given jurisdiction. It includes the standards, conventions and rules that accountants follow in recording and summarizing and in the preparation of financial statements.
    ii)Managerial Accounting : simple definition of management accounting is the provision of financial and non-financial decision-making information to managers. In other words, management accounting helps the directors inside an organization to make decisions. This can also be known as Cost Accounting. This is the way toward distinguishing, examining, deciphering and imparting data to supervisors to help accomplish business goals.The information gathered includes all fields of accounting that educates the administration regarding business tasks identifying with the financial expenses and decisions made by the organization. Accountants use plans to measure the overall strategy of operations within the organization.
    B) Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.
    Managerial accountants focus on short-term growth strategies relating to economic maintenance. For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product.
    Financial accountants focus on long-term financial strategies relating to organizational growth.
    2) Relevance
    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances.
    ii) Representational faithfulness
    Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.
    iii) Verifiability
    To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results.
    iv) Understandability
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information
    v) Timeliness
    Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions.
    Vi) Comparability
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance.
    3) Integrity.:
    A professional accountant should be straightforward and honest in all professional and business relationships
    ii) Objectivity.:
    A professional accountant should not allow bias, conflict of interest or undue influence of others.
    iii) Professional Competence and Due Care.:
    A professional accountant has a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services based on current developments in practice, legislation and techniques. A professional accountant should act diligently and in accordance with applicable technical and professional standards when providing professional services.
    iv) Confidentiality.:
    A professional accountant should respect the confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without proper and specific authority unless there is a legal or professional right or duty to disclose. Confidential information acquired as a result of professional and business relationships should not be used for the personal advantage of the professional accountant or third parties.
    v) Professional Behavior.:
    A professional accountant should comply with the relevant laws and regulations and should avoid any action that discredits the profession.

  119. Avatar Ameh Emmanuel Chinaecherem says:

    Name: Ameh Emmanuel Chinaecherem
    Reg no: 10523257ED
    email : emmanuelchinaecherem115@gmail.com

    (1)The categories are as follows:
    Managerial accounting & Financial accounting.
    Managerial accounting can also be called management accounting. It is an accounting for the management i.e., accounting which provides
    arrangements and combinations or adjustments of the orthodox information to provide
    presentation of accounting information is such a way as to assist management in the
    necessary information to the management for discharging its functions. According to
    the Anglo-American Council on productivity, “Management accounting is the
    confined to the area of cost accounting but also covers other areas (such as capital
    Information about funds, costs, profits etc. Management accounting is not only
    the Chief Executive with the information from which he can control the business e.g.
    creation of policy and the day-to-day operation of an undertaking.” It covers all
    expenditure decisions, capital structure decisions, and dividend decisions) as well.
    Financial accounting is the accounting system concerned only with the financial state of affairs and
    from of accounting. It is mainly concerned with the preparation of financial
    balance sheet, show them the manner in which operations of the business have been
    financial results of operations is known as Financial Accounting. It is the original
    statements for the use of outsiders like creditors, debenture holders, investors and
    financial institutions. The financial statements i.e., the profit and loss account and the
    conducted during a specified period.

    The major difference between managerial accounting and financial accounting is that the managerial accounting provides information primarily intended for managers and others inside the company, While Financial accounting provides information primarily intended for people outside the organisation.
    Again, most financial accounting information is of a monetary nature, While managerial accounts incorporates non monetary measures.
    Limited companies must by law prepare financial accounts, While there is no legal requirement to prepare management accounts.
    As financial accounts are essentially historical, Management accounts are both an historical record and a future planning too.

    (2) The qualitative attributes of accounting includes the following:
    i. RELIABILITY : It is the first qualitative characteristics of accounting information. It simply means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what its meant to represent.
    ii. RELEVANCE : The second qualitative characteristics of accounting information is relevance. It means that a relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.
    iii. UNDERSTANDING : This is the third most important qualitative characteristics of accounting information. It simply means that decision makers must interpret accounting information in the same sentences it is prepared and conveyed to them.
    iv. COMPARABILITY : The last qualitative characteristics of accounting information is Comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstances or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

    (3)The following are the basic fundamental principles of Accounting:
    i. Monetary Unit: Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    ii. Going Concer: A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years. In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    iii. Principle Of Conservatism: Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organisation must state the lowest possible revenue and the highest possible costs.This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    iv. Cost Principle: Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized. Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  120. Avatar Johnson Esther Ebubechukwu Reg number: 2021/241340 says:

    1. i.Cash Basis Accounting
    ii. Accural Accounting
    I. Cash Basis Accounting: Revenue is reported on the income statement only when is cash is received.Expenses are recorded only when cash is paid out. The cash method is typically used by small businesses and for personal finances.
    II. Accural Accounting: Revenue is accounted for when it is earned. The accural method records revenue when a product or service is delivered to a customer with the expectation that money will be paid in the future.
    Differences between cash Basis Accounting and Accural Accounting.
    I. Cash accounting recognizes revenue only when money is received but Accural accounting recognizes revenue when it is earned.
    II. Cash accounting recognizes expenses when cash has been spent while Accural accounting recognizes expenses when they’re billed.
    III. In cash accounting taxes are not paid on money that hasn’t been received yet while in Accural accounting taxes are paid on money that you’re still owed.
    IV. Cash accounting is used mostly used by small businesses while Accural accounting is used for businesses with large revenue.

    2. Qualitative Attributes of Accounting
    I. Comparability
    II. Verifiability
    III. Timeliness
    IV. Understandability

    I. Comparability: implies that users of financial statements must be able to compare aspects of an entity at one time and over time and between entities.
    II. Verifiability: it provides assurance that the information faithfully represents what it’s supposed to be representing.
    III. Timeliness: it means that the accounting information is available to all stakeholders in time for decision making process.
    IV. Understandability: implies that the financial statement, information must be classified,characterized and presented clearly and concisely.

    3. Principles of Accounting
    I. Revenue Recognition Principle
    II. Cost principle
    III. Matching principle
    IV. Objectivity principle
    V. Full Disclosure Principle

    I. Revenue Recognition Principle: this is the period of time when revenue are recognized through the income statement of your company. In order for your revenue to be recognized in the period that the service were provided if you’re on the accural basis and if you’re on the cash Basis then the revenues need to be recognized in the cash was received.
    II. Cost Principle: it is important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
    III. Matching principle: Expenses should be matched to the revenue recognized in the same accounting period and be recorded in the period the expenses was incurred.
    IV. Objectivity principle: Accounting data should consistently stay accurate and be free of personal opinions.
    V. Full Disclosure Principle: Each piece of information should be included in the financial statement of an entity. It is important to disclose information about events that have a material impact on the financial position of an entity.

  121. Avatar ONUOKA ANTHONIA CHIAMAKA says:

    NAME: ONUOKA ANTHONIA CHIAMAKA
    DEPARTMENT: ECONOMICS
    REG NO: 2021/243690
    EMAIL ADDRESS: anthoniaonuoka@gmail.com

    1. The two categories of accounting is cash accounting and accrual accounting.
    Cash accounting: This is an accounting that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received .
    Accrual accounting: This is based on the matching principle, which is intended to match the timing of revenue and expenses recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.
    The major difference between cash accounting and accrual accounting lies in the timing of when sales and purchases are recorded in your accounts. Cash accounting recognises revenue and expenditure only when money changes hands. While accrual accounting recognises revenue when it’s earned and expenses when they’re billed ( but not payed ).
    2. The qualitative attributes of accounting are:
    a. Relevance.
    b. Representational faithfulness.
    c. Verifiable.
    d. Understanding.
    e. Comparable.
    3. The fundamental principles of accounting are:
    a. Revenue recognition principle: This is a period of time when revenues are recognised through the income statement of your company.
    b. Cost principle: Recording your assets when you purchase a product or service helps keep your business’s expenses orderly.
    c. Matching principle: Expenses should be matched to the revenues recognised in the same accounting period and be recorded in the period the same expenses was incurred.
    d. Full disclosure principle: Information on financial statements should be complete so that nothing is misleading.
    e. Objective principle: The accurate data should consistently stay accurate and be free of personal opinions.

  122. Avatar Ogeobuma says:

    NAME: Ogeobuma Janet Jennifer
    FACULTY: Education
    DEPARTMENT: social science education
    UNIT: Economics Education
    reg no: 10156354JD

    1)The two main accounting methods are cash accounting and accrual accounting. Cash accounting records revenues and expenses when they are received and paid. Accrual accounting records revenues and expenses when they occur. Generally accepted accounting principles (GAAP) requires accrual accounting.

    1b)Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed.

    Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.

    Accrual accounting provides a more accurate view of a company’s health by including accounts payable and accounts receivable.

    The accrual method is the more commonly used method by large companies, especially by publicy traded companies, as it smooths as out earning over time.

    2)The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability

    3)
    The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle. Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements.

  123. Avatar Nana Wendezinkede Danielle says:

    Name: Nana Wendezinkede Danielle
    Matric No: 2021/241347
    Department: Economics

    1) The two major categories of accounting are:
    Cash Accounting and Accrual Accounting
    i) Cash Accounting: This is an accounting method where payment receipt are recorded during the period in which they are received and expenses are recorded in the period in which they are actually paid. In other words, revenues and expenses are recorded when cash is received and paid respectively. Cash Accounting is also called Cash-basis accounting.

    ii) Accrual Accounting: This is where revenue and expense are recorded when they are incurred. Small businesses often use cash accounting because it is simpler and straightforward and it provides a clear picture of how much money the business actually has on hand. Corporations, however are required to use accrual accounting under General Accepted Accounting Principles (GAAP).

    Differences between Cash Accounting and Accrual Accounting

    a) The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized

    b) The cash method provides an immediate recognition of revenue and expenses , while the accrual method focuses on anticipated revenue and expenses.

    c) Cash accounting records revenue and expenses when cash related to those transactions actually is received or dispensed while accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed.

    d) The cash method is typically used by sole proprietors and smaller businesses while the accrual method is the more commonly used method by large companies as it smooths out earnings over time.

    2) The qualitative attributes of accounting are:

    Relevance
    Reliability
    Understandability
    Comparability
    Consistency
    Neutrality
    Materiality
    Timeliness
    Verifiability
    Conservatism
    Substance over form

    3) The following are the basic fundamental principles of Accounting:

    a) Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    b) Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    c) Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    d) Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  124. Avatar Onovo Emmanuel Chimobi 2021/246561 says:

    1. Financial Accounting
    Financial accounting involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal management use to help make decisions.
    2. Managerial Accounting
    Managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team in making strategic and tactical business decisions.
    DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING
    1. Financial Accounting is a discipline that deals with the preparation of financial statements, and communication of the information to the users. As against, management accounting is all about the provision of information that is useful to the management, to assist the management in the formulation of policies and day to day operations for efficient operation of the business.
    2. Financial Accounting uses the monetary records of past financial activities, so it is historically oriented. As against, management accounting is future-oriented, as it provides both present and future information in the form of forecasts and budgets which are duly analysed and presented in a detailed manner, so as to act as a base for management decision making.
    3. In financial accounting, the reports prepared are mainly used by external users, but internal users also use them. It reflects how the business enterprise uses resources during a particular period of time. External users use it for decision-making purposes. However, it is the members of management who use the reports generated under management accounting.
    QUALITATIVE ATTRIBUTES OF ACCOUNTING
    Relevance
    Relevance means that the information can influence the economic decisions made by users. For example, the information may help users to predict future events, such as future cash flows, and help determine alternative courses of action under consideration.
    Reliability
    Reliability means that the user is assured that the information presented represents faithfully, without bias, the transactions and events being reported. This is a major reason that accountants record assets at their original historical cost.
    Timeliness
    For accounting information to be relevant, it must be timely, i.e. it must be available to the decision makers before it loses its capacity to appropriately inform decisions.
    Comparability
    Comparability results when different companies use the same accounting principles.
    Materiality
    It is important that users are not overwhelmed with so much detail that they cannot clearly understand the message. The concept of materiality relates to the extent to which information can be omitted, misstated or grouped with other information without misleading the statement users when they are making their economic decisions.
    FUNDAMENTAL PRINCIPLES OF ACCOUNTING
    1.Principles of Conservatism
    The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise.
    2. Principle of Accrual
    The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them.
    3. Principle of Cost
    The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation.
    4. Principle of Consistency
    The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.
    5. Principle of Economic Entity
    According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

  125. Avatar Akachukwu kosisochukwu John says:

    Name:Akachukwu Kosisochukwu John
    Reg no:2021/244040
    Dept:Economics
    Course: Eco 121

    1. Cash basis lets businesses record income and expenses only when cash is actually received or paid. Accrual accounting involves tracking income and expenses as they are incurred (when an invoice is sent or a bill received) instead of when money actually changes hands.
    The difference between cash basis and accrual basis accounting comes down to timing.
    When do you record revenue or expenses? If you do it when you pay or receive money, it’s cash basis accounting. If you do it when you get a bill or raise an invoice, it’s accrual basis accounting.
    If the company receives an electric bill for $1,700, under the cash method, the amount is not recorded until the company actually pays the bill.
    However, under the accrual method, the $1,700 is recorded as an expense the day the company receives the bill.
    2.comparability
    Verifiability
    Timeliness
    Understandability
    3. The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle. Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements.

  126. Avatar Ugoh Jacinta Nzubechi Jamb reg:10811405GD Department: Economics says:

    1) Financial accounting involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible .
    Accounting principles and standards, such as US GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards), are standards that are widely adopted in financial accounting. The accounting standards are important because they allow all stakeholders and shareholders to easily understand and interpret the reported financial statements from year to year.

    b) Managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team in making strategic and tactical business decisions.
    Managerial accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing accounting information, deciding on the best next steps to follow, and then communicating these next steps to internal business managers.
    An example of managerial accounting is cost accounting.
    B)Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes

    b) Managerial accountants focus on short-term growth strategies relating to economic maintenance. For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product.
    Financial accountants focus on long-term financial strategies relating to organizational growth.

    c)Compliance with established formats is vital for financial accountants, who must prepare reports for shareholders and potential investors as well as executives. Managerial accountants, however, generally prepare their reports for internal audiences.

    2)Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions.
    a)Faithful representation
    The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent.
    b) Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time.
    c) Verifiability
    The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.
    d)Timeliness
    The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.
    e)Understandability
    The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely.

    3) Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.
    b) Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
    c) Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
    d) Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

  127. Avatar UDEZE MMESOMA MARYCYNTHIA says:

    NAME:UDEZE MMESOMA MARYCYNTHIA
    REG NO: 2020/247504
    DEPARTMENT: ECONOMICS
    COURSE TITLE: PRINCIPLES OF ACCOUNTING
    COURSE CODR: ECO 121
    ANSWERS
    1). To effectively track the income and expenses of a business it must use the three separate types of accounting and they include:
    a. cost accounting
    b. financial accounting
    c. managerial accounting
    I. The cost accounting : the main objective of cost accounting is to determine the cost of goods manufactured by the producers. it helps the management in controlling the cost.
    Cost accounting can be further as a specialty field that looks closely at the actual cost related to the accomplishment of a business goal. Cost accounting plays an important role in optimizing production processes in order to reduce costs for businesses and bring higher profits for individual product sales.
    The costs of producing a product for a business can be categorized as fixed and variable costs.

    II. The managerial accounting : The objective of the managerial accounting is to communicate the relevant information to the manager of the business to enable it make suitable decisions.
    Managerial accounting can be easily mistaken for financial accounting, but actually, they are two different aspects. Managerial accounting is the process of organizing financial data and reporting financial status to managers. Thereby helping business managers make optimal operating decisions and grasp the issues as soon as possible if there are any. Management accounting information is especially important in operating an enterprise, and at the same time serves to control and evaluate that business. While financial accounting can be publicly shared with stakeholders, management accounting information is shared exclusively with others in an organization due to the sensitive nature of the information.
    Three common types of management accounting are used:
    Strategic management
    Performance management
    Risk management

    III. The financial accounting : The primary function of financial accounting is to track, record, and recap all daily transactions into monthly, quarterly, and yearly financial statements. From the financial statements, the owners and financial managers can perform multiple forms of financial analysis, such as Common size financial statement analysis or Ratio analysis. The result from the analysis is reported to the stakeholders later. In short, financial accounting provides a general look at business performance over a period of time in the form of financial statements – the Balance Sheet, Income Statement, and Statement of Cash Flows.

    2). The qualitative attributes of accounting are as follows :
    I. Comparability
    The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.

    II. Verifiability
    The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.

    III. Timeliness
    The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.

    IV. Understandability
    The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. The financial reports are prepared with the assumption that its users have a ‘reasonable knowledge’ of the business and its economic activities

    V. Relevance
    The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.

    3). The fundamental principles of accounting are

    I. Monetary Unit
    Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

    II. Going Concern
    A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
    In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

    III. Principle Of Conservatism
    Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
    This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

    IV. Cost Principle
    Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
    Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

  128. Avatar TOCHUKWU ADAORAH DESTINY says:

    1. a) CATEGORIES OF ACCOUNTING
    the two major types of accounting are;
    I) FINANCIAL ACCOUNTING: This is a process of recording, summarizing, and reporting various transactions that occur over a period of time during the course of business.
    We gather and convert all the daily transactions into financial statements, balance sheet, income statements, and cash flow statements and in preparation, financial accounting uses a bunch of accounting principles. These contain different rules and assumption set out for the preparation of financial statements. Furthermore, there are two different methodology financial accounting uses to prepare financial statements:
    *Accrual method which entails recording transaction as and when the transaction occurs and revenue is recognizable or expenses are certain and payable and cash method, which records transactions on the basis of the exchange of cash.
    And the combination of the above two methods.

    II. COST ACCOUNTING,
    This is a process of recording, summarizing, analyzing, and allocating the cost over the process of manufacturing a product or providing services.
    It helps management to determine the cost involved in manufacturing a product or services by use of different cost accounting method.
    Further, it helps management to make organization cost-efficient and capable. Cost accounting acts as a controlling tool.
    Elements of cost accounting are Material, Labor
    Other expenses etc.

    b)MAJOR DIFFERENCES BETWEEN THE CATEGORIES OF ACCOUNTING
    **In Financial accounting, Ratio analysis of financial information are contained in financial statements.

    **Comparative analysis of past and current financial information.

    **Through an analysis of fund flow statements and cash flow statements.

    **Analysis of Return on capital employed.

    WHILE BASED ON COST ACCOUNTING INFORMATION,cost volume and profit volume analysis.
    **Incremental and differential costing method.
    **Standard costing and variance analysis.

    2. QUALITATIVE ATTRIBUTES OF ACCOUNTING
    Qualitative characteristics of accounting information are traits that allow financial professionals to more easily understand and make decisions on accounting reports and they are six different types of qualitative characteristics of accounting information, including:
    a)Relevance
    b)Representational faithfulness
    c)Verifiability
    d)Understandability
    e)Comparability
    f)Timeliness

    3.FUNDAMENTAL PRINCIPLES OF ACCOUNTING
    1) Accrual Principle:
    This is a concept in accounting that mandates the recording of transactions in the time period in which they occur. It is regardless of the time when actual cash flows for the transactions are received. Through this principle, one can gain an accurate insight into the financial status of a business. Most large-scale businesses adopt an accrual system to determine the cash flow of the business operations. Along with this, revenues and related expenses are recorded in the same time period of reporting. In case, a business has more than $5 million in revenue, then such businesses must adopt this system for the purpose of taxations.

    2. Consistency Principle :
    According to this principle, when an organisation adopts a specific accounting method of reporting or documentation, then it should stay consistent with the method. The aim of this basic accounting principle is to make financial statements comparable across industries and companies. This principle has two issues associated with it. First, the principle is not properly followed when many people are recording data and compiling reports. To combat this issue, organizations need to have a set method internally. The second issue is related to switching between the financial reporting methods. Some organizations do this in order to manipulate the data to their advantage.

    3. Conservatism Principle
    The principle gives you a realistic perspective of unexpected situations. According to this principle, one should recognize expenses and liabilities at the early stages even if there is uncertainty about the outcome. However, the principle recognizes revenues and assets when there is an assurance of its receival. This principle can be applied to recognizing the estimates. The conservatism principle is the foundation of lower cost or market rule. As per this rule, one should record inventory at a lower end of its current market value or at its acquisition cost.

    4. Cost Principle
    Whenever a business acquires an asset, its initial value is recorded in its financial reports of the business. This value might not be improved in the market value of inflation. It is also not updated to reflect any depreciation or even appreciation. This value is known as the cost principle. As per the principle, companies keep a record of their tangible assets without reflecting the market value. Through this principle, companies can assess the actual cost of using financial services for calculating the historical cost principles of the assets of the company.

    5. Matching Principle
    The matching principle is a concept in accounting that states that companies must report their expenses and revenues simultaneously. The revenues and expenses are matched on income statements for a specific time period. It is a part of the accrual accounting method that provides an accurate representation of operations on the income statement. This principle is quite useful for investors as investors can match revenue and expenses to get a better sense of the finances of a business. Along with the income statement, there is a need to assess the cash flow statement as well.

    6. Materiality Principle
    As per the materiality principle, any item that may impact the decision-making process of an investor must be recorded. These details must be recorded in length in the financial statements using Generally Accepted Accounting Principles (GAAP). The material principle states that the accounting standard can be ignored if the end result is small. It is an important principle for deciding if a transaction should be recorded as a part of closing process.

    7. Going Concern Principle.
    According to this accounting principle, a company will complete its recent plans, meet its financial obligations and use its existing assets. This process of continuing operations indefinitely must go on until the company has any evidence on the contrary. Through this principle, the company continues to make money to avoid going bankrupt. In case, the company is unable to adopt this principle properly, the chance of liquidation and bankruptcy increases. Going concern concept is also known as the continuing concern concept. A company continues to be a going concern till the time the sale of assets does not hamper its operations. If a company is no longer a continuing concern, it needs to start reporting specific information on financial statements. Through this principle, accountants can make decisions related to which information should be reported on financial statements.

    8.Revenue Recognition Principle.
    This is a part of GAAP that identifies certain conditions in which the revenue is recognized. The revenue is recognized when a critical event has occurred. This principle uses the accrual method of accounting. According to this, revenues are recognized when realised and earned. It is a straightforward principle when revenue is recognized when customers make payments. Whenever the production takes longer, the accounting for revenue becomes more complicated. This is one of the standard accounting principles in the industry.

  129. Avatar CHIZITALU EKENE-MADUEKE CHERISH ECONOMICS 2021/245588 says:

    1. Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the major differences between them?
    There are two major classes of accounting which are Financial Accounting and Cost Accounting.
    Financial Accounting can be defined as a process of recording, summarizing, and reporting various transactions that occur over a period of time during the course of business.
    Cost Accounting is a process of recording, summarizing, analyzing, and allocating the cost over the process of manufacturing a product or providing services. It helps management to determine the cost involved in manufacturing a product or services by use of different cost accounting method. Cost accounting acts as a controlling tool.

    2. What are the qualitative attributes of accounting?
    The two fundamental qualitative characteristics of financial reports are relevance and faithful representation. The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.

    3. Discuss the fundamental Principles of Accounting.
    The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle.
    Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements.

  130. Avatar Acholonu Chidubem Wisdom says:

    Name: Acholonu Chidubem Wisdom
    Reg no: 2021/243697

    1) Two major categories of accounting are:
    a) Cash accounting: This involves revenues and expenses as they are received and paid through cash inflows and outflows
    b) Accrual accounting: These are revenues and expenses that are earned and incurred through sales and purchases on credit and by using accounts receivable and payable
    The major difference between them is that cash accounting focuses on only on corporate transactions involving cash while Accrual accounting focuses on recording transactions when they are incurred even if it has not been received immediately
    2) Qualitative attributes of accounting are:
    a) Comparability: This involves the process of evaluating one’s financial period with another to understand a company’s trend and overall performance
    b) Relevance: This is an attribute that can help individuals make decisions related to a business’ finance
    C) Understandability: This is the measure of how easily an individual can comprehend a company’s financial report or accounting information
    D) Reliability: This is an attribute that makes accounting information useful for decision making
    3) Fundamental principles of accounting are:
    A) Objectivity: The accounting data should consistently stay accurate and be free of personal opinion
    B) Matching principle: Expenses should be matched to the revenues recognized in the same accounting period
    C) Revenue recognition principle: Revenue is reported when it’s earned, regardless of when payment is actually received
    D) Full disclosure principle: The information on financial statements should be complete so that nothing is misleading

  131. Avatar Adepoju Oluwatosin Eliel says:

    Name:Adepoju Oluwatosin Eliel
    Reg no:11274715EG
    Dept:Economics (100lvl)
    Date:Monday 13 February 2023

    Question 1: Answer
    A) i)Cash Accounting
    ii)Accrual accounting

    B)Cash accounting reports revenues and expenses as they are received and paid through cash inflows and outflows.Cash accounting is mostly used by small business owners and it helps them in accounting for their sales and purchases on a small or medium scale. It is used in transacting payment received and expenses made.

    Accrual accounting reports them as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable. Generally accepted accounting principles (GAAP) requires accrual accounting.It is based on Matching principle,which helps to accounting for the timing on sales and expense recognition. Transactions are made when goods are fully purchased but not payed yet. Goods are incurred from the seller. The purchase is recorded as revenue,expenses are recorded as well.

    C)Cash accounting lets businesses record income and expenses only when cash is actually received or paid. Accrual accounting involves the tracking of income and expenses as they are incurred (when an invoice is sent or a bill received) instead of when money actually changes hands.
    Cash accounting is much simpler to understand
    Accrual is required for certain businesses(small businesses or medium sized)and preferable for others to leverage certain tax strategies.
    Other differences:
    a) When transaction are made:
    Cash account:receives or money is spent
    Accrual account:When a sale occurs or an expense is incurred
    b) Tax liability incurred:
    Cash account:When the income is received
    Accrual account:When the income is recorded
    c)Ease of use:
    Cash account:Very simple and straightforward
    Accrual account:More complex and time-consuming
    d)Required for businesses of a certain size:
    Cash account: No.
    Accrual account:Yes.

    Question 2: Answer:
    There are six different types of Qualitative attributes of Accounting

    a)Relevance:
    Relevance, in regards to accounting information, helps individuals in making decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which helps provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.

    Accounting information can be considered relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

    b)Representational faithfulness:
    Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.

    There are three factors to consider in measuring a company’s representational faithfulness:

    Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
    Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
    Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.

    c)Verifiability:
    To create accurate financial predictions, a company ensures that its financial information can be verifiable. Verifiability involves authenticating financial information and calculations by the use of several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company needs to rework its financial report and perform calculations again.

    d)Understandability:
    Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. It creates the avenue for a layman yo be able to understand the day to day transactions of a company and its investments.Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.

    Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

    e)Comparability:
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.

    Comparability can also refer to a company’s ability to compare its financial statements to its competitors. It allows the company to provide changes to thyer work pattern and also helps to know if there is an increase jn capital or a reductikn(profit or loss)Comparability can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.

    f)Timeliness:
    Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions. A company must be able to analyze and record transaction timely and precise. They should be able to present transaction details speedily.

    C)The 5 basic principles of accounting are as follows:
    i). Revenue Recognition Principle

    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
    ii). Cost Principle

    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
    iii). Matching Principle

    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized. Equality between revenue incurred and expenses made.
    iv). Full Disclosure Principle

    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.
    Accounting records must be precise and up to date,every transaction record must be the same.
    v). Objectivity Principle

    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.
    Your analysis must be based on proof from previous transactions made or the records from recent ones. It must be convincing and concrete.

  132. Avatar Azubuike Emmanuel Ayomide says:

    Azubuike Emmanuel Ayomide 2021/241308
    1.) Cash accounting is the methodology under which transactions are recorded when they actually happen. For example, income will be recorded when the company receives cash and expenses are recorded when they are actually paid out and not when the bill is raised.
    Accrual accounting is where a business records revenue or expenses when a transaction occurs using the double-entry accounting method.
    Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed. Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.
    2.). Relevance; In regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.
    Representational faithfulness; Sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.
    Verifiability; To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results.
    Understandability; Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand.
    Comparability
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions.
    3) The Fundamental Principles of Accounting :

    i) Revenue Recognition Principle

    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    ii) Cost Principle

    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    iii) Matching Principle

    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    iv) Full Disclosure Principle

    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    v) Objectivity Principle

    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

  133. Avatar Ajah Helminna Sama says:

    1 The two primary categories of accounting are accrual accounting (generally used by companies) and cash accounting (generally used by individuals).

    Cash accounting reports revenues and expenses as they are received and paid through cash inflows and outflows;
    accrual accounting reports them as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable

    Cash accounting records revenues and expenses when they are received and paid.
    Accrual accounting records revenues and expenses when they occur.

    The major difference between cash account and accural is that accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses

    Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed.
    Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.

    3. The fundamental accounting principles include:
    Conservatism Principle
    The conservatism principle states that accountants and businesses should record both expenses and liabilities A. Furthermore, it states the revenues and assets should only be recorded when you are sure that they will occur.

    Consistency Principle
    It asks accountants to continue to use any accounting principle or method they began with so long as they don’t have a demonstrably better principle or method.

    Cost Principle
    The cost principle states that businesses should only record their assets, equity investments, and any liabilities at original purchase costs. However, some businesses ignore this principle these days since they may opt to adjust assets and liabilities according to fair values instead.

    Economic Entity Principle
    The economic entity principle is the idea that any business transactions should be kept separate from the transactions of its owners or other businesses.

    Full Disclosure Principle
    The full disclosure principle states that businesses and their accountants should include all information necessary to understand financial statements in or alongside those financial statements.

    In other words, financial documents should be understandable by themselves without needing additional documents for clarification. This prevents confusion both within a business and in the event of an outside audit.

    Going Concern Principle
    The going concern principle is more of a philosophy than the other principle so far. It allows accountants and business owners to act as though the business will remain in operation for the foreseeable future.
    In practical terms, this allows businesses to defer the recognition of certain expenses, like depreciation, until they would likely kick in or come into effect.

    Matching Principle
    The matching principle is a simplistic concept that states you should record all expenses related to revenue at the same time that you record the original revenue.
    For example, if you record revenue from selling several retail inventory items, you should also record the expenses for inventory and cost of goods.

    Materiality Principle
    The materiality principle states that you should always record transactions and accounting records if, by not doing so, you might alter the business decision-making process or the conclusions that someone might come to if they read a company’s financial statements.

    Monetary Unit Principle
    The monetary unit principle states that businesses should only record transactions that can accurately be stated in terms of currencies or units of value.
    This prevents businesses from estimating the value of their assets and liabilities too much and keeps things grounded in real, precise numbers.

    Objectivity Principle
    It’s the principle that states any accounting data should be as accurate and unbiased as possible. Personal opinions, such as your gut feelings or hypothetical dreams about the future of your company, should never be taken into account or recorded as official data.

    Furthermore, accounting data should be supported by evidence wherever possible.

    Reliability Principle
    The reliability principle focuses on proven transactions. According to this principle, only transactions that you can prove should be recorded. This is particularly important for auditors, who use “physical” evidence like recorded transactions to come to conclusions about their subject organizations.

    Revenue Recognition Principle
    The revenue recognition principle is similar to the last. It states that revenue should only be recognized when the business in question has mostly or substantially completed the earnings process. This prevents businesses from reporting earnings and revenue when it’s too early to guarantee that said income will be added to the company’s coffers.

    Time Period Principle
    Lastly, the time period principle essentially states that businesses should try to report the results of their activities over a set and standard period of time. For instance, accountants should not record business transactions over a quarter of three months, then record business transactions over a single month timeframe later.

    This allows accountants to make standard sets of comparable timeframes, helping them to create long-form or trend analyses using accounting software.Cg

    2 the qualitative attributes of accounting include:
    Relevance
    Representational faithfulness
    Verifiability
    Timeliness
    Understandability
    Comparability

  134. Avatar Neboh Odinakachukwu Maria says:

    Name: Neboh odinakachukwu Maria
    Reg no: 2021/241342
    1. TWO CATEGORIES OF ACCOUNTING
    a: Financial Accounting -It involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. Accounting principles and standards,such as GAAP (General Accepted Accounting Principles) or IFRS (international Financial Reporting Standards).
    b: Managerial Accounting: Is the process of identifying, analyzing, interpreting, and communicating financial information to managers so that they can make informed decisions about how to run their business. Managerial accounting reports and often includes financial statements as well as other types of financial information, such ad cost of goods sold ,budget variances, and financial ratios.
    DIFFERENCE BETWEEN MANAGERIAL AND FINANCIAL ACCOUNTING
    Managerial accounting focuses on an organization’s internal financial processes ,WHILE Financial accounting focuses on an organization’s external financial processes.
    2. THE QUALITATIVE ATTRIBUTES OF ACCOUNTING
    a: Reliability – It means that the users must be able to depend on the information and should be free from error and bias and faithfully represents what it is meant to represent.
    b: Relevance – Information must help in prediction, feedback and must influence the decisions of users in a positive manner.
    c: Understandability – It must interpret accounting information in the she sense as it is prepared and conveyed to them.
    d: Compatibility – It is believed that it is not sufficient that the financial information is relevant or for a particular time , in a particular circumstance or for a particular reporting entity.
    3. FUNDAMENTAL PRINCIPLE OF ACCOUNTING
    a. Integrity -It imposes upon professional accountants , a duty of straightforwardness and honesty at all times. It prevents our work from being corrupted by self – interest or d interest of other parties .
    b. Professional competence and due care – The principle prevents us from providing a low – quality or incompetent service and to act in accordance with the generally accepted accounting principles.
    c. Objectivity – It tells a professional accountant to focus on the task and nothing else .
    d. Behavior – We shall not engage with any behavior that doesn’t follow the law and the ethical guidelines that all accountants must follow.

  135. Avatar Ogochukwu chukwuka great says:

    Ogochukwu chukwuka great
    2021/241355
    greatchukwuka59@gmail.com

    1a.)TWO MAJOR CATEGORIES OF ACCOUNTING
    i.) Cash accounting : cash accounting reports revenues and expenses as they are received and paid through cash inflows and outflows. Cash accounting enables you to focus only on corporate transactions involving cash. Other economic events I.e those with no monetary input don’t matter because they don’t make it into financial statements. Under the cash accounting method a corporate bookkeeper always debit or credit the cash account in each journal entry depending on the transaction. To record customer remittances, for example, the bookkeeper debits the cash account and credit the sales revenue account.
    ii.) Accural accounting : Accural accounting reports revenue and expenses as they are earned and incurred through sales and purchases on credit and by using accounts receivable and accounts payable. Under Accural accounting, a company records all transactional data, regardless of the monetary inflow and outflows. In other words, this accounting type incorporates the cash accounting method, but goes beyond it to take into account all transactions making up a corporation’s operating activities. In a financial dictionary, “accruing” means accumulating an item and recording it as legally binding even though no cash paymrfent takes place. The phrases “account payable” and “account reiceivable” perfectly illustrate the concept of Accural.
    1b.)MAJOR DIFFERENCES BETWEEN CASH ACCOUNTING AND ACCRUAL ACCOUNTING
    Cash basis accounting records revenue and expenses when actual payments are received or disbursed. It doesn’t account for either when the transactions that create them occur. On the other hand, Accural accounting records revenue and expenses when those transactions occur and before any money is received or payed out.
    Cash basis reflects business transactions on a company’s financial statement when cash flows into or out of the business. While Accural accounting recognizes revenue when it’s earned and expenses when they are occurred regardless of when money actually changes hands

    2.) QUALITATIVEI ATTRIBUTES OF ACCOUNTING
    They are: comparability verifability timeliness understandability
    FASB(Financial Accounting Standards Board) list six qualitative characteristics which are :Relevance Faithful Representation Comparability verifability Timeliness Understandability

    3.)DISCUSS THE FUNDAMENTAL PRINCIPLES OF ACCOUNTING.
    Accounting principles are defined as the various guidelines and rules that companies must follow when documenting, recording and reporting financial transactions and information. They are:
    I.) Revenue recognition :it states that companies revenue are recognized when the service or product is considered delivered to the customer not when cash is received
    Ii. ) Matching concept :for recording revenue and expenses
    III.) Materiality concept :all items are reasonably likely to impact investors, decision making must be recorded or reported
    IV.) Consistency : refers to a company’s use of accounting principles over time

  136. Avatar Ezenduka Sochima Adriano 2021/241333 says:

    Reg No:2021/214333
    1a. The categories are:
    Financial accounting:it involves the preparation of financial statements meaning the aim is to measure the finances, financial basis, records and performance of a business as accurately as possible.They also gather information which the managerial sector analyse as to process of decision making. Financial statement are for external use as they handle the finances as book as loan statement, cash invoice etc they may also be for internal management use to help make decisions.
    Managerial accounting: it refers to the process of preparing report about business operation, and the report help assist the management team to make decisions.it is a process that allows an Enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the steps to take and broadcasting the steps to all internal business managers e.g cost accounting.
    B. Differences are:
    Financial accounting helps in measuring the performance of a business or financial statement accurately while managerial accounting analysis the information gathered from financial accounting reports and statement to prepare report about business operation, the report serve to assist the team in making decisions.
    2. Qualitative attributes are:
    Reliability
    Relevance
    Comparability
    Faithful representation
    Understandability
    3. Principle are:
    Cost principle
    Matching principles
    Revenue recognition principle
    Full disclosure principle
    Objectivity principle.

  137. Avatar Ogboluo Favour Chigaemezu says:

    ANSWERS

    1) The Two major categories of Accounting are :
    Cash accounting and Accrual accounting ;

    Cash accounting is also known as cash-basis accounting, cash receipts and disbursements method of accounting or cash records revenues and expenses when they are received and paid.
    Accrual accounting records revenues and expenses when they occur. Generally accepted accounting principles (GAAP) requires accrual accounting
    Cash basis lets businesses record income and expenses only when cash is actually received or paid while
    Accrual accounting on the other hand involves tracking income and expenses as they are incurred (when an invoice is sent or a bill received) instead of when money actually changes hands.

    2) The Qualitative Attributes of Accounting are :

    i) Reliability: The first qualitative characteristic of accounting information is reliability. Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.

    ii) Relevance: The second qualitative characteristic of accounting information is relevance. It is believed that a relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.

    iii) Understandability: Understandability is the third most important qualitative characteristic of accounting information. Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.

    iv) Comparability: The last qualitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

    3) The Fundamental Principles of Accounting :

    i) Revenue Recognition Principle

    When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

    ii) Cost Principle

    Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

    iii) Matching Principle

    Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

    iv) Full Disclosure Principle

    The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

    v) Objectivity Principle

    The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

  138. Avatar Mbaeze chidera marycynthia says:

    NAME- MBAEZE CHIDERA MARYCYNTHIA
    REG NO-10911021HC
    DEPARTMENT-ECONOMICS

    1.Accounting can be classified into two major categories.Deeply discuss what the categories are?
    what are the major differences between them.
    A.Financial accounting – is the process of recording, summarizing, and reporting a company’s business transactions through financial statements.Financial accounting is concerned specifically with the generation of these reports, that they are based on accurate information and follow generally accepted accounting principles also known as (GAAP).its also the financial statements that are written records that convey the business activities and the financial performance of a company.it involves the generation of accounting statements
    B.Managerial accounting – also called management accounting, is a method of accounting that creates statements, reports, and documents that help management in making better decisions related to their business’ performance. Managerial accounting is primarily used for internal purposes. managerial accounting analyzes the information gathered from financial accounting
    DIFFERENCES BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING
    A. Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.
    B.Managerial accountants focus on short-term growth strategies relating to economic maintenance. while Financial accountants focus on long-term financial strategies relating to organizational growth.
    C.financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.
    D.Managerial accounting is the process of identifying, analyzing, interpreting, and communicating financial information to managers so that they can make informed decisions about how to run their business. While Financial accounting is the process of recording, classifying, and summarizing financial transactions to provide information that is useful in making business decisions.
    2. What are the qualitative attributes of accounting
    A. Reliability implies that the information must be factual and verifiable
    B. Relevance accounting information depicted by financial statements must be relevant to the objectives of enterprise
    C. Understandability accounting information should be presented in such a simple and logical manner that are easily understood by their users
    D. Comparability the financial statements should contain the figures of previous year along with the current year
    E. Faithful representation accounting aims at preparing those financial statements that depict the true and fair view of profitability liquidity and solvency position of an enterprise
    3. Discuss the fundamental principles of accounting
    A. Accrual- when transactions are recorded in the books of accounts as they occur even if the payment for that particular product or service has not been received or made, it is known as accrual
    B. Consistency- it helps accountants record the accounting transactions and work with the accounts.
    C. The conservatism concept- is a concept in accounting which refers to the idea that expenses and liabilities should be recognised as soon as possible in a situation where there is uncertainty about the possible outcome and in contrast record assets and revenues only when they are assured to be received.
    D. Matching- principle is an accounting principle for recording revenues and expenses. It requires that a business records expenses alongside revenues earned.
    E. Materiality- is an accounting principle which states that all items that are reasonably likely to impact investors’ decision-making must be recorded or reported in detail in a business’s financial statements using GAAP standards.
    F. Cost- In accounting, the term cost refers to the monetary value of expenditures for services, supplies, raw materials, labor, products, equipment, etc. Cost is an amount that is recorded in bookkeeping records as an expense.
    G. Revenue recognition- is an accounting principle that asserts that revenue must be recognized as it is earned. Revenue is generally recognized after a critical event occurs, like the product being delivered to the customer.
    H. Going concern is an accounting term for a company that has the resources needed to continue operating indefinitely until it provides evidence to the contrary. This term also refers to a company’s ability to make enough money to stay afloat or to avoid bankruptcy.

  139. Avatar Onwuachumba Chinenye Jessica says:

    1. Relevance
    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.
    2.

  140. Avatar Onwuachumba Chinenye Jessica says:

    (1) The two major categories of accounting and their differences:
    (a) Cash Accounting: Cash accounting records revenues and expenses when they are received and paid.
    (b) Accrual Accounting: In this method of accounting, a company records all transactional data, regardless of monetary inflows or outflows.
    Differences :
    1. Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed. While
    Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.
    2.
    The accrual method is the more commonly used method by large companies, especially by publicly-traded companies, as it smooths out earnings over time. While The cash basis method typically is used by sole proprietors and smaller businesses.
    3. Cash basis accounting records revenue and expenses when actual payments are received or disbursed. It doesn’t account for either when the transactions that create them occur. On the other hand, accrual accounting records revenue and expenses when those transactions occur and before any money is received or paid out.
    4. Cash accounting recognizes revenue and expenses only when money changes hands, but accrual accounting recognizes revenue when it’s earned, and expenses when they’re billed
    5. In order for a company to use cash-basis accounting, it can’t sell items using in-house charge accounts that would result in an account receivable. It must only accept cash, check or credit cards as payment. Under the accrual basis of accounting, the company does have accounts receivables.
    (2.) Qualitative attributes of accounting:
    1. Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
    2. Relevance
    Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances.
    3. Understandability:
    Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information.A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory
    3. Comparability:
    Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions.A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.
    4. Timeliness: Timeliness involves how rapidly accounting information is available to professionals. If information reaches a company quickly, it allows an accounting team to make timely decisions.
    5. Reliability: Reliability means the users must be able to depend on the information.
    6. Consistency:Consistent use of accounting principles from one accounting period to another enhances the utility of financial statements to users by facilitating analysis and understanding of comparative accounting data.

    (3) Discussion the fundamental principles of accounting :
    1. Consistency Principle:
    Any working entity should set economic principles to work by it to record all the revenue, cost, and exchange.
    2. Going Concern Principle:
    It works on the rule of believing in the business and the fact that it has the liabilities to last for years to come.
    3. Conservatism Principle: this principle gives you a more realistic look into your firm accounting principle without any assumptions.
    4. Objectivity Principle:
    In this principle, all the entity’s accounting and cost details should always be realistic and separate from any personal assumption
    5. Accrual Principle: this principle that highlights the importance of making a complete accounting bookkeeping statement by the time of the action and deal, not by the period of the cost and revenue entry
    6. Matching Principle: Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred.
    7. Full Disclosure Principle: The information on financial statements should be complete so that nothing is misleading.

  141. Avatar UMOREN PRAISE IBORO says:

    1. The two major categories of financial accounting are cash and Accural..Both methods rely on the same conceptual framework of double entry accounting to record, analyze and report transactional data at the end of a given period.
    the major difference between both is Cash basis records revenue and expenses when actual payment are received or disbursed while accural accounting records revenue and expenses when those transactions occur and before any money is received or paid to them.
    2 The fundamental qualitative characteristics are relevance and faithful representation
    a.Relevance : A financial information is relevant if it can make difference in the decision made by users. a reliable financial information is capable of making difference in decisions when it has 1.Predictive value. 2.Confirmative value.
    b. Faithful representation: Financial reports represent economic phenomena in words and numbers. A neutral depiction is without bias in the selection or presentation if financial information. There are 4 qualitative characteristics that enhance the uselessness of information that’s is relevant and faithful. they include: Comparability, verifiability, Timeliness, Understandability.
    3The fundamental principles of accounting.
    -Monetary Unit -Accounting needs all values to be recorded in terms of a single monetary unit.
    -Going concern -This principle implies that the furm will continue to do it’s business as usual till the end of the next accounting period and that there is no information to the contrary.
    -Principle of Conversalism-Accountants must be conservative by nature.
    -Cost principle- Closely related to the principle of conversalism is the cost principle. Accountants must believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them.
    UMOREN PRAISE IBORO
    2021/241371.

  142. Avatar Asuzu Chinwendu Emmanuella says:

    Name: Asuzu Chinwendu Emmanuella
    Course Code: Eco 121 Assignment.
    Department: Economics.
    Email: asuzuchinwendu@gmail.com.
    Reg No: 2021/241941.

    CATEGORIES OF ACCOUNTING
    Accounting can be classified into two major categories: Financial accounting and Managerial accounting.

    1. FINANCIAL ACCOUNTING
    Financial accounting involves capturing and summarizing all of a business’s financial transactions and creating reports to provide a clear overview of those business transactions. Financial accountants also generate financial records that provide valuable information about a company’s fiscal health, such as balance sheets, cash flow statements, and income statements. Financial accounting is always focused on past performance, not the future.

    The statements created by financial accountants are useful for internal purposes, providing business executives with a clear snapshot of a company’s performance. Creditors who have loaned business money and tax authorities like the Internal Revenue Service (IRS) may also request such statements in audits. Finally, companies that are traded publicly must issue statements in line with the International Financial Reporting Standards (IFRS) that investors can access.

    Since a company’s financial statements can be used for official purposes, financial accounting experts must stick to strict guidelines as outlined by the Generally Accepted Accounting Principles (GAAP). These guidelines ensure consistent financial reporting across companies and are set by the Financial Accounting Standards Board (FASB).

    2. MANAGERIAL ACCOUNTING
    The management accounting method is used by businesses to gain greater insights into a company’s operations. Since managerial accounting is strictly focused on providing accounting information for internal use, it doesn’t have to stick to the same strict GAAP guidelines as financial accounting. Rather, it focuses on things like financial analysis, budgeting, and cost analysis.

    By analyzing past financials and forecasting future outcomes—for example, how much a company could cut expenditures by switching software providers—managerial accountants provide business owners with the data they need to make savvy business decisions. Generally, the emphasis is on strategic management, risk management, or performance management. It depends on what kind of data business owners and investors want.

    Techniques commonly used by management accountants include margin analysis, capital budgeting, and constraint analysis. Trend analysis—which identifies patterns in business expenditures over time—is also useful. Ultimately, the primary goal of managerial accounting is to improve business outcomes by ramping up profits and minimizing losses.

    THE DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING
    1. The managerial accounting is presented to a company’s internal community, while financial accounting is prepared for an external audience.
    2. Financial accounting is of great importance to current and potential investors, management accounting is neccessary for managers to make current and future financial decisions for their business.
    3. Financial accounting is exact and must adhere to Generally Accepted Accounting Principles (GAAP), while management accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.
    4. Financial Accounting reports on the profitability and therefore the efficiency of a business, whereas managerial accounting reports on specifically what is causing problems and how to fix them.

    QUALITATIVE CHARACTERISTICS OF ACCOUNTING.
    1. Relevance: Accounting information is relevant if it can provide helpful information about the past events and help in predicting future events or in taking action to deal with possible future events.
    2. Verifiability: This is the extent to which information is reproducible given the same data and assumptions. Therefore, the accountant should be able to reproduce the same result. If they cannot, the information is considered not verifiable.
    3. Timeliness: The less timely ( thus resulting in older information), the less useful information is for decision making.
    4. Understandability: This is the degree to which information is easily understood. Information that is understandable to the average user of financial statements is highly desirable.
    5. Comparability: Financial statements that are comparable, with consistent accounting standards and policies applied throughout each accounting period, enable users to draw insightful conclusions about the trends and performance of the company overtime.

    FUNDAMENTAL PRINCIPLES OF ACCOUNTING

    Accounting principles are defined as the various guidelines and rules that companies must follow when documenting, recording, and reporting financial transactions and information. These rules help to ensure uniformity and accuracy in reporting and analyzing financial data. Having companies record and report their financial data using the same standards allows for the accurate comparison and analysis of data and information. It allows investors to gain an accurate picture of a company’s financial health, and it allows for transparency in identifying fraud and inaccuracies in the data.

  143. Avatar Chime Adaeze Chizuruoke says:

    NAME: CHIME ADAEZE CHIZURUOKE
    REG. NO: 2021/241947
    EMAIL ADDRESS: adaezechime3@gmail.com

    1. Deeply discuss what the categories of accounting and the major differences between them.
    Financial accounting is the process of recording, summarizing and reporting a company’s business transactions through financial statements. These transactions are summarized in the preparation of financial statements, including the balance sheet, income statement and cash flow statement, that record the company’s operating performance over a specified period. Financial reporting occurs through the use of financial statements such as the income statement, the balance sheet, the cash flow statement and the statement of retained earnings. The financial statements used in financial accounting present the five main classifications of financial data: revenues, expenses, assets, liabilities and equity. Revenues and expenses are accounted for and reported on the income statement. They can include everything from research and development to payroll. Financial accounting differs from managerial (or cost) accounting as financial reporting is more for reporting to external parties while cost accounting is more for strategic planning internally.
    Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals. Managerial accounting involves the presentation of financial information for internal purposes to be used by management in making key business decisions. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Managerial accounting encompasses many facets of accounting, including product costing, budgeting, forecasting, and various financial analysis. Managerial accounting differs from financial accounting because the intended purpose of managerial accounting is to assist users internal to the company in making well-informed business decisions.
    Major Differences between managerial accounting and financial accounting
    1. Managerial accounting information is aimed at helping managers within the organization make well-informed business decisions, while financial accounting is aimed at providing financial information to parties outside the organization.
    2. Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.
    3. A financial accounting system is aimed at external decision-makers such as investors, regulators, and creditors, while a managerial accounting system is aimed at internal decision-makers such as managers.

    2. What are the qualitative attributes of accounting

    1. Relevance: This simply means that the information given should be available in time and also able to aid the users in making decisions and/or predictions.
    2. Reliability: This means that all information given should be accurate and dependable, and can be used for inferences or decision making.
    3. Understandability: This means that the information presented should be in such a way that will make it easy for you the users to comprehend.
    4. Comparability: This is the quality of information that helps decision makers compare their findings with other information and reports to determine relative financial strengths and weaknesses.
    5. Faithful representation: This is the quality of financial statements produced ti accurately reflect the condition of a business.

    3. Discuss the fundamental principles of accounting

    1. Revenue recognition: This is an accounting principle that asserts that revenue must be recognized as it is earned. It identifies the specific conditions in which revenue is recognized and determines how to account for it. The revenue recognition principle using accural accounting requires that revenues are recognized when realized and earned -not when the cash is received. Revenue recognition standards can vary based on a company’s accounting method, geographical location, whether they are a public or private entity etc.
    2. Matching principle: This is an accounting principle that dictates that companies report expenses at the same time as the revenues they are related to. It is part of the accural basis of accounting and ensures that expenses are matched to revenues recognition in the accounting period. Using this principle will show how well the business has done financially and how effective it was.
    The main goal of the matching principle is to be able to look at an income statement and know how much revenue was performed during the year and to also see the expenses we incurred to produce that revenue.
    3. Materiality principle: This is an accounting principle which states that all material items that are reasonably likely to impact investors’ decision making must be recorded or reported in details in a business’s financial statements using GAAP(Generally Accepted Accounting Principles) standards.
    Material items are considered as those items whose inclusion or exclusion results in significant changes in the decision making for the users of the business information.
    In materiality principle, an accounting standard can be ignored if the impact of doing so has a small impact on the financial statement.
    4. Consistency principle: This states that, once you adopt an accounting principle or method, continue to follow it consistently in future accounting periods so that the results reported from period to period are comparable. However, companies can change an accounting principle or method if the new version in some way improves the usefulness of the reported financial results.

  144. Avatar Udeozo success says:

    10830586gi

  145. Avatar Chukwuka Godswill Kosiso says:

    Name: Chukwuka Godswill kosiso
    Reg number:2021/245673
    Gmail:kosisogodswill67@gmail.com

    1) Accounting can be classified into two major categories that’s cash accounting and Accrual Accounting
    difference:
    Cash basis lets businesses record income and expenses only when cash is actually received or paid. Accrual accounting involves tracking income and expenses as they are incurred (when an invoice is sent or a bill received) instead of when money actually changes hands

    2)Understandability
    Verifiability
    comparability
    Timeliness

    3) 1) The accrual principle: it is defined as an accounting concept that requires transactions to be recorded in the time period in which they occur, regardless of when the actual cash flows for the transaction are received.
    2)The cost principle : it means items need to be recorded as the actual price paid. It is the same way when a buyer buys products, and the recording is done based on the price paid. In short, the cost principle is equal to the amount paid for each transaction.
    3)Full disclosure principle : it refers to the concept that suggests that a business should report all the necessary information in their financial statements, so that the users who are able to read the financial information are in a better position to make important decisions regarding the company.
    4)Materiality is an accounting principle : which states that all items that are reasonably likely to impact investors’ decision-making must be recorded or reported in detail in a business’s financial statements using GAAP standards
    5)What is the Time Period Principle : The time period principle is the concept that a business should report the financial results of its activities over a standard time period, which is usually monthly, quarterly, or annually.

  146. Avatar IFEANYICHUKWU EMMANUELLA NKIRU says:

    DEPARTMENT:SOCIAL SCIENCE EDUCATION
    UNIT:ECONOMIC EDUCATION
    REG NO:10829835GD

    1.Cost and Managerial
    Cost: In accounting, the term cost refers to the monetary value of expenditures for services, supplies, raw materials, labor, products, equipment, etc. Cost is an amount that is recorded in bookkeeping records as an expense.
    Managerial: Management is the coordination and administration of tasks to achieve a goal. Managers plan, organize, direct, and control resources to achieve specific goals.
    DIFFERENCE BETWEEN COST AND MANAGERIAL
    I. Cost Accounting is all about the Cost and it includes things like Cost control, Cost computation and Cost reduction.While Management Accounting is about managing the organization and making effective decisions.
    II.Cost Accounting has a narrow scope while managerial accounting has much broader scope.
    2.