Introduction To Accounting

INTRODUCTION TO ACCOUNTING

OUTLINE

ETHICAL ISSUES IN ACCOUNTING • They are as follows:  Fraud: Accountants with poor ethical standards may conduct fraud activities, such as overbilling or delaying vendor payments. Most fraud cases involve hiding cash for internal purposes.  Embezzlement: Accountants may embezzle from their employers given too much responsibility and little oversight. These situations give accountants more control than necessary and the ability to mislead their employers on financial information.  False information: Some companies employ accounts who have ability to manipulate financial transaction into positive company results. These ethical situations were seen in the accounting departments of Enrom and Worldcom.  Tax Evasion: Some accounts create illegal tax shelters to hide company income. Companies use these shelters to avoid paying government income tax.  Personal Loss: Poor accounting ethics can cause great personal damage in addition to business problems.

MECHANICS OF ACCOUNTING • Accounting mechanics shows us how accountants collect and record accounting data for preparation principal financial statements required by GAAP. • Account is a summary device to record transactions in company’s books of account. It is label to record changes in assets, liabilities and shareholder’s equity. • However the total in an account is the difference between totals of debits an