Principles Of Accounting / Semester 2nd / GPGJC

Organisation

“A social arrangement which pursues collective goals, which controls its own performance,
and which has a boundary separating it from its environment.”

Business organisations are organisations that focus either on making profits (like a
conventional commercial company) or on improving society (like a charity).

Business Transactions

A business transaction is an instance of buying or selling something. all organisations will have
business transactions. Typically, these will include:

i. Purchasing goods and materials. Purchases can be for cash or credit. Cash purchases
are paid for immediately and are rare in most businesses. Credit purchases are paid for
after some time, typically a month or so
ii. Purchasing services, for example, repair s to equipment, advertising, printing costs.
iii. Sales. Cash sales, for example in shops, are paid for immediately. Credit sales are paid
for after some time.
iv. Paying wages and salaries.
v. Purchase of non-current assets.
vi. Raising finance and paying rewards to the suppliers of finance. For example, owners
putting in capital or loans being raised from banks. Owners of the business expect
rewards based on a share of the profit; banks usually expect interest to be paid.
vii. Accounting for and paying tax.
viii. Movements of cash and money in the bank account. These movements usually arise
from the transactions above

Business Accounting

Business accounting is the systematic recording, analysing, interpreting, and presenting of

financial information. Accounting may be done by one person in a small business, or by
different teams in large organisations. Accounting is the way a business keeps track of its
operations.

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 Principles Of Accounting / Semester 2nd / GPGJC

Types of Accounting Information

Accounting information is the base all important decisions which are taken by owners,
management, potential investors, creditors, lenders, employees, government , researchers and
public. They are the interested parties in accounting information. Different people need
different accounting information. So, it is necessary to classify the accounting information in
different types.

Following are the main types of accounting information which are generated from accounting
records for providing the benefits to interested parties.

i. Information of net profit or loss

ii. Information of the financial position of the business
iii. Information for planning and control of the business
iv. Information of total cost and per unit cost
v. Information for tax management
vi. Information for social responsibility

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