INTRODUCTİON TO BUSİNESS

Accounting is an information system that provides reports to decision makers about the economic activities and condition of a business.

• Sales documents • Purchasing documents
• Payroll records • Bank records • Others

Processing:

• Journalizing • Balance sheet • Income statement • Cash flows statement

• Other reports • Posting • All accounts are summarized

Outputs:

• Balance sheet • Income statement • Cash flows statement

• Other reports

Labor unions want to know whether the owners have the ability to pay increased wages and benefits.

We can summarize the main purposes of managerial accounting information that is used within a business as follows:

Planning: An example of planning is budgeting. Budgeting is the process of forecasting future financial needs. This process is based on the funds that the com- pany expects to collect as a result of sales and how much will be paid to purchase materials, for salaries, and wages etc.

Decision Making: Managerial account- ing information will be helpful to evaluate various alternatives available. For example, management may be considering whether to purchase or lease an equipment.

Control: Management also uses account- ing information to determine whether the business is operating according to its plans and identifies the differences.

An audit is an examination of a company’s financial records.

The transaction is recorded chronologically in the journal. All the transactions are recorded through journal entries. The third step is to post each journal
entry to the appropriate ledger accounts. The journalized transactions are posted to the account that it impacts. The accounting cycle requires summarizing of the entries pertaining to a particular period in a trial balance. A trial balance is essentially a list of all accounts and provides an overview of the various types of financial transactions entered into by any organization during a period. After preparation of trial balance, the next step is recording the adjustments like adjusting prepaid/outstanding expenses, recording advance/accrued income, etc. The purpose of adjusting entries is to match incomes with expense during the accounting period. One of the most important steps of the accounting process involve preparing the financial statements. Final step of the accounting process involves closing the books for the revenue and expense accounts which leads to begin again the entire cycle with zero balances.

A transaction is an event that affects the financial position of the enterprise and requires recording.

Operating cycle consists of : I. Cash  II. Inventory IV. Accounts Receivable

Retained earnings are the profits that the owners do not take out of the business but instead save for use by the business.

Liquidity is a firm’s ability to meet short- term obligations. The greater the level of current assets available relative to current liabilities, the greater the firm’s liquidity.

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.

-Bookkeeping and accounting are not the same processes.

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

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 defines accounting and auditing as a profession and recognizes two qualifications of accounting and auditing professionals granted by the Union of Chambers of Certified Public Accountants (TÜRMOB): Certified Public Accountant (CPA, Serbest Muhasebeci Mali Müşavirler-SMMM) and Swornin Certified Public Accountant (Sworn-in CPAs, Yeminli Mali Müşavirler-YMM). Only accountants who have been awarded a license by TÜRMOB are entitled to render professional services.

-In distinguishing between the two titles, SMMMs may keep books, prepare financial statements, and conduct general audits, but cannot perform tax audits nor provide consulting services.

An audit is an examination of a company’s financial records. The independent accountants then issue an opinion that states whether or not the financial statements give a fair picture of the company’s financial situation.

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 must equal the sum of liabilities and owner’s equity. Liabilities appear before owners’ equity in the basic accounting equation because they are paid first if a business is liquidated.

A transaction is an event that affects the financial position of the enterprise and requires recording.

Contributed capital is the amount that the owners have invested in the company.

A balance sheet or statement of financial position is a financial statement that reports a business’s assets, liabilities, and equity on a specific date.

Current assets:
Cash and cash equivalents 
Trade receivables 
-Due from related parties 
-Trade receivables, third parties 
Derivative instruments 
Inventories 
Prepaid expenses 
Current income tax assets 
Other current assets 
Assets held for sale

Non-current assets:
Financial investments 
Trade receivables 
Derivate instruments 
Associates 
Investment properties 
Property, plant and equipment 
Intangible assets 
-Goodwill 
-Other intangible assets 
Deferred tax assets

Efficiency ratios (Activity ratios) measure how efficiently a firm manages its assets. Efficiency ratios use turnover measures to show how efficiently
a company operates and uses its assets.

A measure of the amount of long-term financing provided by debt relative to equity is called the debt-to-equity ratio.

Operating profit also known as earnings before interest and tax (EBIT) is a part of a company’s income statement. The operating profit margin is an important indicator of the company’s earning power from its current operations. Operating profit is any income directly related to the operations of the business. The operating profit margin (OPM) is a measure of overall operating efficiency and incorporates all of the expenses associated with ordinary business activities.