UNISA FAC1502 Study unit 1 and 2

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Study unit 1 and 2 

What is accounting? 

Accounting is the process of identifying economic transactions, recording these transactions in monetary terms and then communication it to users.

How are the users? 

Investors:
What is the return of my investment going to be at what risk?
Should I buy, hold of sell these shares?
Employees:
Will the company be able to pay me?
Is this business going to be around for long period of time so I can build a career?
Creditors:
Can this business afford to repay me and the interest of the capital?
Management: 
How is the business doing?
What can I learn from the statements so that I can better manage the business?
Governments:
Are they paying the correct amount of tax?

Assumptions 

Two very important assumptions of accounting is the going concern assumption and the that the statements are produced on the accrual basis.
Going concern assumption assumes that the business will still be in business for the foreseeable future. During the next financial year assets will be used as intended to produce income and pay creditors as it becomes due.
Accrual basis means that income and expenses are recorded when the business enters into a transaction and not when the cash is received or paid.