Question

-What is accounting?

-What is the difference between financial and managerial accounting?

-What is the role of ethics in accounting?

-What is the accounting equation? Provide an example

-What are the financial statements?

Answer 1

Answer-1- Accounting:-

Accounting is the systematic process of identify,measuring recording, classifying summarizing, analysing and communicating the financial data to the users. In accounting only those transactions are recorded which are in monetary terms. For example:- Purchase of goods, sale of goods.

2-Difference between Financial and Managerial Accounting

S.No.	Basis of Difference	Financial Accounting	Managerial Accounting
1	Efficiency	Financial accounting reports on the profitability of a business.	Managerial accounting reports on specifically
2	Timing	Financial accounting requires that financial statements be issued following the end of an accounting period.	Managerial accounting may issue reports much more frequently.
3	Valuation	Financial accounting addresses the proper valuation of assets and liabilities with impairment and revaluations.	Managerial accounting is not concerned with the value of impairments and revaluations.
4	Reporting focus	Financial accounting is oriented toward the creation of financial statements, which are distributed both within and outside of a company.	Managerial accounting is more concerned with operational reports, which are only distributed within a company.

3- Ethics are very important in accounting as they provide the guidelines to accountant to maintain accounting records in a systematic way.Ethics requires accounting professionals to comply with the laws and regulations. Accountant are more legally and obligated to do their work. They can avoid negative actions that could negative effects on the business.

4-An Accounting Equation is a mathematical expression which shows that the assets and liabilities of a firm are equal. An Accounting Equation is based on the Dual Aspect Concept of accounting, means every transaction has two aspect-debit and credit. It holds that for every debit there is a credit of equal amount. It Means total claims will always be equal to total assets of the firm.The claims are of two types-

1.Owner's Equity

2-Liabilities or amounts due to outsiders

We can express it mathematically as follows:-

Assets= Capital +Liabilities

Example: Commence business with $20,000

	Assets	=	Capital	+	Liabilities
(i)	Cash	=	Capital	+	Liabilities
	$20,000	=	$20,000	+	$0

5-Financial Statements are the statements prepared at the end of the accounting period to determine the financial performance i.e.profit earned or loss incurred during the accounting period and also the financial position of the business as on the date.

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