INTRODUCTİON TO BUSİNESS

Many people confuse bookkeeping and accounting. They think that bookkeeping is accounting. Actually it is not. Bookkeeping is the act of recording and organizing financial transactions in the accounting system in accordance with the generally accepted accounting principles (GAAP). It ensures that records of the individual financial transactions are correct, up-to-date, and comprehensive. In modern accounting systems, bookkeeping is processed by computer software.

Internal users of accounting information are managers who plan, organize, and run a business. They include marketing managers, production supervisors, finance directors, and company officers. External users are individuals and organizations outside a company who need financial information about the company. The two most common types are investors and creditors. Current and prospective investors (owners) use accounting information to make decisions to buy, hold, or sell stock.

Financial accounting focuses on reporting to external parties such as stockholders, investors, governmental agencies, creditors, banks, and suppliers. Financial accounting measures and records business transactions and provides financial statements that are based on generally accepted accounting principles (GAAP).

All professions have regulations. Accountancy profession in Turkey is regulated through the law No. 3568, “The Law of Independent Accountancy, Certified Public Accountancy, and Sworn-in Certified Public Accountancy”. It was enacted in 1989. The law establishes accounting and auditing as a profession and defines those who are rendering services in these fields as professionals.

The Union of Chambers of Certified Public Accountants of Turkey (TÜRMOB) is the national umbrella organization for the 81 local chambers of CPAs (SMMMs) and Chambers of Sworn-in CPAs (YMMs). The Union is empowered to award professional licenses that Turkey’s accountants must have to render professional services.

The accounting cycle is a set of steps that are repeated in the same order every period to keep track of what happened in the business and to report the financial effect of those transactions. The accounting cycle is the financial process starting with obtaining data from business transactions and leading up to preparation of financial statements. This cycle starts when a business transaction occurs. It will end when the transaction has been included in the financial statements or reports of the company.

The accounting equation is the formula used to capture the company’s financial position at any point in time. The accounting equation shows how assets, liabilities, and owners’ equity are related to each other: assets = liabilities + owners’ equity.

A journal is the chronological record of transactions A ledger is the book holding all the accounts with their balances. Posting is the process of copying from the journal to the ledger

This transaction increases both the assets (in this case, cash) and the owner’s equity (capital) of the business by 10.000 dollars.

The excess of the current assets of a business over its current liabilities is called net working capital (NWC). The net working capital is often used in evaluating a company’s ability to meet currently maturing debts. Net working capital is the difference between current assets and current liabilities.

Outputs of accounting system;

• Balance sheet
• Income statement
• Cash flows statement
• Other reports

Processing;

• Journalizing
• Posting
• All accounts are summarized

Bookkeeping is the recording of a firm’s financial transactions which usually involves only the recording of budgetary events.

Internal users of accounting information are managers who plan, organize, and run a business. They include marketing managers, production supervisors, finance directors, and company officers.

Financial accounting measures and records business transactions and provides financial statements that are based on generally accepted accounting principles (GAAP)

Help managers make decisions to fulfill an organization’s goals. Reports to those inside the organization for:
• Planning
• Directing and motivating
• Controlling
• Performance evaluation

The accounting cycle is a set of steps that are repeated in the same order every period to keep track of what happened in the business and to report the financial effect of those transactions.

In practically every business, there are three basic steps in the recording process:
1. Analyze each transaction for its effects on the accounts,
2. Enter the transaction information in a journal,
3. Transfer the journal information to the appropriate accounts in the ledger

A ledger is the book holding all the accounts with their balances.

The income statement shows the amount of sales, all the costs incurred in making those sales and all the overhead costs incurred in running the operations of the company so it would be able to deliver on its promises to customers