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1- Introduction to Accounting Notes

Accounting is the process of recording, classifying, and summarizing financial transactions to interpret results. Key financial statements include the balance sheet, income statement, and cash flow statement, which provide insights into a company's financial position and performance. Users of accounting information range from managers and shareholders to banks and the public.

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4 views

1- Introduction to Accounting Notes

Accounting is the process of recording, classifying, and summarizing financial transactions to interpret results. Key financial statements include the balance sheet, income statement, and cash flow statement, which provide insights into a company's financial position and performance. Users of accounting information range from managers and shareholders to banks and the public.

Uploaded by

7wpkvfnmjk
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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ACCOUNTING;

IS THE ART OF RECORDING, CLASSIFYING and SUMMARIZING, IN A


SIGNIFICANT MANNER AND IN TERMS OF MONEY, TRANSACTIONS AND
EVENTS WHICH ARE IN PART AT LEAST OF A FINANCIAL CHARACTER
AND INTERPRETING THE RESULTS.

RECORDING
CLASSIFYING
SUMMARIZING
TRANSACTIONS
BUSINESS ENTITY
IN TERMS OF MONEY
FINANCIAL STATEMENTS
BALANCE SHEET
INCOME STATEMENT
CASH FLOW STATEMENT

USERS OF ACCOUNTING INFORMATION:


MANAGERS
AUDITORS
OWNERS/PARTNERS/SHAREHOLDERS
POTENTIAL INVESTORS
TAX OFFICE
LABOUR UNIONS
SOCIAL SECURITY INSTITUTION
BANKS
CREDITORS
DEBTORS
CAPITAL MARKET INSTITUTION
PARTICIPATIONS
THE PUBLIC GENERAL

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1ST PERSON → BUSINESS ENTITY ITSELF
2ND PERSON → OWNERS/ PARTNERS/ SHAREHOLDERS
3RD PERSON → REST

TYPES OF BUSINESS ORGANIZATIONS:

1. INDIVIDUAL (SOLE) PROPRIETORSHIP (ŞAHIS ŞİRKETİ)


2. PARTNERSHIPS (ORTAKLIKLAR)
→ JOINT VENTURE (ADİ ORTAKLIK)
→ GENERAL PARTNERSHIP (KOLLEKTİF ŞT.)
→ LIMITED PARTNERSHIP (KOMANDİT ŞT.)
→ LIMITED COMPANY (LİMİTED ŞT.)
3. CORPORATION (A.Ş.)

TRANSACTION:
IS A SPECIAL KIND OF EXTERNAL EVENT IN WHICH THE ENTITY
EXCHANGES SOMETHING OF VALUE WITH AN OUTSIDER.

EXTERNAL EVENTS WHICH ARE INTRODUCED TO ACCOUNTING SYSTEM


ARE CALLED AS “BUSINESS TRANSACTIONS”. TRANSACTIONS ARE THE
INPUTS OF ACCOUNTING SYSTEM, OUTPUT WILL BE FINANCIAL
STATEMENTS.

EXAMPLES OF TRANSACTIONS:
1. ACQUIRING ASSETS FROM 2ND PERSON
2. ACQUIRING ASSETS FROM 3RD PERSON
3. INVESTING RESOURCES
4. SELLING GOODS AND SERVICES
5. RETURNING ASSETS TO 3RD PERSON
6. RETURNING ASSETS TO 2ND PERSON

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BALANCE SHEET:

→ SHOWS THE FINANCIAL POSITION OF A COMPANY FOR A


SPECIFIC POINT OF TIME,

→ SHOWS THE ASSETS AND THE SOURCES OF THE ASSETS


(LIABILITIES) OF A COMPANY.

BALANCE SHEET CONTAINS:


NAME OF THE STATEMENT
NAME OF THE BUSINESS ENTITY
DATE
ASSETS
LIABILITIES
OWNERS’ EQUITY

ASSETS:
→ ARE RESOURCES OWNED BY A COMPANY,
→ THEY ARE THINGS OF VALUE USED IN CARRYING OUT
SUCH ACTIVITIES AS PRODUCTION, CONSUMPTION, AND
EXCHANGE.

CURRENT ASSETS:
ARE CASH AND OTHER RESOURCES THAT ARE REASONABLY
EXPECTED TO BE REALIZED IN CASH OR SOLD OR CONSUMED IN
THE BUSINESS WITHIN ONE YEAR OF THE BALANCE SHEET DATE
OR THE COMPANY’S OPERATING CYCLE, WHICHEVER IS LONGER.

FIXED ASSETS:
ASSETS OF A RELATIVELY PERMANENT NATURE THAT ARE
BEING USED IN THE BUSINESS AND NOT INTENDED FOR RESALE

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LIABILITIES:
→ ARE CLAIMS AGAINST ASSETS,
→ ARE EXISTING DEBTS AND OBLIGATIONS.

CURRENT LIABILITIES:
ARE OBLIGATIONS THAT ARE REASONABLY EXPECTED TO BE
PAID FROM EXISTING CURRENT ASSETS OR THROUGH THE
CREATION OF OTHER CURRENT LIABILITIES.

LONG-TERM LIABILITIES:
OBLIGATIONS EXPECTED TO BE PAID AFTER ONE YEAR

OWNERS’ EQUITY:
→ INVESTMENT OF CAPITAL IN THE BUSINESS BY THE INVESTOR
→ INCOME RETAINED FOR USE IN THE BUSINESS.

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BALANCE SHEET OF ABC CO. AS OF 31.12.2023

I. CURRENT ASSETS I. CURRENT LIABILITIES


Cash & Banks Bank Loans
Marketable Securities Trade Payables
Trade Receivables Unearned Revenue
Inventory Expense Accruals
Prepaid Expense
Revenue Accruals II. LONG-TERM LIABILITIES
Bank Loans
II. FIXED ASSETS Bonds Payable
Trade Receivables Trade Payables
Financial Fixed Assets
Tangible Fixed Assets III. OWNERS’ EQUITY
Intangible Fixed Assets Capital
Net Income (or Loss)

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INCOME STATEMENT:

PRESENTS THE REVENUES AND EXPENSES AND RESULTING NET


INCOME OR NET LOSS OF A COMPANY FOR A SPECIFIC PERIOD OF TIME.

THE PRIMARY FOCUS OF THE INCOME STATEMENT IS ON REPORTING


THE SUCCESS OR PROFITABILITY OF THE COMPANY’S OPE-RATIONS
OVER A SPECIFIED PERIOD OF TIME.

EXPENSE:
THE COST OF ASSETS CONSUMED OR SERVICES USED IN THE PROCESS
OF EARNING REVENUE.

EXPENSES ARE THE OUTFLOW OF ASSETS IN ORDER TO GENERATE


REVENUES.

EXPENSES ARE THE EXPIRED COSTS.

REVENUE:
THE GROSS INCREASE IN OWNERS’ EQUITY RESULTING FROM BUSINESS
ACTIVITIES ENTERED INTO FOR THE PURPOSE OF EARNING INCOME.

REVENUES ARE THE INFLOW OF ASSETS.

INCOME STATEMENT SHOULD CONTAIN:


NAME OF THE STATEMENT
NAME OF THE BUSINESS ENTITY
PERIOD
REVENUES
EXPENSES
NET INCOME (OR LOSS)

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INCOME SUMMARY OF ABC CO. FOR THE PERIOD OF
01.01.2023-31.12.2023
Cost of Goods Sold (COGS) Sales
Rent Rent
Wages Interest
Advertising Commissions
Interest Dividends
Commissions
Depreciation
Communication
Transportation
R&D
Insurance
Repairs & Maintenance
Stationery
Heating

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INCOME STATEMENT OF ABC CO.
FOR THE PERIOD OF
01.01.2023-31.12.2023

Sales …................................................. XXXXX


Cost of Goods Sold…........................... (XXXX)

Gross Profit (or Loss)…....................... XXXX

Operating Expenses
Selling Exp…...................... XX
Gen. Adm. Exp. …............. XX (XXX)

Operating Income (or Loss)…............. XXX

Nonoperating Revenues and Income… X


Nonoperating Expenses and Losses…. (X)
Financial Expenses
Interest Exp. …................... XX (XX)

Net Income…....................................... XXX


Tax….................................................... (X)

Net Income After Tax…....................... XX

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