ECO. 121 ONLINE DISCUSSION/QUIZ—6-2-2023 (PRINCIPLES OF ACCOUNTING)

Kalu Valentina Onyinyechi
2021/246562
Economics department
tinakalu88@gmail.com

The two categories of accounting is the FINANCIAL ACCOUNTING and the MANAGERIAL ACCOUNTING.

Although financial accounting and managerial accounting complement each other in an organization’s financial strategy, professionals considering one of these careers should understand the differences between the two.
Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.

Managerial accountants focus on short-term growth strategies relating to economic maintenance. The managerial accounting involves the analysing of information gathered from finance accounting.
For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product.

Financial accountants focus on long-term financial strategies relating to organizational growth. The financial reports that these accountants produce follow established formats and abide by Financial Accounting Standards Board (FASB) rules and regulations.
They have to do with the preparation of accurate financial statement.

2. The qualitative attribute of accounting includes:
a) Reliability: reliability implies that the information must be factual and verifiable.
b) Understandability: accounting information should be a simple and logical manner that are understandable easily by the users.
c) Relevance: accounting information depicted by financial statements must be relevant to the objectives of enterprise.
d) Faithful representation: accounting aims at preparing those financial statements that dipicts the true and fair view of profitability
e) Comparability: the financial statements should contain the figures of previous year, along side with the figures of current year so that the current performance can be compared with the past information.

3. The principles of accounting includes

a) Revenue Recognition Principle
When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

2. Cost Principle
Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

3. Matching Principle
Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

4. Full Disclosure Principle
The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

5. Objectivity Principle
The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

NWANKWO ESTHER CHIOMA
ECONOMICS DEPT.
2021/244120

1a. TWO MAJOR CATEGORIES OF
ACCOUNTING

1. FINANCIAL ACCOUNTING
What Is Financial Accounting? Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time.

2. MANAGERIAL ACCOUNTING
Managerial accounting is the process of “identification, measurement, analysis, and interpretation of accounting information” that helps business leaders make sound financial decisions and efficiently manage their daily operations, according to the Corporate Finance Institute.

b MAJOR DIFFERENCES BETWEEN FINANCIAL
AND MANAGERIAL ACCOUNTING

1. The difference between financial and managerial accounting is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

2. The certification for each of these types of accounting is different as well. People who have been trained in financial accounting have a Certified Public Accountant designation, while those with a Certified Management Accountant designation are trained in managerial accounting.

3. Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.

4. Financial accounting is focused on creating financial statements to be shared internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company.

2. QUALITATIVE ATTRIBUTES OF
ACCOUNTING
a. Relevance
Relevance refers to how helpful the information is for financial decision-making processes. For accounting information to be relevant, it must possess:

i. Confirmatory value – Provides information about past events.
ii. Predictive value – Provides predictive power regarding possible future events.

b. Timeliness
Timeliness is how quickly information is available to users of accounting information. The less timely (thus resulting in older information), the less useful information is for decision-making. Timeliness matters for accounting information because it competes with other information.

c. Representational Faithfulness
Representational faithfulness, also known as reliability, is the extent to which information accurately reflects a company’s resources, obligatory claims, transactions, etc. To help, think of a pictorial depiction of something in real life – how accurately does the picture represent what you see in real life? For accounting information to possess representational faithfulness, it must be complete and neutral.

3. FUNDAMENTAL PRINCIPLES OF
ACCOUNTING
What Are Accounting Principles?
Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.
These principles are:

1. Accrual Principle: This principle states that revenue and expenses are recognized and included in the profit and loss account as they are accrued, not as they are paid or received.

2. Going Concern: This principle states that financial statements are prepared on the understanding that the business is a going or a continuous business and not one on the verge of cessation.

3. Revenue Recognition: The revenue recognition principle, a key feature of accrual-basis accounting, dictates that  companies recognize revenue as it is earned, not when they receive payment. Accurate revenue recognition is essential because it directly affects the integrity and consistency of a company’s financial reporting.

4. Principle of Cost: This states that the value of assets are shown at the cost of acquisition. The accountant cannot value assets in terms of the future returns it is expected to generate.

5. Principle of Materiality: It states that in the preparation of accounts, amount of material value must be recorded. This means that the accountant should not report certain economic event when the result of doing so are insignificant as to affect the financial statement, e.g depreciation of a stapler.

6. Matching Principle: This states that all the expenses are matched against the revenue generated at that period to determine the net profit.

7. Principle of Conservatism: This principle often express the accountant’s view of his responsibility to the organization for whom he provides information.
The principle states that:
a. Income should not be anticipated and all possible losses must be provided for.
b. Given a choice between two methods of valuing an asset, the accountant should choose the lower value. e.g stock should be valued at the lower of cost and market value.

8. Consistency Principle: This principle states that similar transactions within the same period and between one period and another must be dealt with, in a consistent manner. Methods must not be changed at will as this will lead to a distortion of the profits.

Name: Umehonyefosim mercy chinelo
Reg no.2021/244215
Department: combined social science (economics /psychology)
Email: chinelomerrcy08@gmail.com

Answer to question no 1
Financial accounting – is the process of recording, summarizing, and reporting a company’s business transactions through financial statements.Financial accounting is concerned specifically with the generation of these reports, that they are based on accurate information and follow generally accepted accounting principles also known as (GAAP).its also the financial statements that are written records that convey the business activities and the financial performance of a company.it involves the generation of accounting statements
B.Managerial accounting – also called management accounting, is a method of accounting that creates statements, reports, and documents that help management in making better decisions related to their business’ performance. Managerial accounting is primarily used for internal purposes. managerial accounting analyzes the information gathered from financial accounting

Difference between financial and managerial accounting:

a)Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.
b)Financial accounting is focused on creating financial statements to be shared internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company.
c)Financial accounting looks at the entire business while managerial accounting reports at a more detailed level. Managerial accounting focuses on detailed reports like profits by product, product line, customer and geographic region.
d)A business’ profitability and efficiency are reported through financial accounting. Managerial accounting reports on what is causing a problem and how to fix that problem.
d)Financial statements are due at the end of an accounting period, while managerial reports may be issued more frequently, to provide managers with relevant information they can act on immediately.
e)Considerable precision is needed to prove that financial records are correct. Financial accounting relies on this accurate data for reporting, while managerial accounting frequently deals with estimates opposed to proven facts.
e)When managerial accounting is made for internal consumption there is no set of standards to compile that information. On the other hand, financial accounting must follow various accounting standards.
f)Financial accounting looks to the past to examine financial results that have already been achieved, so it is historically focused. Managerial accounting looks to the future with forecasting.
Answer to question no 2
1)Reliability: this means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represent what it is meant to represent.
2.Relevance: this means information must be available in time,must help in prediction and feedback and must influence the decision of users in a positive manner.Timeliness;
3)Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions.Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. 4)Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.
Most companies aim to have financial reports that individuals without a background in accounting can understand.
5)Comparability
The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.

Answer to question no 3
Fundamental principle of accounting:
Objectivity – This is the concept that all recorded data must be based on documented information, rather than on anticipated transactions, or assumed outcomes.
• Arm’s-length transactions – This concept dictates that parties to a transaction are unrelated to one another.
• Going Concern Concept – This concept assumes that the business entities in the transaction will remain in business and are not subject to close in the foreseeable future.
• Monetary Measurement – This concept states that accounting transactions must be recorded in terms of money.
• Revenue Recognition – This concept dictates that revenue should be recorded when it is earned rather than when payment is actually received.
• Separate Entities – This principle states that all business transactions must be recorded separately from any private transactions of the business owners or principals.

Financial accounting
Financial accounting involves capturing and summarizing all of a business’s financial transactions and creating reports to provide a clear overview of those business transactions. Financial accountants also generate financial records that provide valuable information about a company’s fiscal health, such as balance sheets, cash flow statements, and income statements.
Managerial accounting
The management accounting method is used by businesses to gain greater insights into a company’s operations. Since managerial accounting is strictly focused on providing accounting information for internal use, it doesn’t have to stick to the same strict GAAP guidelines as financial accounting.
Cost accounting
Cost accounting is technically considered a subcategory of management accounting. It focuses specifically on a company’s cost of doing business. This is used explicitly for internal purposes, helping determine how to reduce costs and increase profit margins.
Tax accounting
Tax accounting focuses on ensuring a business, nonprofit, or individual is abiding by all relevant tax laws and regulations that may apply to them. Tax accountants operate according to guidelines set forth by the Internal Revenue

Qualitative attributes of accounting
Verifiability
Verifiability is the extent to which information is reproducible given the same data and assumptions. For example, if a company owns equipment worth $1,000 and told an accountant the purchase cost, salvage value, depreciation method, and useful life, the accountant should be able to reproduce the same result. If they cannot, the information is considered not verifiable.
Timeliness
Timeliness is how quickly information is available to users of accounting information. The less timely (thus resulting in older information), the less useful information is for decision-making. For example, if a company issues its financial statements a year after its accounting period, users of financial statements would find it difficult to determine how well the company is doing in the present.
Understandability
Understandability is the degree to which information is easily understood. In today’s society, corporate annual reports are in excess of 100 pages, with significant qualitative information. Information that is understandable to the average user of financial statements is highly desirable.
Comparability
Comparability is the degree to which accounting standards and policies are consistently applied from one period to another. Financial statements that are comparable, with consistent accounting standards and policies applied throughout each accounting period, enable users to draw insightful conclusions about the trends and performance of the company over time.
Fundamental principles of accounting
1. Revenue Recognition Principle
When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
2. Cost Principle
Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
3. Matching Principle
Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
4. Full Disclosure Principle
The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

Name: Arubaleze Raluchukwu Marie-Zita
Department: Economics
Reg No: 2021/241310

1.Financial accounting is the process of gathering, classifying, analysing, recording, summarizing, reporting and reporting a company’s business transactions through financial statements over a period of time. The financial statements are: the income statement, the balance sheet, the cash flow statement and the statement of retained earnings.

Managerial accounting, also called management accounting. Managerial accounting is the process of identifying, analyzing, interpreting and communicating information to managers to help managers make decisions within a company and to help achieve business goals.

The major differences between financial accounting and managerial accounting are:

I.) Managerial accounting information is aimed at helping managers within the organization make well-informed business decisions, while financial accounting is aimed at providing financial information to parties outside the organization.

management accounting is presented to a company’s internal community, while financial accounting is prepared for an external audience

II.) The financial accounting is exact and must adhere to Generally Accepted Accounting Principles (GAAP), while management accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.

III.) Financial accounting is concerned with the financial results that a business has already achieved, so it has a historical orientation. Managerial accounting may address budgets and forecasts, and so can have a future orientation.

IV.) Financial accounting reports on the results of an entire business. Managerial accounting almost always reports at a more detailed level, such as profits by product, product line, customer, and geographic region

V.) Financial accounting requires that financial statements be issued following the end of an accounting period. Managerial accounting may issue reports much more frequently, since the information it provides is of most relevance if managers can see it right away.

2. The qualitative attributes of accounting are:
a.) Reliability
b.) Relevance
c.) Understandability
d.) Comparability
e.) Faithful Representation

3. The Fundamental Principles of accounting are:
I.) Monetary unit principle: Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.
II.) Going Concern Concept: A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
III.) Principles of conservatism: Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
IV.) Cost principle: Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
V.) Matching principle: Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
VI.) Objectivity principle: The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.
VII.) Accrual principle: The Accrual Accounting principle states that revenue is recognized when the sale is completed,regardless of whether it is a cash or credit sale. Accrual basis of accounting recognizes revenues, expenses, gains and losses and the related increase or decrease in assets and liabilities in the period when the accounting event occurs.
VIII.) Materiality principle: Materiality concept in accounting refers to the concept that all the material items should be reported properly in the financial statements. Material items are considered as those items whose inclusion or exclusion results in significant changes in the decision making for the users of business information.

NAME: EZEOGU SYSTUS CHIMUANYA B.
MATRIC NUMBER: 2021/241332
COURSE: ECO 121(ASSIGNMENT)

Major categories in accounting
i. Financial accounting:-
it involves the preparation of accurate financial statement. The focus of financial accounting is the measurement of financial performance of a business as accurately as possible. Financial statements often used externally, they may also b used for internal measurements to help make decisions about the business.
Accounting principles and standards such as GAAP ( Generally Accepted Accounting Principle ), IFRS ( International Financial Reporting standard ), are standards that are widely adopted in financial accounting. The accounting standards are important because they allow all stakeholders and shareholders to easily interpret yearly financial statements.

ii. Managerial accounting
involves the analyzing the information gathered from financial accounting. It refers ro the process of preparing report about business operations. The report serve to assist the management make tactical decision.
It is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best step to take and then broadcasting the required step to all internal business. An example of managerial accounting is cost accounting.

2. What are the qualitative attributes of accounting
this are attributes that simplifies and expand on the financial figures to ensure easy understanding and comparability
i. Reliability:- implies that the information must be factual and verifiable. It must posses verifiability
ii. Relevance:- the financial statement must be relevant to the objective of the enterprise. Unnecessary and irrelevant information should be put aside
iii. Understandability:- it should be presented in a simple manner that they are easily understood by their users. Even those without much knowledge in accounting should be able to understand them

iv. faithful representation:- aims at preparing those financial statements that depicts the true and fair view of profitability, liquidity and solvency position of an enterprise

3. Discuss the fundamental principle of accounting
1. . Accrual Principle
It is a concept in accounting that mandates the recording of transactions in the time period in which they occur. It is regardless of the time when actual cash flows for the transactions are received. Through this principle, one can gain an accurate insight into the financial status of a business. Most large-scale businesses adopt an accrual system to determine the cash flow of the business operations. Along with this, revenues and related expenses are recorded in the same time period of reporting. Both IFRS and GAAP support this concept. In case, a business has more than $5 million in revenue, then such businesses must adopt this system for the purpose of taxation.
2. Consistency principle
According to this principle, when an organisation adopts a specific accounting method of reporting or documentation, then it should stay consistent with the method. The aim of this basic accounting principle is to make financial statements comparable across industries and companies. This principle has two issues associated with it. First, the principle is not properly followed when many people are recording data and compiling reports. To combat this issue, organizations need to have a set method internally. The second issue is related to switching between the financial reporting methods. Some organizations do this in order to manipulate the data to their advantage.

3. Conservatism Principle
The principle gives you a realistic perspective of unexpected situations. According to this principle, one should recognize expenses and liabilities at the early stages even if there is uncertainty about the outcome. However, the principle recognizes revenues and assets when there is an assurance of its receival. This principle can be applied to recognizing the estimates. The conservatism principle is the foundation of lower cost or market rule. As per this rule, one should record inventory at a lower end of its current market value or at its acquisition cost.

4. Cost Principle
Whenever a business acquires an asset, its initial value is recorded in its financial reports of the business. This value might not be improved in the market value of inflation. It is also not updated to reflect any depreciation or even appreciation. This value is known as the cost principle. As per the principle, companies keep a record of their tangible assets without reflecting the market value. Through this principle, companies can assess the actual cost of using financial services for calculating the historical cost principles of the assets of the company.

5. Economic Entity Principle
This is a concept of accounting that requires businesses to be treated as a separate financial and legal entity. This means that the recorded activities of the business entity must be kept separate from the recorded activities of the owner and other entities. These may include either a sole trader, limited liability partnership, or general partnership.

OGBODO UCHECHUKWU JACINTA
REG NO: 2021/241933
DEPARTMENT OF COMBINED SOCIAL SCIENCES ( ECONOMICS/SOCIOLOGY)
ogbodoaxjacinta@gmail.com

1.) CATEGORIES OF ACCOUNTING

a.) Financial Accounting:
This involves the recording of financial transactions, and the preparation of financial statements such as cash flow statements, income statements, balance sheet. In this form of accounting, the purpose is to accurately measure the financial performance of businesses. It is mainly for external use, although internal management can use its information for decision making.

B.) Management Accounting:
This involves the analysis of information garnered from the financial statements. It involves the preparation of reports concerning the business. Reports such as the cash flow analysis, inventory turnover analysis, sales forecasts, etc. Reports, which help management in making good decisions concerning the business. It is for internal use.

DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING

A.) Financial accounting is somewhat historical:
Here, records are made of financial transactions that have been made. On the other hand, management accounting, is more forward-looking. The reports made by management accountants, are used to help making business decisions in the near future.

B.) Financial accounting is mainly for external use:
That is to say, it is not necessarily prepared, with management in mind. Rather, it is prepared for shareholders, investors, and the like. On the other hand, management accounting is for internal use. It is prepared primarily for management so they can make good business decisions.

C.) Financial accountants are obligated to use GAAP (Generally Accepted Accounting Principles):
This is due to the fact that different kinds of people make use of their work. However, management accountants aren’t obligated to use GAAP. Instead their reports are generally tailored to the needs of the management, who are the users of their work.

2.) QUALITATIVE ATTRIBUTES OF ACCOUNTING

A.) Reliability:
The statements and/or reports made by accountants must be reliable
That is to say, they must be verifiable and factual. Information is verifiable if it can be verified through the use of source documents. Reliability also implies that the information provided by accountants should be prudent, void of personal bias, comprehensive, and should reflect the actual realities of transactions rather than simply conforming with legal form.

B.) Relevance:
The information given by accountants should be be relevant to the objectives of the business. That is to say, information that doesn’t in anyway, influence the economic or business decisions users should not be given by accountants.

C.) Understandability:
accounting information should be presented in ways that even people with no prior knowledge or understanding of accounting, would be able to understand what the information means for them. Tye information should be clear and logical, and presented as simply as possible. Explanatory notes can also be included with the information.

D.) Comparability:
The information provided by accountants should be prepared in such a way, that they can be compared with information provided in other accounting or fiscal periods, or even information on other issues related to the business, or even other businesses. This is important, because it makes it possible for users to see the strong or weak points of a business, and they can therefore, act accordingly.

E.) Faithful Representation:
Accounting information should true and fair views on crucial matters such as the profitability of the business, the liquidity of the business, the level of solvency of the business.

3. Fundamental principles of accounting includes:
a) MONETARY UNIT

Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

b) GOING CONCERN
A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

c) PRINCIPLE OF CONSERVATISM
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

d) COST PRINCIPLE
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

Name :chekwube festus Joshua
Department:economics
Reg no:2021/241952

1.financial accounting
The primary function of financial accounting is to track, record, and recap all daily transactions into monthly, quarterly, and yearly financial statements. From the financial statements, the owners and financial managers can perform multiple forms of financial analysis, such as Common size financial statement analysis or Ratio analysis. The result from the analysis is reported to the stakeholders later. In short, financial accounting provides a general look at business performance over a period of time in the form of financial statements – the Balance Sheet, Income Statement, and Statement of Cash Flows, and “financial reporting” to your description would make it more comprehensive. Finance bookkeeping involves recording financial transactions and maintaining financial records, while financial reporting involves preparing financial statements and other reports for external stakeholders.

Managerial accounting:
Managerial accounting can be easily mistaken for financial accounting, but actually, they are two different aspects. Managerial accounting is the process of organizing financial data and reporting financial status to managers. Thereby helping business managers make optimal operating decisions and grasp the issues as soon as possible if there are any. Management accounting information is especially important in operating an enterprise, and at the same time serves to control and evaluate that business. While financial accounting can be publicly shared with stakeholders, management accounting information is shared exclusively with others in an organization due to the sensitive nature of the information

2.qualitative attributes of accounting
1.Relevance
Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.

Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

2.Representational faithfulness
Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.

There are three factors that measure a company’s representational faithfulness, including:

3.Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
Verifiability
To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.

4.Understandability
Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.

Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

5.Comparability
Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.

Comparability can also refer to a company’s ability to compare its financial statements to its competitors. This can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.

3.fundamental principles of accounting
1.Monetary Unit
Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

2.Going Concern
A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

3.Principle Of Conservatism
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

4.Cost Principle
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

NAME: Njoku Nmesoma Gift
REG NO: 2021/244122
DEPARTMENT: ECONOMICS
COURSE TITLE: ECO 121

1A. What are the categories of accounting? Deeply discuss what the categories are?
Answers:
There are;
Financial accounting and managerial accounting

(I) Financial accounting: is one the categories of accounting whereby they mark, record and sum-up or summarize all daily transactions into monthly, quarterly and yearly financial statements. Through the financial statements, owners and financial managers can form multiple forms of financial analysis, such as common size financial statements and ratio analysis. Then the analysis result is being reported to the stakeholders later. It helps to see if the business is performing well over a period of time in the form of financial statements ie the balance sheet, income statement etc. Those are used by outsiders to analyze the health of the business or company.
(II) Managerial accounting: it is the process of organizing financial data and reporting financial status to managers, this mode of accounting is important in operating an enterprise and serves to control and evaluate the business. Management accounting information is shared exclusively with others in an organization due to the sensitive nature of the information. The report being made in managerial accounting are internally and data are being translated in useful information for utilization of the company’s management for their decision making process.

1B. Difference between managerial accounting
and financial accounting.
I. Financial accounting focuses on an
organization’s external financial processes
while managerial accounting focuses on an
organization’s internal financial processes.
ii. Managerial accounting focus on short-term
growth strategies relating to economic
maintenance. financial accounting deals on
long-term financial strategies relating to
organizational growth.
iii. The reports financial accounting produce
follow established formats and abide by
financial accounting standard board (FASB)
rules and regulation. For they will prepare
reports for external users i.e. stakeholders,
potential investors as well as executives, while
managerial accounting is made for internal
consumption there is no set of standard to
compile that information, they are not subject
to rules and regulations on like financial
accounting.
iv. Managerial accounting command higher
salaries than financial accountants.
v. Financial accounting cares about generating a
profit and not the overall system of how the
company works, managerial accounting looks
for bottleneck operation and determine
various ways to enhance profit by eliminating
bottleneck issues.
vi. Financial statements are due to the end of an
accounting period while managerial reports
are issued or may be issued more frequently,
to provide managers with relevant information
they can act on instantly.
vii.Managerial accounting is only concerned with
the value these items have on a company’s
productivity. While financial accounting is
concerned with knowing the properties of a
company’s assets and liabilities.

2. What are the qualitative attributes of
accounting?
a. Relevance: For the information to be relevant
they must have information about past events
that can assist in making predictions about
future. They must have confirmatory and
predictive value to develop and have accurate
accounting information.
b. Reliability: accounting information must be
reliable, when it’s financial statements should
have been verified from source documents.
c. Understandability:: financial information
should be made clear and easy to understand
so that investors or externals who may not
have a background in accounting will find it
easy to comprehend.
d. Comparability: it is the ability for companies to
compare it’s financial statement to it’s
competitors, whereby accounting methods
are used ; balance sheet, cash flow or income
reports etc. in comparing company’s trends
and overall financial performance.
e. Timeliness: it involves how available and how
rapidly accounting information is to
professionals.

3. Discuss the fundamental Principles of
Accounting.
a. Revenue recognition: it is the principle that
identifies the specific conditions in which
revenue is recognized and determined how to
account for it and it is recognized when critical
event has occurred, when product or service
has been delivered to customers and the
amount is easily measurable to the company.
b. Consistency principle: this states that
accountants should adhere and abide to the
same set of standards throughout all
business recordings.
c. Materiality principle: states that all financial
data and material transactions should be fully
disclosed in appropriate reports.
d. principle of regularity: it states that the GAAP
rules and regulations should be adhered as a
standard by accountants.
e. Matching principle: it states that revenues and
expenses should be matched in the income
statement for a period of time or to say that
companies should report expenses at the
same time as the revenues that are related to
it.
f. Cost principle: it is the principle which states
that cost of an asset should be recorded at the
cash amount at the time the asset was
acquired and it prohibit a company from
recordings an asset that was not acquired in a
transaction. Cost principle means that a long-
term asset purchased for a given cash amount
should be recorded and will be depreciated on
it’s cost, under exception of land as an asset
and the amount recorded should not be
increased for inflation or improvement in
market value.
g. Disclosure principle: is the principle that
require a company to provide the necessary
information so that people who are able to
make informed decisions regarding the
company.

Name: Ajah Helminna Sama
Reg num: 2021/243688
Dept: Economics
1 The two primary categories of accounting are accrual accounting (generally used by companies) and cash accounting (generally used by individuals).

Cash accounting reports revenues and expenses as they are received and paid through cash inflows and outflows;
accrual accounting reports them as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable

Cash accounting records revenues and expenses when they are received and paid.
Accrual accounting records revenues and expenses when they occur.

The major difference between cash account and accural is that accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses

Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed.
Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.

3. The fundamental accounting principles include:
Conservatism Principle
The conservatism principle states that accountants and businesses should record both expenses and liabilities A. Furthermore, it states the revenues and assets should only be recorded when you are sure that they will occur.

Consistency Principle
It asks accountants to continue to use any accounting principle or method they began with so long as they don’t have a demonstrably better principle or method.

Cost Principle
The cost principle states that businesses should only record their assets, equity investments, and any liabilities at original purchase costs. However, some businesses ignore this principle these days since they may opt to adjust assets and liabilities according to fair values instead.

Economic Entity Principle
The economic entity principle is the idea that any business transactions should be kept separate from the transactions of its owners or other businesses.

Full Disclosure Principle
The full disclosure principle states that businesses and their accountants should include all information necessary to understand financial statements in or alongside those financial statements.

In other words, financial documents should be understandable by themselves without needing additional documents for clarification. This prevents confusion both within a business and in the event of an outside audit.

Going Concern Principle
The going concern principle is more of a philosophy than the other principle so far. It allows accountants and business owners to act as though the business will remain in operation for the foreseeable future.
In practical terms, this allows businesses to defer the recognition of certain expenses, like depreciation, until they would likely kick in or come into effect.

Matching Principle
The matching principle is a simplistic concept that states you should record all expenses related to revenue at the same time that you record the original revenue.
For example, if you record revenue from selling several retail inventory items, you should also record the expenses for inventory and cost of goods.

Materiality Principle
The materiality principle states that you should always record transactions and accounting records if, by not doing so, you might alter the business decision-making process or the conclusions that someone might come to if they read a company’s financial statements.

Monetary Unit Principle
The monetary unit principle states that businesses should only record transactions that can accurately be stated in terms of currencies or units of value.
This prevents businesses from estimating the value of their assets and liabilities too much and keeps things grounded in real, precise numbers.

Objectivity Principle
It’s the principle that states any accounting data should be as accurate and unbiased as possible. Personal opinions, such as your gut feelings or hypothetical dreams about the future of your company, should never be taken into account or recorded as official data.

Furthermore, accounting data should be supported by evidence wherever possible.

Reliability Principle
The reliability principle focuses on proven transactions. According to this principle, only transactions that you can prove should be recorded. This is particularly important for auditors, who use “physical” evidence like recorded transactions to come to conclusions about their subject organizations.

Revenue Recognition Principle
The revenue recognition principle is similar to the last. It states that revenue should only be recognized when the business in question has mostly or substantially completed the earnings process. This prevents businesses from reporting earnings and revenue when it’s too early to guarantee that said income will be added to the company’s coffers.

Time Period Principle
Lastly, the time period principle essentially states that businesses should try to report the results of their activities over a set and standard period of time. For instance, accountants should not record business transactions over a quarter of three months, then record business transactions over a single month timeframe later.

This allows accountants to make standard sets of comparable timeframes, helping them to create long-form or trend analyses using accounting software.Cg

2 the qualitative attributes of accounting include:
Relevance
Representational faithfulness
Verifiability
Timeliness
Understandability
Comparability

Name; Onu Faithfulness Chinyere
Reg no: 2021/244051
Department: Economics
Email: Onfaithfulness@gmail.com
Answers:
1a)
-Financial Accounting; it is a specific branch in accounting involving the process of recording, summarizing and reporting the myriad of transaction s resulting from business operations over a period of time. These transactions are summarized in the preparation of financial statements, including balance sheet, income statement and cash flow statement, that record the company’s operating performance over a specified period.
-Managerial Accounting; it is the process of identification, measurement , analysis and interpretation of accounting information that helps business leaders make sound financial decisions and efficiently manage their daily operations, according to the corporate Finance institute. Managerial accounting focuses on understanding their company’s cash flows, financial transactions, operating costs and internal rate of return.
: 1b)
-Financial accounting reports are consumed by stake holders , while managerial accounting information is for internal purposes.
-Financial Accounting is heavily used public regulators , creditors and shareholders, while Managerial Accounting information is confidential and used largely by managers only inside the company.
-financial accountancy is legally required and expected by law, while managerial accounting is not required by any law or norm.
-financial accounting is encompassing , focusing on the entire organisation, while managerial accounting specific offering detailed and divided information in diverse things such as tasks, operations, specific activities, product
2)
[a]relevance ;is closely and directly related to the concept of useful information Relevance implies that all those items of information should be reported that may aid the users in making decisions and/or prediction. [b] Reliability:
Reliability is described as one of the two primary qualities (relevance and reliability) that make accounting information useful for decision-making. (C) Comparability:
Economic decision requires making choice among possible courses of actions. In making decisions, the decision-maker will make comparisons among alternatives, which is facilitated by financial information.
(d) Conservatism:
There is a place for a convention, such as conservatism – meaning prudence in financial accounting and reporting, because business and economic activities are surrounded by uncertainty, but it needs to be applied with care.
(e) Understandability:
Understandability is the quality of information that enables users to perceive its significance. The benefits of information may be increased by making it more understandable and hence useful to a wider circle of users.
[: 3)
[a] Going concern principle; it works on the rule of believing in the business and the fact that it has the liabilities to last for years to come.
[b]Accrual principle; The accrual principle helps you to know your money flow statics better and attach it to different times.
[c]objectivity principle; in this principle , all the entity’s accounting and cost details should always be realistic and separate from any personal assumption or the need to create a well drawn image for your firm materiality ledger.
[d] conservatism principle; This principle gives you more realistic look into your firm accounting principles without any assumptions.
[e] matching principle; by setting an archive for your entity’s revenue and cash income accounts , you should create a record for the related expenses by this principle.

Name:Okeke Kachidubem precious
Course:Eco121
Reg no.:2021/244121
Department:Economics
Date:13 February 2023

1a)Financial accounting
This involves the preparation of accurate financial statements.The focus of financial accusations the measure the performance of a business accurately as possible.Accounting principles are standards such as GAAP,IFRS and ASPE are standards that are widely adopted in financial accounting.the standards are important because they allow all stakeholders and shareholders to easily understand and interpret the reported financial statements from year to year
b)Managerial Accounting
This analyses the information gathered from financial accounting it refers to the process of preparing reports about business operations.The reports serve to assist the management team to make tactical decisions.It helps enterprises to achieve maximum efficiency by reviewing final accounting.Picking the best following steps to take and then broadcasting the final required steps to all internal business managers. eg cost accounting
Differences
Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.

Managerial accountants focus on short-term growth strategies relating to economic maintenance. For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product.

Financial accountants focus on long-term financial strategies relating to organizational growth. The financial reports that these accountants produce follow established formats and abide by Financial Accounting Standards Board (FASB) rules and regulations. The guidelines are outlined in the generally accepted accounting principles (GAAP), which all publicly traded companies in the U.S. have adopted.

Compliance with established formats is vital for financial accountants, who must prepare reports for shareholders and potential investors as well as executives. Managerial accountants, however, generally prepare their reports for internal audiences.

Managerial accountants typically command higher salaries than financial accountants.
2)Qualitative attributes main purpose is to simplify and expand on the financial figures to ensure easy understanding and comparability of results

The attributes are
a)Reliability: This implies that the information must be factual and verifiable
b)Relevance: Accounting information depleted by financial statements must be relevant to the objective of enterprise
c)Understandability: The accounting information should be represented in a simple and logical way that they are understood easily by their users such as investors, lenders, employees.
d)Comparability: It should contain financial statements from previous years
e)Faithful Representation: Accounting aims at preparing those financial statements that depict the true and fair view of profitability, liquidity and solvency position of an enterprise

3) 1. Revenue Recognition Principle
When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
2. Cost Principle
Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
3. Matching Principle
Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
4. Full Disclosure Principle
The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.
5. Objectivity Principle
The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

1. The two main categories of accounting includes: financial accounting and managerial accounting.
Financial accounting: it deals with the preparation of accurate financial statement
While
Managerial accounting analyzes the information gathered from financial statement

2.The qualitative attributes of accounting are:
I Reliability
ii Compactability
III. verifiability
iv timelines and so on
But the most important is verifiability. Every account must be verifiable. For example,suppose an accountant says the depreciation on an asset must be worth a certain amount based on a certain calculation. In that case they must do that calculation based on sounding accounting measurement. An auditor also have his work to look into this aspect of account.

accounting principles are the rules and guidelines companies and other bodies must follow when reporting financial data. They include: Accural principles, consistency principles, economic entities principles, going concern principles, matching principles and lots more.

The two main accounting categories are cash accounting and accrual accounting.
Accrual accounting is a financial accounting method that allows a company to record revenue before receiving payment for goods or services sold and record expenses as they are incurred.
Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are actually paid.
DIFFERENCE BETWEEN CASH AND ACCRUAL ACCOUNTING
The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

QUALITATIVE ATTRIBUTES OF ACCOUNTING
Accounting information should satisfy the following criteria:

Understandability

This implies the expression, with clarity, of accounting information in such a way that it will be understandable to users – who are generally assumed to have a reasonable knowledge of business and economic activities

Relevance

This implies that, to be useful, accounting information must assist a user to form, confirm or maybe revise a view – usually in the context of making a decision (e.g. should I invest, should I lend money to this business? Should I work for this business?)

Consistency

This implies consistent treatment of similar items and application of accounting policies

Comparability

This implies the ability for users to be able to compare similar companies in the same industry group and to make comparisons of performance over time. Much of the work that goes into setting accounting standards is based around the need for comparability.

Reliability

This implies that the accounting information that is presented is truthful, accurate, complete (nothing significant missed out) and capable of being verified (e.g. by a potential investor).

Objectivity

This implies that accounting information is prepared and reported in a “neutral” way. In other words, it is not biased towards a particular user group or vested interest

FUNDAMENTAL PRINCIPLES OF ACCOUNTING
Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.

Accounting standards are implemented to improve the quality of financial information reported by companies.
In the United States, the Financial Accounting Standards Board (FASB) issues generally accepted accounting principles (GAAP).
GAAP is required for all publicly traded companies in the U.S.; it is also routinely implemented by non-publicly traded companies as well.
Internationally, the International Accounting Standards Board (IASB) issues International Financial Reporting Standards (IFRS).
The FASB and the IASB sometimes work together to issue joint standards on hot-topic issues, but there is no intention for the U.S. to switch to IFRS in the foreseeable future.

Name : Amogu sunny Ndukwe
Reg Number: 2021/245590

(1)Financial Accounting is the process of recording, summarizing and reporting transactions and revenue-expense generations in a time period. For example, investors or sponsors need to verify an account statement before showing interest in associating with the business.

(1i)Managerial accounting is the practice of using accounting information — from revenues to production inputs and outputs affecting the supply chain — internally, in support of organization-wide efficiency and for tracking the organization’s progress .
(1ii)
The difference between financial and managerial accounting is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

(2) The qualitative attributes of accounting are
(2i) Reliability: The first qualitative characteristic of accounting information is reliability.
(2ii) Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information.
(2iii) Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances .
(2iv) Comparability can also refer to a company’s ability to compare its financial statements to its competitors.

(3)The fundamental principles of accounting:
3(I) Accrual accounting is an accounting method where revenue or expenses are recorded when a transaction occurs vs. when payment is received or made. The method follows the matching principle, which says that revenues and expenses should be recognized in the same period.
(3ii) The consistency principle states that business should maintain the same accounting methods or principles throughout the accounting periods, so that users of the financial statements or information are able to make meaningful conclusions from the data.

(3iii)The matching principle is an accounting concept that dictates that companies report expenses at the same time as the revenues they are related to.

(3iv)Materiality is an accounting principle which states that all items that are reasonably likely to impact investors’ decision-making must be recorded or reported in detail in a business’s financial statements using GAAP standards.

(3v) The cost principle means items need to be recorded as the actual price paid. It is the same way when a buyer buys products, and the recording is done based on the price paid. In short, the cost principle is equal to the amount paid for each transaction.

(3vi)revenue recognition principle means that companies’ revenues are recognized when the service or product is considered delivered to the customer.

(3vii)The going concern principle assumes that any organization will continue to operate its business for the foreseeable future.

(3viii)Conversation is a Developmental Process. Quantity Principle – only be informative as necessary to communicate your intended meaning. Relation principle – you talk about what is relevant to the conversation. Turn-requesting cues- let the speaker know that you want to speak.

Name: Elochukwu chigozie Victor
Reg no: 2021/241954
Department: Economics

1) Accounting can be categorised into 2 : Financial accounting and managerial accounting
A) Financial accounting: This involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal managements use to help make decisions
B) Managerial accounting: This analyses the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team to make tactical decisions. It is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required steps to all internal business managers.
The major difference between financial accounting and managerial accounting is that managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on the organization’s external financial processes. Financial accounting focus on long-term financial strategies relating to organizational growth, while managerial accounting focus on short-term growth strategies relating to economic maintenance.

2)The qualitative attributes of accounting:
I).Reliabilityv
Ii).relevance
Iii)understandability
Iv).comparability
V).faithful representation

3) fundamental principles of accounting:
a)
What are the 8 Fundamental Principles of Financial Accounting?
6 Min Read Last Updated: October 20, 2022
What are the 8 Fundamental Principles of Financial Accounting?
Published On: May 23, 2022
The fundamental principles of financial accounting are a set of guidelines that govern how a company should manage their business accounting. To ensure consistency and accountability, all accountants shall adhere to those standards while doing their duties. Certain countries adhere to particular standards, but some of these laws are more universally understood globally. This post will go through the most basic accounting rules, which online accounting software also follows.

When you practice accounting, you must have a basic grasp of these main accounting concepts. This isn’t as simple as memorizing financial facts for an exam and then recalling it two days later. In the study of accounting, these values can be seen all over the world. Accounting software for financial services follows these to conduct the seamless accounting process for any business, small or large.

First, Let’s talk about the trends, facts, and stats for billing software and online accounting software, and then we will continue with the basic principles of financial accounting.

Implementation of Accounting Software – Moon Invoice

Implementation of Accounting Software (Source – Year Ahead Report)

According to the “Year Ahead” report conducted by AccountingToday.com in 2018, almost 57 percent of Mid-sized companies have adopted accounting software, only 1 percent fewer than big corporations. In contrast, the concept of online billing software is increasingly permeating in small firms, with 45%.

What are the 8 Fundamental Principles of Financial Accounting?

Here are some of the most widely recognized accounting standards and how they relate to the accounting software for financial services, position, and responsibilities of an accountant.

1. Principles of Conservatism
The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

2. Principle of Accrual
The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

3. Principle of Cost
The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation. Professional Invoicing Software

What are the 8 Fundamental Principles of Financial Accounting?
6 Min Read Last Updated: October 20, 2022
What are the 8 Fundamental Principles of Financial Accounting?
Published On: May 23, 2022
The fundamental principles of financial accounting are a set of guidelines that govern how a company should manage their business accounting. To ensure consistency and accountability, all accountants shall adhere to those standards while doing their duties. Certain countries adhere to particular standards, but some of these laws are more universally understood globally. This post will go through the most basic accounting rules, which online accounting software also follows.

When you practice accounting, you must have a basic grasp of these main accounting concepts. This isn’t as simple as memorizing financial facts for an exam and then recalling it two days later. In the study of accounting, these values can be seen all over the world. Accounting software for financial services follows these to conduct the seamless accounting process for any business, small or large.

First, Let’s talk about the trends, facts, and stats for billing software and online accounting software, and then we will continue with the basic principles of financial accounting.

Implementation of Accounting Software – Moon Invoice

Implementation of Accounting Software (Source – Year Ahead Report)

According to the “Year Ahead” report conducted by AccountingToday.com in 2018, almost 57 percent of Mid-sized companies have adopted accounting software, only 1 percent fewer than big corporations. In contrast, the concept of online billing software is increasingly permeating in small firms, with 45%.

What are the 8 Fundamental Principles of Financial Accounting?

Here are some of the most widely recognized accounting standards and how they relate to the accounting software for financial services, position, and responsibilities of an accountant.

1. Principles of Conservatism
The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

2. Principle of Accrual
The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

3. Principle of Cost
The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation.

Principle-of-Cost

The exemption to this rule is whether a short-term transaction in a corporation’s capital stock has had a change in market valuation. However, this exception only happens if the securities are publicly traded on one international stock market.

Well, if your accounting software for financial services is not working as per the principle of cost, then your organization’s financial statements might not be accurate as they should have been.

4. Principle of Consistency
The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.

If the accuracy theory is properly and narrowly followed, there are many advantages for financial statement stakeholders. That applies to the use of small business financial reporting software. Software that follows the consistency principle will simplify things for you.

5. Principle of Economic Entity
According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

This implies that the transactions reported in the entity accounts are just those belonging to the entity.

For example, let us consider that you are running a cake shop. And you are picking up two cakes for your daughter’s birthday. Now, the online accounting software you are using for billing and managing the finance needs to be clear who is an entity and who is the owner to record the transaction.

6. Matching Principle
The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.Grab 70% OFF For Three Months. Buy Now & Save
Professional Invoicing Software

What are the 8 Fundamental Principles of Financial Accounting?
6 Min Read Last Updated: October 20, 2022
What are the 8 Fundamental Principles of Financial Accounting?
Published On: May 23, 2022
The fundamental principles of financial accounting are a set of guidelines that govern how a company should manage their business accounting. To ensure consistency and accountability, all accountants shall adhere to those standards while doing their duties. Certain countries adhere to particular standards, but some of these laws are more universally understood globally. This post will go through the most basic accounting rules, which online accounting software also follows.

When you practice accounting, you must have a basic grasp of these main accounting concepts. This isn’t as simple as memorizing financial facts for an exam and then recalling it two days later. In the study of accounting, these values can be seen all over the world. Accounting software for financial services follows these to conduct the seamless accounting process for any business, small or large.

First, Let’s talk about the trends, facts, and stats for billing software and online accounting software, and then we will continue with the basic principles of financial accounting.

Implementation of Accounting Software – Moon Invoice

Implementation of Accounting Software (Source – Year Ahead Report)

According to the “Year Ahead” report conducted by AccountingToday.com in 2018, almost 57 percent of Mid-sized companies have adopted accounting software, only 1 percent fewer than big corporations. In contrast, the concept of online billing software is increasingly permeating in small firms, with 45%.

What are the 8 Fundamental Principles of Financial Accounting?

Here are some of the most widely recognized accounting standards and how they relate to the accounting software for financial services, position, and responsibilities of an accountant.

1. Principles of Conservatism
The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

2. Principle of Accrual
The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

3. Principle of Cost
The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation.
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4. Principle of Consistency
The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.

If the accuracy theory is properly and narrowly followed, there are many advantages for financial statement stakeholders. That applies to the use of small business financial reporting software. Software that follows the consistency principle will simplify things for you.

5. Principle of Economic Entity
According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

This implies that the transactions reported in the entity accounts are just those belonging to the entity.
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6. Matching Principle
The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.

7. Principle of Going Concern
Going concern is the term that means the entity can continue to operate shortly, usually twelve months from the operation date if the financial accounts are compiled based on a going concern.
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8. Principle of Full Disclosure
The Full Disclosure Principle demands that the company publish any relevant material in its financial report. The critical theory behind this concept is that consumers of an entity’s financial statements can rely on financial statements to make decisions.

1.Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business.[1] This involves the preparation of financial statements available for public use. Stockholders, suppliers, banks, employees, government agencies, business owners, and other stakeholders are examples of people interested in receiving such information for decision making purposes.
Financial accountancy is governed by both local and international accounting standards. Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting used in any given jurisdiction. It includes the standards, conventions and rules that accountants follow in recording and summarizing and in the preparation of financial statements.
On the other hand, International Financial Reporting Standards (IFRS) is a set of accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board (IASB).[2] With IFRS becoming more widespread on the international scene, consistency in financial reporting has become more prevalent between global organizations.
While financial accounting is used to prepare accounting information for people outside the organization or not involved in the day-to-day running of the company, managerial accounting provides accounting information to help managers make decisions to manage the business.

What Is Managerial Accounting?
Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals.
Managerial accounting differs from financial accounting because the intended purpose of managerial accounting is to assist users internal to the company in making well-informed business decisions.

Managerial Accounting vs. Financial Accounting
The key difference between managerial accounting and financial accounting relates to the intended users of the information. Managerial accounting information is aimed at helping managers within the organization make well-informed business decisions, while financial accounting is aimed at providing financial information to parties outside the organization.
Financial accounting must conform to certain standards, such as generally accepted accounting principles (GAAP). All publicly held companies are required to complete their financial statements in accordance with GAAP as a requisite for maintaining their publicly traded status.Most other companies in the U.S. conform to GAAP in order to meet debt covenants often required by financial institutions offering lines of credit.
Because managerial accounting is not for external users, it can be modified to meet the needs of its intended users. This may vary considerably by company or even by department within a company. For example, managers in the production department may want to see their financial information displayed as a percentage of units produced in the period. The HR department manager may be interested in seeing a graph of salaries by employee over a period of time. Managerial accounting is able to meet the needs of both departments by offering information in whatever format is most beneficial to that specific need.

2.The qualitative characteristics of accounting information are as follows

Reliability: The first qualitative characteristic of accounting information is reliability. Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.

Relevance: The second qualitative characteristic of accounting information is relevance. It is believed that a relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.

Understandability: Understandability is the third most important qualitative characteristic of accounting information. Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.

Comparability: The last qualitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

3.What Are Accounting Principles?
Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.
The International Financial Reporting Standards (IFRS) is the most widely used set of accounting principles, with adoption in 167 jurisdictions. The United States uses a separate set of accounting principles, known as generally accepted accounting principles (GAAP).
What Are the Basic Accounting Principles?
Some of the most fundamental accounting principles include the following:
Accrual principle
Conservatism principle
Consistency principle
Cost principle
Economic entity principle
Full disclosure principle
Going concern principle
Matching principle
Materiality principle
Monetary unit principle
Reliability principle
Revenue recognition principle
Time period principle
The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle. Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements. Consistency refers to a company’s use of accounting principles over time.

NAME: OGBODO KINGSLEY OBINNA
REG NO: 2023/243698
EMAIL: ogbodokingsley26@gmail.com
DEPARTMENT: ECONOMICS
QUESTION 1
Accounting, is the process of measuring, processing, and sharing financial and other information about businesses and corporations. It is the process of keeping the accounting books of the financial transactions of the company.
ANSWER NO 1
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations. Accounting, which has been called the “language of business”, measures the results of an organization’s economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants. The terms “accounting” and “financial reporting” are often used as synonyms.
Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the major differences between them?
Financial accounting
Financial accounting focuses on the reporting of an organization’s financial information to external users of the information, such as investors, potential investors and creditors. It calculates and records business transactions and prepares financial statements for the external users in accordance with generally accepted accounting principles (GAAP). GAAP, in turn, arises from the wide agreement between accounting theory and practice, and change over time to meet the needs of decision-makers.
Financial accounting produces past-oriented reports—for example financial statements are often published six to ten months after the end of the accounting period—on an annual or quarterly basis, generally about the organization as a whole.

Management accounting:
Management accounting focuses on the measurement, analysis and reporting of information that can help managers in making decisions to fulfill the goals of an organization. In management accounting, internal measures and reports are based on cost-benefit analysis, and are not required to follow the generally accepted accounting principle (GAAP). In 2014 CIMA created the Global Management Accounting Principles (GMAPs). The result of research from across 20 countries in five continents, the principles aim to guide best practice in the discipline.
Management accounting produces past-oriented reports with time spans that vary widely, but it also encompasses future-oriented reports such as budgets. Management accounting reports often include financial and non financial information, and may, for example, focus on specific products and departments.

The major differences between them financial and managerial

1. Financial Accounting is an accounting system that focuses on the preparation of a financial statement of an organization to provide financial information to the interested parties while managerial accounting is the accounting system which provides relevant information to the managers to make policies, plans and strategies for running the business effectively.
2. Financial accounting Required to be published and audited by statutory auditors while managerial accounting It is not meant to be published or audited. It is for internal use only.

QUESTION 2
What are the qualitative attributes of accounting?

ANSWER NO 2
1. Relevance
The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.
2. Faithful representation
The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.

3. Comparability
The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.
4. Verifiability
The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.
5. Timeliness
The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.
6. Understandability
The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. The financial reports are prepared with the assumption that its users have a ‘reasonable knowledge’ of the business and its economic activities.

QUESTION NO 3
Discuss the fundamental Principles of Accounting.

ANSWER NO 3
1. Principle Of Conservatism
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

2. Cost Principle
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.
3. Monetary Unit
Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

2020/246206
EZEH CLARA SOMTOCHUKWU
COMBINED SOCIAL SCIENCES (Economic/Psychology)

The two major categories of accounting are:
Financial accounting:
The primary function of financial accounting is to track, record, and recap all daily transactions into monthly, quarterly, and yearly financial statements. From the financial statements, the owners and financial managers can perform multiple forms of financial analysis, such as Common size financial statement analysis or Ratio analysis. The result from the analysis is reported to the stakeholders later. In short, financial accounting provides a general look at business performance over a period of time in the form of financial statements – the Balance Sheet, Income Statement, and Statement of Cash Flows.

Cost accounting:
Cost accounting is a process of assigning costs to cost objects that typically include a company’s products, services, and any other activities that involve the company. Cost accounting is helpful because it can identify where a company is spending its money, how much it earns, and where money is being lost.

Qualitative attributes of accounting
Reliability: Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.

Consistency:
Consistency of method over a period of time is a valuable quality that makes accounting numbers more useful.
Relevance implies that all those items of information should be reported that may aid the users in making decisions and/or predictions.
Comparability: Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance.
Understandability: This is the quality of information that enables users to perceive its significance.
Fundamental principles of accounting.
Objectivity Principle: This principle states that the accounting data should consistently stay accurate and be free of personal opinion.
Going concern principle: This is the concept that a business will remain in operation for the foreseeable future.
Conservatism: According to this principle, one should recognize expenses and liabilities at the early stages even if there is uncertainty about the outcome. It is a concept in accounting that mandates the recording of transactions in the time period in which they occur.
Accrual concept: It is a concept in accounting that mandates the recording of transactions in the time period in which they occur.
Matching Principle: Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred.

Name:Dike Grace Afuekwe
Matric number:2021/246042
Department: Economics
1. Financial accounting involves the preparation of the preparation of the performance of business.
Standards that are widely adopted in financial accounting include G.A.A.P ,I.F.R.S, A.S.P.E.
Managerial Accounting uses information gathered from financial accounting to achieve maximum efficiency.
While Financial accounting means that the focusing of financial statements in order to measure the performance of a business as accurately as possible.
Managerial Accounting involves reviewing financial accounting to know the best steps to take and then broadcasting the required details to all internal business managers.
2. Comparability, Relevance, Faithful representation.
3. Consistency principle: Organizations must adopt the same accounting method for reporting and documentation in every accounting period.
b. Cost principle: Initial value of the acquired asset must be recorded in financial reports of the organization. This is necessary even when the value of an asset does not improve with time
c. Matching principle: Businesses need to report their revenues and expenses simultaneously since they are matched on the income statements for an accounting period.
d..Materiality principle: Businesses must record an item in financial statements that can impact the decision of an investor.
e.Monetary unit principle: Money measurement concept is followed as per this concept. Business transactions must only be recorded when they can be expressed in currency.
f.Reliability principle: This principle ensures the reliability of the business activities, events and transactions in a financial statement.

NAME UGWUANYI DUMEBI DOMINIC
REG NO 2021/241948
COURSE CODE ECO 121

ASSIGNMENT
1] The two main or major accounting methods are cash accounting and accrual accounting. Cash accounting records revenues and expenses when they are received and paid. Accrual accounting records revenues and expenses when they occur. Generally accepted accounting principles (GAAP) requires accrual accounting.
Cash Accounting
Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.

In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size.

If a business generates more than 25 million naira in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to Internal Revenue Service rules.
Accrual Accounting
Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.

Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made.
DIFFERENCE
The main difference is that accrual accounting stays or lies in the timing of when revenue is recognized, on the other hand cash accounting focuses on anticipated revenue.
2]There are six different types of qualitative characteristics of accounting information, including:

Relevance
Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.

Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

Representational faithfulness
Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.

There are three factors that measure a company’s representational faithfulness, including:

Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
Verifiability
To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financialinformation and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.

Understandability
Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.

Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

Comparability
Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.
3] THERE ARE FIVE FUNDAMENTAL PRINCIPLES OF ACCOUNTING THEY ARE AS FOLLOWS
1. Revenue Recognition Principle

When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

2. Cost Principle

Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

3. Matching Principle

Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

4. Full Disclosure Principle

The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

5. Objectivity Principle

The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

Name : Emmanuel izuchukwu Godslove
Department: Economics
Reg no: 2022/241331
Course code : eco 121
1. Financial accounting: primarily concerned with the process of compiling information for financial reports for external reporting. We can define financial accounting as a process of recording, summarizing, and reporting various transactions that occur over a period of time during the course of business. We gather and convert all the daily transactions into financial statements, balance sheet, income statements, and cash flow statements.
2. Cost accounting: Cost accounting is a process of recording, summarizing, analyzing, and allocating the cost over the process of manufacturing a product or providing services. It helps management to determine the cost involved in manufacturing a product or services by use of different cost accounting method. Further, it helps management to make organization cost-efficient and capable. Cost accounting acts as a controlling tool.
DIFFERENCE BETWEEN COST ACCOUNTING AND FINANCIAL ACCOUNTING
1. Where cost accounting is a system that keeps track of the costs incurred by a business, financial accounting focuses on the financial position of the business.
2. Cost accounting is theinternal reporting of the business finances and financial accounting is helpful for both internal and external stakeholders to understand the position of the business to make decisions about its future.
3. The purpose of completing cost accounting procedures is to reduce and control costs, whereas financial accounting statements help keep a record of financial transactions.

2. Relevance
The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.

Faithful representation
The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.

Comparability
The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.

Verifiability
The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.

3. Revenue recognition principle
Cost principle
Matching principle
Full disclosure principle
Objectivity principle

1. Revenue Recognition Principle
When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
2. Cost Principle
Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
3. Matching Principle
Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
4. Full Disclosure Principle
The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.
5. Objectivity Principle
The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results.

Name: Arthur Philip David
Department: economics
Reg no: 2021/241939
100 LEVEL
Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals,while, Financial accounting involves recording, summarizing, and reporting the stream of transactions and economic activity resulting from business operations over a period of time to the public or regulators.

Qualitative attributes of accounting are;
* Reliability
*Relevance
*Understandability
*Comparability
*Faithful presentation

The fundamental principles of accounting are;
Consistency Principle
Going Concern Principle
Accrual Principle
Conservatism Principle
Objectivity Principle
Matching Principle

NAME: OKOLIE CHINWENDU THERESA
REGISTERATION NUMBER: 11105924HJ
COURSE: ECO 121; INTRODUCTION TO ACCOUNTING
DETARTMENT: ECONOMICS
FACULTY: SOCIAL SCIENCES
BLOG: okolietheresa.blogspot.com

ASSIGNMENT
1. Deeply discuss the major categories of Accounting.
The major categories of accounting are;
1. Financial Accounting
2. Managerial Accounting
FINANCIAL ACCOUNTING:
This is a specific branch of accounting that involves a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time. These transactions are summarized in the preparation of financial statements including the balance sheet, income statement and cash flow statement, that records the company’s operating performance over a specific period of time. Financial accounting is the framework that dictates the rules, processes, and standards for financial recordkeeping.
Nonprofit organizations, corporations, and small businesses use financial accountants to prepare their books and keep records and generate their financial reports. Financial accounting may be performed under the accrual method (recording expenses for items that have not yet been paid) or under the cash method (only cash transactions are recorded).
MANAGERIAL ACCOUNTING:
This is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals. It is a category or branch of accounting that encompasses many facets of accounting that is aimed at improving the quality of information delivered to management about business operation metrics. It makes use of information relating to the cost and sales revenue of goods and services generated by a company. With managerial accounting, companies can track and craft spending budgets, reduce costs, manage cash flows and project sales figure, among other tasks.

b. What are the major differences between them?
DIFFERENCES BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING
1. Efficiency;
Financial accounting reports on the profitability or efficiency of a business, while managerial accounting reports on specifically what is causing problems and how to fix them. Managerial accounting reports are used in improving operations, while financial accounting reports are used by outsiders to decide whether to invest in or lend to a business.
2. Aggregation;
Financial accounting reports on the results of an entire business, whereas managerial accounting reports at a more detailed level, such as profits by products, product line, customer, and geographic region. Financial accounting reports are more likely to be distributed to outsiders, while the results of managerial accounting are only used by insiders or the business.
3. Valuation;
Financial accounting addresses the proper valuation of assets and liabilities, and so is involved with impairments, revaluations, and so on. Managerial accounting is not concerned with the value of these items, only their productivity.
4. Time Period;
Financial accounting is concerned with the financial results that a business has already achieved, so it has a historic orientation. Managerial accounting may address budgets and forecasts, and so can have a future orientation.
5. Systems;
Financial accounting pays no attention to the overall system that a company has for generating a profit, only its outcome. Conversely, managerial accounting is interested in the location of bottleneck operations, and the various ways to enhance profits by resolving bottleneck issues.
6. Timing;
Financial accounting requires the financial statements be issued following the end of an accounting period. Managerial accounting may issue reports much more frequently, since the information it provides is of most relevance if managers can see it right away.
7. Standards;
Financial accounting must comply with various accounting standards, whereas managerial accounting does not have to comply with any standard when information is compiled for internal consumption.

2. What are the qualitative attributes of accounting?
The qualitative characteristics of accounting information are as follows;
1. Reliability:
The first qualitative attribute of accounting is reliability. Reliability means that the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.
2. Relevance:
The second qualitative characteristics of accounting information is relevance. A relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.
3. Understandability;
This is the third most important quality of an accounting information. Understandability means that decision makers must interpret accounting information in the same sense as it is prepared and conveyed to them.
4. Comparability;
The last quantitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

3. Discuss the fundamental principles of accounting
Accounting principles are defined as the various guidelines and rules that companies must follow when documenting, recording, and reporting financial transactions and information. These principles are;
• Objectivity – This is the concept that all recorded data must be based on documented information, rather than on anticipated transactions, or assumed outcomes.
• Arm’s-length transactions – This concept dictates that parties to a transaction are unrelated to one another.
• Going Concern Concept – This concept assumes that the business entities in the transaction will remain in business and are not subject to close in the foreseeable future.
• Monetary Measurement – This concept states that accounting transactions must be recorded in terms of money.
• Revenue Recognition – This concept dictates that revenue should be recorded when it is earned rather than when payment is actually received.
• Separate Entities – This principle states that all business transactions must be recorded separately from any private transactions of the business owners or principals.

11074032BG.
1) The two types of accounting are managerial and financial accounting.
_managerial accounting focuses on an organizations internal financial processes, while financial accounting focuses on an organizations external financial processes managerial accounting focuses on short term growth strategies relating to economic maintainance.
Financial accounting is oriented toward the creation of financial statements which are distributed both within and outside of a company . In conclusion managerial provides information primarily intended for people inside the company, while financial provides information primarily intended for people outside the organization.
2) attributes of accounting.
-Understandability
_Relevance
– consistency
_conparability
_reliability
_objectivity
3) The principles of accounting
Principles of Conservatism
The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise. And being an SME, you must check that your software for creating invoices is built on this fundamental or not because expenses are always crucial to a business.

Using this idea will skew financial statements in a conservative direction, resulting in lower estimated earnings due to asset and revenue identification delays.

2. Principle of Accrual
The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.

So, when you are operating on online accounting software – you must be aware that to record a transaction, it is not necessary to cash being paid or received.

If an entity may not adhere to the accrual concept, the resulting cash flow can cause the transaction to be artificially accelerated or delayed.

3. Principle of Cost
The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation.

Principle-of-Cost

The exemption to this rule is whether a short-term transaction in a corporation’s capital stock has had a change in market valuation. However, this exception only happens if the securities are publicly traded on one international stock market.

Well, if your accounting software for financial services is not working as per the principle of cost, then your organization’s financial statements might not be accurate as they should have been.

4. Principle of Consistency
The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.

If the accuracy theory is properly and narrowly followed, there are many advantages for financial statement stakeholders. That applies to the use of small business financial reporting software. Software that follows the consistency principle will simplify things for you.

5. Principle of Economic Entity
According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

This implies that the transactions reported in the entity accounts are just those belonging to the entity.

For example, let us consider that you are running a cake shop. And you are picking up two cakes for your daughter’s birthday. Now, the online accounting software you are using for billing and managing the finance needs to be clear who is an entity and who is the owner to record the transaction.

6. Matching Principle
The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.

Matching-Principle

The theory ensures that profits and liabilities in the income statement are accurately measured in the timeframe in which they were sustained. If you are using accounting software for financial services that remains the same.

When this theory is followed correctly, net profits appear in the income statement indeed and equitably. That is not due to an overestimation or underestimation of sales or expenditures.

7. Principle of Going Concern
Going concern is the term that means the entity can continue to operate shortly, usually twelve months from the operation date if the financial accounts are compiled based on a going concern.

So, that’s a plus if your small business financial reporting software works on an ongoing concern principle.

8. Principle of Full Disclosure
The Full Disclosure Principle demands that the company publish any relevant material in its financial report. The critical theory behind this concept is that consumers of an entity’s financial statements can rely on financial statements to make decisions.

As a result, it is essential to ensure that they have access to all relevant material using accounting software for financial services.

As a result, this concept is implemented to guarantee the material reported in the entity’s financial report following accounting principles or mechanisms has been disclosed.

You should obey each accounting requirement regardless of whether the condition that occurs in your entity should be revealed or not.

Wrap Up
The Generally Accepted Accounting Principles (GAAP) are significant since they provide reporting and bookkeeping standards. No matter if you are doing an accounting process manual or using small business finance reporting software.

Digitalization is overtaking many manual processes in every business segment, and accounting is one of them. The accounting software for financial services is created as per the clients’ demand; Which makes the business accounting process smoother and more superficial.

1, Accounting can be classified into two major categories;I, Cash accounting is an account
that reports revenues and expenses as they are received and paid through cash inflows and outflows
II, Accrual accounting reports revenues and expenses as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable.

2,the qualitative attributes of accounting are;Relevance, Faithful representation, Comparability, Verifiability, Timeliness, Understandability.

3,the fundamental Principles of Accounting are set of guidelines that govern how a company should manage their business accounting. To ensure consistency and accountability, all accountants shall adhere to those standards while doing their duties.

Igwe Ebubechukwu Victor
10375074EB
Rgduniverse370@gmail.com

Answer 1
Accounting can be classified into two categories
(a). Financial Accounting
(b). Managerial Accounting

(a). Financial Accounting involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal management use to help make decisions.

(b). Managerial Accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team to make tactical decisions.

Managerial accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required steps to all internal business managers.

Major Differences Between Financial And Managerial Accounting.
(a). Financial accounting reports are prepared for outside parties (external), while managerial reports is for inside parties (internal).
(b). Managerial accounting is focused on the future while financial accounting summarizes past transactions.
(c). Financial accounting has to follow the GAAP(General Accepted Accounting Principles) while managerial does not.

Answer 2
(a). Reliability
(b). Relevance
(c). Understandability
(d). Comparability
(e). Faithful representation

Answer 3

(a). Monetary unit: Accounting needs all values to be recorded in terms of a single monetary unit. It cannot
account for goods like the barter system. Assigning values to goods and items therefore becomes a problem because its subjective. However, accounting has prescribed rules to deal with the same.
.
(b). Going Concern: A company is said to have an eternal existence once it is formed, the only way to do it is by dissolution. It does not die like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future
and charge depreciation assumin.g that the machine will be used for many years.
In case, the management has information that the company will be suspended in the near future, normal accounting ceases. A special type of account meant for dissolution purpose is used.

(c). Principle of conservatism: Accountants are said to be very conservative by nature. They want to hope for the best and prepare for the worst. This is displayed in the rules that they have created for their profession. One of the central principle of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possuble costs.
This can be seen in the facts that accountants value inventory at lower cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

(d). Cost Principle: Closely related to the principle of conservatism is the cost Principle. The cost principle advocates that company should list everything in the financial statements at the cost price. Usually assets like land, building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till its realized.
Accountants believe that the market value of anything its just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence, accounting works on cost Principle and therefore on facts.

Chukwudile Chinomso Wendy
2021/245480
Chukwudilewendy@gmail.com
Accounting can be classified into two major categories, which are??
1). FINANCIAL ACCOUNTING: This is a specific branch of accounting which involves the process of recording, summarising and reporting the myriad of transactions resulting from business operations over a period of time. These transaction history are summarized in the preparation of financial statements including balance sheet, income statements and cash flow statements or history, that are kept in the company’s records or the operating format performance of the company over a certain period of time. This category of accounting utilises a series of established accounting principles to use during the course of financial accounting analysis depending on the regulatory and reporting requirements the enterprise faces.
The financial statements used in financial accounting present the five main classifications of financial data: revenues, expenses, assets, liabilities and equity. Revenues and expenses are accounted for and reported on the income statement. They can include everything from R&D to payroll.

Financial accounting results in the determination of net income at the bottom of the income statement. Assets, liabilities and equity accounts are reported on the balance sheet. The balance sheet utilizes financial accounting to report ownership of the company’s future economic benefits.
2). MANAGERIAL ACCOUNTING: This category of accounting can be also known as management accounting This is a method of accounting that creates statements, reports, and documents that help management in making better decisions related to their business’ performance. Managerial accounting is primarily used for internal purposes such as; analysing data, providing adequate data, aids meaningful company decisions, helps yield productive goals, use qualitative informations etc.
Managerial accounting may define the pace and process of development of an organisation yet it has its set of drawbacks. Managerial decisions is dependent on financial statements. Due to this, the strength or weakness of accounting decisions made depends solely on the quality of basic records. Meanwhile, different managers may interpret the same information in different ways depending on their capacity and experience in the field. That way there might be bias in decision-making process.

The difference between FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING: The financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

2). The qualitative attributes of accounting are:
-Comparability
-Verifiability
-Timeliness
-Understandability

3). Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.
The ultimate goal of any set of accounting principles is to ensure that a company’s financial statements are complete, consistent, and comparable.
These are few basic accounting principles that helps in analysis of company data:
-Accrual principle
-Conservatism principle
-Consistency principle
-Cost principle
-Economic entity principle
-Full disclosure principle
-Going concern principle
-Matching principle
-Materiality principle
-Monetary unit principle
-Reliability principle
-Revenue recognition principle
-Time period principle etc.

NAME: ORJIUDE NNAORJI IZUCHUKWU
REG NO: 2021/241360
EMAIL: norjiude@gmail.com

Accounting can be classified into two major categories. Deeply discuss what the categories are?

The two major categories of accounting are financial accounting and managerial accounting.
Financial accounting is the process of preparing financial statements that are intended to provide information to external stakeholders, such as investors, creditors, and regulators. The main purpose of financial accounting is to provide transparency and accountability by reporting the financial performance and position of a company. Financial statements include the balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity. The information in these statements is based on generally accepted accounting principles (GAAP) and is intended to be neutral, verifiable, and relevant to the users’ decision-making process.

Managerial accounting, on the other hand, provides internal information to the company’s management for planning, decision-making, and control purposes. The information generated by managerial accounting is not intended for external stakeholders, but rather for internal use only. Managerial accounting provides information such as cost analysis, budgeting, and performance evaluation to help management make informed decisions. The information generated by managerial accounting is typically more flexible and adaptable to the specific needs of the company, and is not bound by the same strict rules and standards as financial accounting.

What are the major differences between them?
There are two main categories of accounting: financial accounting and managerial accounting. Here are five differences between the two:
Purpose: Financial accounting is focused on providing information to external parties such as investors, creditors, and regulators, while managerial accounting provides information to the company’s internal management team for decision-making purposes.
User audience: Financial accounting is intended for external stakeholders, while managerial accounting is intended for internal stakeholders.
Time frame: Financial accounting focuses on historical data and provides information about a company’s financial performance over a specific period of time (e.g., the past year), while managerial accounting focuses on future-oriented data and provides information to help managers plan and control operations.
Level of detail: Financial accounting provides a high-level overview of a company’s financial position and performance, while managerial accounting provides a much more detailed analysis of specific business processes and operations.
Focus: Financial accounting is concerned with the overall financial health of a company, while managerial accounting is focused on providing information for specific decisions related to product costs, pricing, and budgeting.

What are the qualitative attributes of accounting?
The qualitative attributes of accounting refer to the characteristics or properties that make accounting information useful and relevant for decision making. The following are considered as the key qualitative attributes of accounting:
Relevance: Accounting information must be relevant to the decision being made, which means it must have the potential to make a difference in the decision.
Reliability: Accounting information must be reliable, which means it must be free from material error and bias, and must be verifiable.
Comparability: Accounting information must be comparable, which means it must be presented in a consistent manner across different periods, entities, or industries.
Consistency: Accounting information must be consistent, which means it must be presented in the same manner from period to period, so that changes in the financial statements can be properly understood.
Understandability: Accounting information must be understandable, which means it must be presented in a clear and concise manner, using language that is easily understood by users.
Materiality: Accounting information must be material, which means it must be significant enough to affect a decision.
Timeliness: Accounting information must be timely, which means it must be available in a timely manner to be useful for decision making.

Discuss the fundamental Principles of Accounting
The fundamental principles of accounting form the basis for financial reporting and provide a framework for preparing and presenting financial statements. The following are the most important principles:
The historical cost principle: This principle states that assets and liabilities should be recorded at their original cost, adjusted for any subsequent changes in value.
The revenue recognition principle: This principle states that revenue should be recognized when it is earned, regardless of when it is received.
The matching principle: This principle states that expenses should be matched with the related revenues in the same accounting period, so that the true financial performance of the entity can be properly understood.
The full disclosure principle: This principle requires that all material information relevant to financial statements be disclosed in the notes to the financial statements, so that users can make informed decisions.
The objectivity principle: This principle requires that accounting information be based on objective evidence, and that personal judgments or biases not influence the preparation of financial statements.
The consistency principle: This principle requires that accounting methods and policies be consistently applied from period to period, so that changes in financial statements can be properly understood.
The going concern principle: This principle assumes that an entity will continue to operate for the foreseeable future, unless there is evidence to the contrary.
The materiality principle: This principle states that only material information should be disclosed, as immaterial information can distract from the important information that is necessary for decision making

1. The two categories of accounting are Financial & managerial accounting

A) Financial Accounting: Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business. This involves the preparation of accurate financial statements available for public use
The focus of financial accounting is to measure the performance of a business as accurately as possible

B) Managerial Accounting: Managerial accounting accounting analyzes the information gathered from financial accounting. It is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals.

1b. The major differences between them are;

1. Managerial accounting differs from financial accounting because the intended purpose of managerial accounting is to assist users internal to the company in making well-informed business decisions.

2. Managerial accounting involves the presentation of financial information for internal purposes to be used by management in making key business decisions. While The focus of financial accounting is to measure the performance of a business as accurately as possible

3. Techniques used by managerial accountants are not dictated by accounting standards, unlike financial accounting in which they are regarded as necessary for easy understanding and interpretation by the users.

2) The qualitative attributes of accounting are;
a) Reliability
b) Relevance
c) Understandability
d) Comparability
e) Faith-full representation

3) The Fundamental principles of accounting are;
i) Accrual principle: The accrual principle is an accounting concept that requires transactions to be recorded in the time period in which they occur, regardless of when the actual cash flows for the transaction are received.

ii) Conservative principle: The Conservatism Principle states that gains should be recorded only if their occurrence is certain, but all potential losses, even those with a remote chance of incurrence, are to be recognized.

iii) Going concern Principle: The going concern principle is the assumption that a business will continue to exist in the near future, in other words, that it will not liquidate or be forced out of business.

iv) Cost principle: The cost principle is an accounting principle that records assets at their respective cash amounts at the time the asset was purchased or acquired. The amount of the asset that is recorded may not be increased for improvements in market value or inflation, nor can it be updated to reflect any depreciation.

v) Matching principle: The matching principle is an accounting concept that dictates that companies report expenses at the same time as the revenues they are related to. Revenues and expenses are matched on the income statement for a period of time (e.g., a year, quarter, or month)

vi) Materiality principle: Materiality is an accounting principle which states that all items that are reasonably likely to impact investors’ decision-making must be recorded or reported in detail in a business’s financial statements using GAAP standards

vii) Revenue recognition principle: The revenue recognition principle states that you should only record revenue when it has been earned, not when the related cash is collected. For example, a snow plowing service completes the plowing of a company’s parking lot for its standard fee of $100. It can recognize the revenue immediately upon completion of the plowing, even if it does not expect payment from the customer for several weeks. This concept is incorporated into the accrual basis of accounting.

Caleb Princess Adaeze
2021/241313
calebadaeze22@gmail.com
Answer 1
The two major categories of accounting are cash accounting and accrual accounting.
Cash accounting: is an accounting method where payment receipts are recorded during the period in which they are received,and expenses are recorded in the period in which they are actually paid.In other words, revenues and expenses are recorded when cash is received and paid, respectively.
Accrual accounting: is an accounting method that recognizes revenue in the period in which it’s earned and realizable, but not necessarily when the cash is actually received. Similarly, expenses are recognized in the period in which the related revenue is recognized rather than when the related cash is paid.The accrual method of accounting is based on the matching principle, which states that all revenue and expenses must be reported in the same period and “matched” to determine profits and losses for the period. It’s often compared against cash accounting.

The difference between cash and accrual accounting lies in the timing of when sales and purchases are recorded in your accounts. Cash accounting recognizes revenue and expenses only when money changes hands, but accrual accounting recognizes revenue when it’s earned, and expenses when they’re billed (but not paid).

Answer 2
1.Faithful representation
The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.
2.Relevance
The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.
3.Comparability
The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.
4.Understandability
The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. The financial reports are prepared with the assumption that its users have a ‘reasonable knowledge’ of the business and its economic activities
5.Timeliness
The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.

Answer 3
1.Revenue recognition is a generally accepted accounting principle (GAAP) that identifies the specific conditions in which revenue is recognized and determines how to account for it. Typically, revenue is recognized when a critical event has occurred, when a product or service has been delivered to a customer, and the dollar amount is easily measurable to the company.
2.The matching principle is an accounting concept that dictates that companies report expenses at the same time as the revenues they are related to. Revenues and expenses are matched on the income statement for a period of time (e.g., a year, quarter, or month).For example, if a business pays a 10% commission to sales representatives at the end of each month. If the company has $50,000 in sales in the month of December, the company will pay the commission of $5,000 next January.
3.The consistency principle states that business should maintain the same accounting methods or principles throughout the accounting periods, so that users of the financial statements or information are able to make meaningful conclusions from the data.
Consistency principle is useful for measuring trends in the business which is spread across many accounting periods. If the business keeps on changing accounting methods, it will create confusion and the financial statements will not be comparable across accounting periods.
4.The principle of materiality is essential in preparing financial statements, as it helps companies determine what information to include and what to exclude to prepare the entity’s financial reports. Materiality is one of the four constraints of GAAP (Generally Accepted Accounting Principle). Companies use the materiality principle when accounting and measuring their transaction and expense in a year.

Name : Adebayo Excel
Reg No: 2021/246242

PRINCIPLE OF ACCOUNTING
1. Accounting is majorly categorized into 2 namely;
A. Cash accounting: cash accounting enables you to focus only on corporate transactions involving cash. Other economic events — those with no monetary input — don’t matter because they don’t make it into financial statements.It is used largely by small businesses that need to keep track of their cash flow at all times. It tends to be easier as there generally is less to track.

B. Acrual accounting; “Accruing” which means accumulating an item and recording it as legally binding even though no cash payment takes place, it is more popular among larger businesses but is typically more complicated and, at times, more labor-intensive. accounting type incorporates the cash accounting method, but goes beyond it to take into account all transactions making up a corporation’s operating activities

Differences between Cash and Acrual accounting
a. Cash accounting is used by small business, Acrual accounting is used by larger business
b. Cash accounting is easier to track cash flow, Actual accounting can be more complicated to track cash flow
c. Cash accounting records exactly when the cash enters or leaves your bank account, Acrual accounting records expenses and revenue when they are incure or earned.

2. What are the qualitative attributes of accounting ?
a. Understandability: The ability to comprehend .
b. Relevance : implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions
c. Comparability: users of financial statements must be able to compare aspects of an entity at one time and overtime.
d. Reliability: Information should be free from error and bias and faithfully represents what it is meant to represent.

3. The fundamental principles of accounting are
A. Accrual principles :Transactions are recorded in the accounting periods when they actually occur, rather than in the periods when there are cash flows associated with them.
B. Conservatism principle: Expenses and liabilities as soon as possible, it encourages the recordation of losses earlier, rather than later
C. Consistency principle: This is the process of maintaining method of accounting adopted.
D. Going-concern: means that you believe that a company is going to keep on keeping on far into the future.
E. Separate entity principle: states that no matter what you do as a business owner, you must keep your personal dealings completely separate from your company dealings.
F. Revenue recognition principle: Revenue is realized when it is earned, regardless of when it is received.

Name: Nnoruka benedicta chinecherem
Reg no: 2021/241348
The two categories of accounting are :

Cash Basis of Accounting

The basis of accounting in which revenues and expenditures are recognized when cash is received or disbursed.
Accrual Basis of Accounting

This is the basis of accounting in which transactions are recognized in the fiscal year they occur, regardless of when cash is received or disbursed. Revenue is recognized in the fiscal year earned, and expenses are recognized when incurred. This is also referred to as the full accrual basis of accounting.

Proprietary and fiduciary type funds use the accrual basis of accounting to recognize and report financial activities.

Major differences between cash and accural accounting.
The main difference between accrual and cash basis accounting is the timing of when revenue and expenses are recorded and recognized. Cash basis method is more immediate in recognizing revenue and expenses, while the accrual basis method of accounting focuses on anticipated revenue and expenses.

2.
Qualitative attributes of accounting are:
Fundamental qualitative characteristics:

Relevance
The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. The relevance of information is affected by its nature and materiality. Information is material if omitting it or misstating it could influence decision making. A financial report should include all information which is material to a particular entity.
Faithful representation
The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent. This depiction implies that the financial information is complete, neutral and free from error.
3.
Fundamental principles of accounting

Following are the basic fundamental principles of Accounting:

Monetary Unit
Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

Going Concern
A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

Principle Of Conservatism
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

Cost Principle
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

Name: Onyeocha Blessing Chinyere. Matric no:2021/246563. Department: Economic. Email: OnyeochaBlessing2@gmail.com. Course code: Eco121 principle of accounting. (1a) Accounting can be classified into two major categories. (i) Management accounting or managerial accounting. (b) Financial accounting. (1b) Deeply discuss what the categories are? (I) Financial accounting is a process of recording, summarizing, and reporting various transactions that occurs over a period of time during the course of business. Management accounting is a process that allows an Enterprise to achieve maximum efficiency by reviewing accounting information, deciding on the best next, management accounting is the practice of using according information for revenues it is for small business like profit and loss account, balance sheet, cash flow statement and a short report. (1c) What are the major differences between them? (i) Managerial accounting focuses on organization’s internal financial processes while financial accounting focuses on organization exterior.financial processes. (ii). Managerial accountants focus on Short-term growth strategies relating to Economic while financial accountant focus on long-term financial strategies relating to organizational growth. (III) Financial accountant must prepare reports for share holder and potential investors while managerial accountant the prepare their reports for internal audiences. (iv) Managerial accountant typically command higher saleries than financial accountants (2). What are qualitative attributes of accounting. (I). It must be understandable.
(ii). It must be financial reliability.
(III). It will be relevance.
(iv) It must be verifiable (v) It must be recorded on a book or on a computer system. (3). Discuss the fundamental principel of accounting. (I). Cost principle mean items need to be recorded as the actual price paid.the cost principle advocate is a case where companies should everything on the financial statement at the cost price.usually assets like land and buildings,gold. (ii). Principle of conservatism this is an account where there is a double about the amount of expected in flows and out flow, the organization must state the lowest possible revenue and the highest possible cost. (III). Monetary unit it take record in terms of a single monetary unit and also do not account for goods like the barter system this is a standard unit of value of a currency, of which the value of coins or notes are multiple. (iv) Going concern this principal implies that the firm will continue to do it’s business as usual till the end of next according period and there is no information to the contrary.

The two major categories of accounting are: Financial accounting and managerial accounting.
financial accounting: this involves the preparation of an accurate financial statements to enable both share holders and stake holders to make use of the information, it is mostly recorded in monetary terms. Accounting principles and standard, such as GAAP( Generally Accepted Accounting Principles), IFRS(International Financial Reporting Standards) are standard that are widely adopted in financial accounting.
Managerial accounting: this analyes the information gathered from financial accounting. The reports serve to assist the management team to make tactical decision. it allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take, and then broadcasting the required step to all internal business managers. an example of managerial accounting is Cost accounting. it focuses on a detailed break-up of costs for effective cost control. it is very vital in decision making
2.Qualitative attributes simplifies and expands on the financial figures to ensure easy understanding and comparability of results.
Reliability: this implies that the information must be factual and verifiable. The documents that aids verifiability are source documents such as cash memos purchase invoice, sales invoices correspondence, agreement, property deeds and other similar documents.
Faithful Representation: Accounting aims at preparing those financial statements that depict the true and fair view of profitablity, liquidity and solvency position of an enterprise.
Comparability: comparability reveals the strong and weak points of the business entity. comparison is possible when the different firms in the same industry adopt the same accounting principles from year to year. if diminishing balance method of charging depreciation is selected, it should not be changed from year to year.
Relevance: accounting information depicted by financial statements must be relevant to the objectives of enterprise. (IASB) says that information is relevant when it influence the economic decisions of users by helping them evaluate past, present or future events or confirming or correcting their past evaluations
Understandability: Accounting information should be presented in such a simple and logic manner that they are understood easily by their users such as investors, lenders, employee.
3 . fundamental principles in accounting
principle of conservatism: accountant are said to be very conservative by nature. They want to hope for the best and the prepared for the worst. This is displayed in the rules that they had created for their profession one of the central tenets of accounting is the principle of conservatism accounting to this principle, when there is doubt about the amount of expected inflows and outflow, the organization must state the lowest possible revenue and the highest possible cost. it help company to prepare for any forthcoming financial crises
ii)Cost principle: closely related to the principle of conservatism is the cost principle. The cost principle advocate that companies should list everything on the financial settlement at the cost price usually assets like land and building gold etc, appreciate . However, the accountant will not allow this application to be reflected on the financial statements of the company till it is realized. Accountant believe that the market value of anything is just an opinion. Accountants cannot on the basis of opinions because there are many of them.
iii) Monetary unit: Accounting needs all values to the recorded in terms of a single monetary unit. it cannot account for goods like the barter system. Assigning value to goods and items therefore becomes a problem since it is subjective.
iv) Going concern: A company is said to have an eternal existence. once it is formed, the only way to end it is by dissolution. it does assume the going concern principle. This principle implies that the firm will continue to do it’s business as usual till the end of the next accounting period and that there is no information to the contrary .

1. CATEGORIES OF ACCOUNTING AND THEIR DIFFERENCES
Financial accounting is a branch of accounting that deals with the recording, classifying, summarizing analyzing and reporting transactions resulting from business operations over a period of time. These are summarized in the preparation of financial statements like the balance sheet, income statement, cost flow statement and statement of retained earnings.
Managerial accounting is a category of accounting that is concerned with the analysis and interpretation of accounting information from revenue to production inputs etc in order to boost organization’s efficiency, help track the organization’s process and help the management in making better decisions relating to the business performances, Examples of Managerial Accounting is product costing and valuation.
Differences:
A. Purpose: Financial accounting emphasizes on giving accurate and fair view on the financial status of a business to various parties such as investors, creditors etc while managerial accounting aims at giving both quality and quantity information to managers in order to enable them make important decisions that’ll help in minimizing cost and maximizing profit.
B. Audience: The primary use and audience of the Financial accounting is potential and existing investors, creditors etc while for that of managerial accounting is the managers and shareholders.
C. Users: Both external and internal users make use of financial statements while managerial accounting is meant for internal users only. D. Publishing and Auditing: It is requirements for financial account to published and audited by statutory auditors while that is not required of managerial accounting because it meant only for internal users. E. Rules: Generally Accepted Accounting Principles (GAAP) is required to be followed when preparing financial accounting while there are no fixed rules for the preparation of managerial reports. F. Time span: Financial statements are prepared for a period of time, usually one year while management reports are prepared whenever needed.

2. QUALITATIVE ATTRIBUTES OF ACCOUNTING
Timeliness
Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is.
Comparability
Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information.
Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.
Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.
Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.
Verifiability
To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events.

3. PRINCIPLES OF ACCOUNTING
A. Principle of Accrual: This principle state that expenses should be recorded as they are incurred and not as they are paid i.e in amount they occur not when cash flow is correlated with them.This concept recognizes revenue and expenses when the sale/purchase is completed, regardless of whether it is a cash or credit sale/purchase.
B. Principle of conservatism: This is a concept in accounting which refers to the idea that expenses and liabilities should be recognised as soon as possible in a situation where there is uncertainty about the possible outcome and in contrast record assets and revenues only when they are assured to be received.In other words, the principle of conservatism states that, if an accountant has two possible outcomes for any accounting issue, then the accountant must choose that outcome which is most conservative or has the least possible chance of profit. C. Principle of cost: the cost theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. this theory says that the quantities reported cannot be modified for market value increases or inflation i.e the assets are recorded as the actual price they were at the time it was purchased or acquired and this amount would not be updated or improved due to inflation, depreciation etc. D. Principle of Consistency: This accounting concept states that an organization is to use the same accounting system practices and standards for publishing its financial statements. Once the business adopts an accounting principle or method, they must continue to follow it consistently in future accounting periods. Only change an accounting principle or method if the new version in some way improves reported financial results.
E. Matching Principle: The matching theory is an accounting principle that governs how costs and receipts are recorded and recognized in financial statements.It dictates that companies report expenses at the same time as the revenues they are related to. Revenues and expenses are matched on the income statement for a period of time (e.g., a year, quarter, or month).
F. Going concern principle: This concept is one of the accounting principles that states that a business entity will continue running its operations in the foreseeable future and will not be liquidated or forced to discontinue operations for any reason. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. G. Principle of revenue recognition; This principle is a feature of accrual accounting which requires that revenues are recognized on the income statement in the period when realized and earned not necessarily when cash is received.
H. Materiality principle: In accounting, this refers to the concept that all the material items should be reported properly in the financial statements. Material items are considered as those items whose inclusion or exclusion results in significant changes in the decision making for the users of business information. It also allows for the provision of ignoring other accounting principles if doing so doesn’t have an impact on the financial statements of the business concerned.

Felix Favour Chidumebi
Matric no: 2021/241943
Accounting can be classified into two, namely, Financial accounting and managerial accounting.
Financial accounting involves the preparation of accurate financial statements. It measures the performance of a business as accurately as possible .

Managerial accounting analyses the information gathered from financial accounting. it prepares report about business operation.
The major difference between them is, financial accounting deals with money and financial transactions while managerial accounting deals with planning and strategizing.

THE QUALITATIVE ATTRIBUTE OF ACCOUNTING
The fundamental nature of financial accounting is to give true and fair view of the state of affairs and profit and loss over a stipulated period of time. It is reliable, authentic, accurate, understandable, relevant amongst others.

THE FUNDAMENTAL PRINCIPLES OF ACCOUNTING

According to investopedia, they are the accrual principle, conservatism principle , consistency principle, cost principle and objectivity principle

Consistency principle deals with the consistent feature of an accounting system.

Cost principle deals with cost as a factor in which an accountant determine the minimum cost in order to maximize profit.

Accrual principle deals with increase in either cost or profit.

Name: Omeje Chisom Peace
Reg number: 2021/241965
Email: mhizchisky@gmail.com

1) Cash accounting reports revenues and expenses as they are received and paid through cash inflows and outflows; accrual accounting reports them as they are earned and incurred through sales and purchases on credit and by using accounts receivable & accounts payable. Generally accepted accounting principles (GAAP) requires accrual accounting.
Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.

In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size.

If a business generates more than $25 million in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to Internal Revenue Service rules.

Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.

Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made.
The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

2) Timelines
Understandability
Verifiability
Relevance
Faithful representation
Comparability.

3). Going Concern
A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

Monetary Unit
Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

Cost Principle
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

Principle Of Conservatism
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

THE TWO CATEGORIES OF ACCOUNTING
(a) Cash accounting : This is an accounting category that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.

In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most people use in managing their personal finances and it is appropriate for business up to a certain size.

If a business generates more than $ 25 million in average annual gross receipts for the preceding three years, however, it must use the accrual method, according to internal Revenue Service rules.

Under cash accounting rules, the company would incur many expenses but would not recognize revenue until cash was received from the customer. So, the accounting book of the company would look weak until the revenue actually came in. If this company was looking for debit financing from a book, for example, the cash accounting method makes it look like a poor bet because it is incurring expenses but no revenue.

(b) Accrual accounting : Accrual accounting is based on the matching principle, which is intended to match timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.

Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded even though no payment has been made.

Example : The value of accrual accounting becomes more evident for large, complex business. A construction company, for example, may undertake a long-term project and may not receive complete cash payment until the project is complete.

DIFFERENCES
The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

The accrual accounting provides a more accurate view of company’s health by including accounts payable and accounts receivable while cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.

The accrual method is the more commonly used method by large companies, especially by publicly -traded companies, as it smooths out earnings over time. The cash basis method typically is used by sole proprietor and smaller businesses.

2. QUALITATIVE ATTRIBUTES OF ACCOUNTING
(a) Relevance
(b) Representational faithfulness
(c) Understandability
(d) Comparability
(e) Timelines

3. FUNDAMENTAL PRINCIPLES OF ACCOUNTING
(a) Revenue Recognition Principle : When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenue are recognized through the income statement of your company. In order for revenue to be recognized in the period that the services were provided if you are on the accrual basis. If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.
(b) Cost principle : Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

(c) Matching Principle : Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

(d) Full Disclosure Principle : The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

(e) Objective principle : The accounting date should consistently stay accurate and be free of personal opinion. Make sure the data is also supported by evidence that can include vouchers, receipts and invoices. Having an objective viewpoint, in this case, helps rely on financial results.

1) The two major types of accounting are Cash accounting and Accrual accounting
Cash accounting records revenues and expenses when they are received and paid.Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received. In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is of course the method most people use in managing their personal finances and it is appropriate for businesses up to a certain size. Let us say that you purchased furniture worth $20,000 to the furniture store in july, according to the cash accounting method, you will be recording the transaction (of cash paid)in july because that is exactly when the cash was paid to the furniture store even though you received furniture a month prior.
Accrual accounting records revenues and expenses when they occur. Accrual accounting is based on the matching principle which is intended to match the timing of revenue and expense recognition. By matching revenue with expenses, the accrual method hives a more accurate picture of a company’s true financial condition. Under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase order is recorded as revenue even though the funds are not received immediately. The same goes for expenses in that they are recorded even though no payment has been made. A construction company may undertake a long term project and may not receive cash payment untill the project is complete under accrual accounting, the construction company would recognize a percentage of revenue and expenses corresponding to the portion of the project that was complete.This is known as the percentage of completion method.

The differences between cash and accrual accounting are as follows;
1) Cash accounting requires the transaction to occur before it is recorded as an expense or income while accrual accounting involves recording a transaction when the activity has taken place even if it means the expense or income will be incurred in the future.
2) Cash accounting is used by micro-businesses and small businesses and those using the single-entry accounting method while accrual accounting can be used by all types of businesses including large enterprises, corporations and those using the double entry accounting method.
3) Cash accounting cannot be used by businesses that have inventory because this type of accounting cannot handle it while accrual accounting can be used by every business with some or large amount of inventory.
4) Cash accounting is easy to learn and minimal training is required to record transactions using this method while accrual accounting is comparatively difficult and requires some form of training in the beginning once you gey a hang of it, it becomes easier
5) Cash accounting shows the present situation of how much cash is available at hand. This gives a clearer picture of how much cash is present while accrual accounting shows when the transaction occured rather than when cash changed hands.it shows money received before it is received.
6) Cash accounting reduces tax liability and makes it easier to file returns while accrual accounting increases tax liability because you are paying for income that is yet to be received.
7) Cash accounting does not show liabilities which means you mighf think you have more than you have.This can lead to wrong decision making while accrual accounting provides a bettter outlook on performance and it paves the way for smarter decisions to be made.

2) The qualitative characteristics of accounting information are as follows;

Reliability: The first qualitative characteristic of accounting information is reliability. Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.

Relevance: The second qualitative characteristic of accounting information is relevance. It is believed that a relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.

Understandability: Understandability is the third most important qualitative characteristic of accounting information. Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.

Comparability: The last qualitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

3)The fundamental principles of accounting are;

Monetary unit principle
Going concern principle
Conservatism principle
Cost principle

Monetary Unit
Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

Going Concern
A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

Principle Of Conservatism
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

Cost Principle
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

Okafor kenechi bella
2021/243713
Combined social science(Economics\political science)

Eco121 Assignment
1: Accounting can be classified into Namely; Deeply discuss What the categories are and their difference’s
i Cash Method
Cash method of accounting is a method of accounting used by many individuals and some small businesses to record their liabilities and income. When using the cash method, transactions are recorded only when the payments have been made or received.
ii Accrual Method
When transactions are recorded in the books of accounts as they occur even if the payment for that particular product or service has not been received or made, it is known as accrual based accounting. This method is more appropriate in assessing the health of the organisation in financial terms.
B. Major Differences between Cash Method and Accrual Method.
Cash accounting records revenues and expenses when they are received and paid. Accrual accounting records revenues and expenses when they occur. Generally accepted accounting principles (GAAP) requires accrual accounting.
2: What are the qualitative attributes of accounting
enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.
3 Discuss The fundamental principles of accounting

Monetary Unit
Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

Going Concern
A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

Principle Of Conservatism
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

Cost Principle
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

Name: Onwe Stella
Reg. No.: 10003697DA
Email address: onwestella79@gmail.com

Name: Chikezie Maureen Chidera
Course: ECO 121
Department: Economics
Reg. No.: 244773

The two types of accounting includes financial and managerial accounting.

Financial accounting involves capturing and summarizing all of a business’s financial transactions and creating reports to provide a clear overview of those business transactions. Financial accountants also generate financial records that provide valuable information about a company’s fiscal health, such as balance sheets, cash flow statements, and income statements. Financial accounting is always focused on past performance, not the future. It is primarily concerned with the process of compiling information for financial reports for external reporting. Financial accountants work with their colleagues and managers to strategize how a company can be more profitable. Also, they track all financial activity recorded in a ledger in addition to ensuring that internal procedures are being followed and that all financial activity appears on relevant financial statements.
Financial accountants will generally work with revenues and disbursements, which include overseeing or participating in general ledger accounting, accounts payable, accounts receivable, payroll, grant management and fixed assets. A financial accountant will be concerned with accurately recording and reporting financial transactions that have already occurred.
The primary function of financial accounting is to track, record, and recap all daily transactions into monthly, quarterly, and yearly financial statements. From the financial statements, the owners and financial managers can perform multiple forms of financial analysis, such as Common size financial statement analysis or Ratio analysis. The result from the analysis is reported to the stakeholders later. In short, financial accounting provides a general look at business performance over a period of time in the form of financial statements – the Balance Sheet, Income Statement, and Statement of Cash Flows.
Remember public companies in the U.S must follow the Generally Accepted Accounting Principles (GAAP) when compiling their financial reports for investors.

Accounting Cycle
Financial accounting for a business is based on the accounting cycle which is a series of steps that companies take every accounting time period in order to manage their financial transactions. Here are the steps to follow:
Recording daily financial transactions in chronological in the accounting journal
Transferring financial transactions to the company’s general ledger
at the end of the accounting cycle.
Classifying financial transactions by account, according to the firm’s Chart of Accounts.
Performing Trial balance and adjusting entries as specified by the accounting equation
Preparing financial statements such as the income statement, the balance sheet, and the statement of cash flows by using the financial information from the general ledger
The statement created by financial accountants are useful for internal purposes, providing business executives with a clear snapshot of a company’s performance. Creditors who have loaned business money and tax authorities like the Internal Revenue Service (IRS) may also request such statements in audits. Finally, companies that are traded publicly must issue statements in line with the International Financial Reporting Standards (IFRS) that investors can access.
Since a company’s financial statements can be used for official purposes, financial accounting experts must stick to strict guidelines as outlined by the Generally Accepted Accounting Principles (GAAP). These guidelines ensure consistent financial reporting across companies and are set by the Financial Accounting Standards Board (FASB).

Managerial Accounting

Managerial accounting can be easily mistaken for financial accounting, but actually, they are two different aspects. Managerial accounting is the process of organizing financial data and reporting financial status to managers. Thereby helping business managers make optimal operating decisions and grasp the issues as soon as possible if there are any. Management accounting information is especially important in operating an enterprise, and at the same time serves to control and evaluate that business. While financial accounting can be publicly shared with stakeholders, management accounting information is shared exclusively with others in an organization due to the sensitive nature of the information.
This type of accounting documents, monitors and assists in the financial planning of an organization. Their documentation is typically meant for internal stakeholders rather than the public. A managerial accountant must be careful in communicating confidential information and to whom. They work with their managers to analyze and create a budget to meet the needs of the short- and long-term goals of the organization. Managerial accountants are concerned with analyzing past performance in order to make predictions about future performance.
Also known as management accounting, this type of accounting provides data about a company’s operations to managers
The focus of managerial accounting is to provide data. This is what managers need to make decisions about a business’s operations, not comply strictly with GAAP.
Managerial accounting includes budgeting and forecasting and cost analysis. As well as financial analysis, reviewing past business decisions and more.

Cost accounting  is a type of managerial  accounting

Accrual Principle

It is a concept in accounting that mandates the recording of transactions in the time period in which they occur. It is regardless of the time when actual cash flows for the transactions are received. Through this principle, one can gain an accurate insight into the financial status of a business. Most large-scale businesses adopt an accrual system to determine the cash flow of the business operations. Along with this, revenues and related expenses are recorded in the same time period of reporting. Both IFRS and GAAP support this concept. In case, a business has more than $5 million in revenue, then such businesses must adopt this system for the purpose of taxation. 
This is the concept that accounting transactions should be recorded in the accounting periods when they actually occur, rather than in the periods when there are cash flows associated with them. This is the foundation of the accrual basis of accounting. It is important for the construction of financial statements that show what actually happened in an accounting period, rather than being artificially delayed or accelerated by the associated cash flows. For example, if you ignored the accrual principle, you would record an expense only when you paid for it, which might incorporate a lengthy delay caused by the payment terms for the associated supplier invoice

2. Consistency principle
According to this principle, when an organisation adopts a specific accounting method of reporting or documentation, then it should stay consistent with the method. The aim of this basic accounting principle is to make financial statements  comparable across industries and companies. This principle has two issues associated with it. First, the principle is not properly followed when many people are recording data and compiling reports. To combat this issue, organizations need to have a set method internally. The second issue is related to switching between the financial reporting methods. Some organizations do this in order to manipulate the data to their advantage.
This is the concept that, once you adopt an accounting principle or method, you should continue to use it until a demonstrably better principle or method comes along. Not following the consistency principle means that a business could continually jump between different accounting treatments of its transactions that makes its long-term financial results extremely difficult to discern.

3. Conservatism Principle
The principle gives you a realistic perspective of unexpected situations. According to this principle, one should recognize expenses and liabilities at the early stages even if there is uncertainty about the outcome. However, the principle recognizes revenues and assets when there is an assurance of its receival. This principle can be applied to recognizing the estimates. The conservatism principle is the foundation of lower cost or market rule. As per this rule, one should record inventory at a lower end of its current market value or at its acquisition cost. 
This is the concept that you should record expenses and liabilities as soon as possible, but to record revenues and assets only when you are sure that they will occur. This introduces a conservative slant to the financial statements that may yield lower reported profits, since revenue and asset recognition may be delayed for some time. Conversely, this principle tends to encourage the recordation of losses earlier, rather than later. This concept can be taken too far, where a business persistently misstates its results to be worse than is realistically the case.

4. Cost Principle
Whenever a business acquires an asset, its initial value is recorded in its financial reports of the business. This value might not be improved in the market value of inflation. It is also not updated to reflect any depreciation or even appreciation. This value is known as the cost principle. As per the principle, companies keep a record of their tangible assets without reflecting the market value. Through this principle, companies can assess the actual cost of using financial services for calculating the historical cost principles of the assets of the company.
This is the concept that a business should only record its assets, liabilities, and equity investments at their original purchase costs. This principle is becoming less valid, as a host of accounting standards are heading in the direction of adjusting assets and liabilities to their fair values.

5. Economic Entity Principle
This is a concept of accounting that requires businesses to be treated as a separate financial and legal entity. This means that the recorded activities of the business entity must be kept separate from the recorded activities of the owner and other entities. These may include either a sole trader, limited liability partnership, or general partnership matching principles
This is the concept that the transactions of a business should be kept separate from those of its owners and other businesses. This prevents intermingling of assets and liabilities among multiple entities, which can cause considerable difficulties when the financial statements of a fledgling business are first audited.

6. Matching principle
The matching principle is a concept in accounting that states that companies must report their expenses and revenues simultaneously. The revenues and expenses are matched on income statements for a specific time period. It is a part of the accrual accounting method that provides an accurate representation of operations on the income statement. This principle is quite useful for investors as investors can match revenue and expenses to get a better sense of the finances of a business. Along with the income statement, there is a need to assess the cash flow statement as well. 
This is the concept that, when you record revenue, you should record all related expenses at the same time. Thus, you charge inventory to the cost of goods sold at the same time that you record revenue from the sale of those inventory items. This is a cornerstone of the accrual basis of accounting. The cash basis of accounting does not use the matching the principle.

7. Materiality Principle
As per the materiality principle, any item that may impact the decision-making process of an investor must be recorded. These details must be recorded in length in the financial statements using Generally Accepted Accounting Principles (GAAP). The material principle states that the accounting standard can be ignored if the end result is small. It is an important principle for deciding if a transaction should be recorded as a part of closing process. 
This is the concept that you should record a transaction in the accounting records if not doing so might have altered the decision making process of someone reading the company’s financial statements. This is quite a vague concept that is difficult to quantify, which has led some of the more picayune controllers to record even the smallest transactions.

8. Full Disclosure Principle
As per the principle, each piece of information should be included in the financial statement of an entity. This is necessary since it might affect the reader’s perspective of understanding the statement. It is important to only disclose information about events that have a material impact on the financial position of an entity. As per the full disclosure principle, it may also include those items that cannot be quantified. Businesses are also liable to report existing accounting policies and any changes in them as well. 
This is the concept that you should include in or alongside the financial statements of a business all of the information that may impact a reader’s understanding of those statements. The accounting standards have greatly amplified upon this concept in specifying an enormous number of informational disclosures.

9. Going Concern Principle
According to this accounting principle, a company will complete its recent plans, meet its financial obligations and use its existing assets. This process of continuing operations indefinitely must go on until the company has any evidence on the contrary. Through this principle, the company continues to make money to avoid going bankrupt. In case, the company is unable to adopt this principle properly, the chance of liquidation and bankruptcy increases. Going concern concept is also known as the continuing concern concept. A company continues to be a going concern till the time the sale of assets does not hamper its operations. If a company is no longer a continuing concern, it needs to start reporting specific information on financial statements. Through this principle, accountants can make decisions related to which information should be reported on financial statements.

10. Revenue Recognition Principle
This is a part of GAAP that identifies certain conditions in which the revenue is recognized. The revenue is recognized when a critical event has occurred. This principle uses the accrual method of accounting. According to this, revenues are recognized when realised and earned. It is a straightforward principle when revenue is recognized when customers make payments. Whenever the production takes longer, the accounting for revenue becomes more complicated. This is one of the standard accounting principles in the industry. 
This is the concept that you should only recognize revenue when the business has substantially completed the earnings process. So many people have skirted around the fringes of this concept to commit reporting fraud that a variety of standard-setting bodies have developed a massive amount of information about what constitutes proper revenue recognition.

11. Time Period Principle
There are two main regulatory bodies that develop the principles based on accounting concepts. GAAP and IFRS develop these principles. US-based companies follow GAAP principles whereas, outside the US, most countries follow IFRS guidelines. GAAP is static in comparison with the IFRS. IFRS builds principles to address the evolving financial condition in the world.
This is the concept that a business should report the results of its operations over a standard period of time. This may qualify as the most glaringly obvious of all accounting principles, but is intended to create a standard set of comparable periods, which is useful for trend analysis.
These principles are incorporated into a number of accounting frameworks, from which accounting standards govern the treatment and reporting of business transactions.

12. Reliability principle. This is the concept that only those transactions that can be proven should be recorded. For example, a supplier invoice is solid evidence that an expense has been recorded. This concept is of prime interest to auditors, who are constantly in search of the evidence supporting transactions.Reliability Principle
This principle ensures that every transaction, business activity, event, etc is reliable when presented in the financial statement. Information should be associated with objective evidence and it can be checked, reviewed, and verified. This makes the information more reliable. Along with this, the information should be accurate and have a transparent representation. This makes the information reliable for its users. This principle ensures every financial statement and business accounting records are accurate.

13. Monetary unit principle. This is the concept that a business should only record transactions that can be stated in terms of a unit of currency. Thus, it is easy enough to record the purchase of a fixed asset, since it was bought for a specific price, whereas the value of the quality control system of a business is not recorded. This concept keeps a business from engaging in an excessive level of estimation in deriving the value of its assets and liabilities.
According to this principle, business transactions should be recorded only when they can be expressed as currency. Accountants should avoid recording non-quantifiable entities in the financial accounts. Whenever a transaction or an event occurs, it is first converted into money. After that, it is recorded into financial accounts of a business. It ensures that every accounting record is measurable in monetary terms by currencies.

3.
Recording : It is concerned with the recording of financial transactions in an orderly manner, soon after their occurrence In the proper books of accounts.

Classifying : It Is concerned with the systematic analysis of the recorded data so as to accumulate the transactions of similar type at one place. This function is performed by maintaining the ledger in which different accounts are opened to which related transactions are posted.

Summarising : It is concerned with the preparation and presentation of the classified data in a manner useful to the users. This function involves the preparation of financial statements such as Income Statement, Balance Sheet, Statement of Changes in Financial Position, Statement of Cash Flow, Statement of Value Added.

Interpreting : Nowadays, the aforesaid three functions are performed by electronic data processing devices and the accountant has to concentrate mainly on the interpretation aspects of accounting. The accountants should interpret the statements in a manner useful to action. The accountant should explain not only what has happened but also (a) why it happened, and (b) what is likely to happen under specified conditions

Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.
Professionals consider accounting information relevant if it provides information about past events that can assist in making predictions about future events, which hopefully results in more profit or helps solve any upcoming financial problems. For example, if a company’s owner wants to invest in a new asset, they can consult their previous investment history since that information applies to any future investments they make.

Representational faithfulness: sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.
There are three factors that measure a company’s representational faithfulness, including:

Completeness: A company that exhibits representational faithfulness includes each transaction it completes or participates in to give a more accurate depiction of its finances.

Neutrality: A neutral company does not involve bias when evaluating its finances—no matter if the information is positive or negative—in order to give an accurate report.

Free from error: This relates to a company’s accounting team not having any errors in their calculations, which leads to a more accurate financial report.

Verifiability:
To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants. If this occurs, a company’s information is accurate and verifiable. If the information isn’t verifiable, then the company knows to rework its financial report and perform calculations again.

Understandability
Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.
Most companies aim to have financial reports that individuals without a background in accounting can understand. A great way to make financial reports easier to understand is to include notes that explain common accounting concepts, such as methods of valuation and information on inventory.

Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.
Comparability can also refer to a company’s ability to compare its financial statements to its competitors. This can offer insight into how a company is performing and allows a decision-making team to understand changes to be made in response to the comparison.
Related: Understanding Cash Flow Statements: A Complete Guide With Steps, Methods and Examples

Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions.

Name: Okoro Emmanuel Chukwubuikem
Reg no: 10777812FJ
Department: Economics

Two major accounting categories are Financial accounting and Managerial accounting.
Financial accounting is the process of recording, summarizing and reporting a company’s business transactions through financial statements. These statements are the income statement, the balance sheet, the cash flow statement and statement of retained earnings.
Financial acounting is used to present the financial health of a company to external stakeholders. This allows the board of directors, potential investors, creditors and financial institutions to see how the company has performed during a specific period of time in the past. These reports are field on an annual basis. If a business is considered a publicly traded company on the stock market, the reports must be made part of the public record.
Financial acounting is the collection of accounting data to create financial statements. It involves the preparation of accurate financial statements. It’s focus is to measure the performance of a business as accurately as possible.
While financial statements are for external use, they may also be for internal management use to help make decisions.
Managerial accounting is a category of accounting which creates statements, reports and documents that help management in making better decisions related to their business performance. Managerial accounting is used for internal purposes. It is used by managers and directors to make decisions regarding the daily operations of a company. It analyzes the information gathered from financial accounting.
Managerial accounting also called management accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing accounting information, deciding on the best next steps to internal business managers. An example is cost accounting, which focuses on a detailed break-up of costs for effective control.

Major differences Managerial accounting and Financial accounting
1. Financial accounting is the collection of accounting data to create financial statements, while Managerial accounting is the internal processing used to account for business transactions.
2. Managerial accounting information is aimed at helping managers within the organization make well informed business decisions, while financial accounting is aimed at providing financial information to parties outside the organization. Even though financial accounting is of great importance to current and potential investors, Managerial accounting is necessary for managers to make current and future financial decisions for their business. Example, determining how much your business should charge for a new product and analyzing how much revenue a future product line is capable of generating are both examples of business problems within the field of managerial accounting.
3.Financial accounting is exact and must adhere to Generally Accepted Accounting Principles (GAAP) while management accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.
4.Financial acounting must comply with various standards whereas mangerial accounting does not have to comply with any standards when information is compiled for internal consumption.
5. Financial accounting is concerned with the financial results that a business has already achieved, so it has a historical orientation While mangerial accounting may address budgets and forecasts, and so can have a future orientation.
6. People with the certified Public Accountant designation have been trained in financial accounting, while those with the certified Management Accountant designation have been trained in managerial accounting

Qualitative Attributes of Accounting
Reliability; it is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent. The information must be factual and verifiable.
Relevance; it is believed that relevance information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner. Accounting information depicted by financial statements must be relevant to the objectives of the enterprise.
Understandability ; decision makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the Understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.
Comparability; it is believed that it is not sufficient that the financial information is relevant and reliable at a particular reporting entity. But it is equally important that the users of general purpose financial reports are able to compare various aspects of an entity over different time, period and with other entities.

Fundamentals principles of accounting
Accounting Principles are required rules and guidelines that companies are required to follow when producing its financial information.
1. Principle of Conservatism
Accountants are said to be very conservative by nature. According to this principle, when there is doubt about the amount of expected inflows, the organization must state the lowest possible revenue and the highest possible cost.
This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crisis.
2. Cost Principle
The cost principle advocates that companies should list everything on the financial statements at the cost price.
Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
3. Principle of Going Concern
This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle , organization can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years
4. Principle of Accrual
The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them. This theory is especially relevant in accrual accounting since it allows for creating more detailed financial records that demonstrate what occurred over time.
5. Principle of Consistency
The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle. If the accuracy theory is properly followed, there are many advantages for financial statement stakeholders.

Name: Ozuluigbo Hope Ekenedilichukwu
Reg. No.: 11193799AD
Email: hopedili2023@gmail.com
1a. The two major categories of accounting are:
i. Financial Accounting
Ii. Managerial Accounting
i. Financial Accounting:
Financial accounting involves the preparation of accurate financial statements. It is used to present the financial health of a company to external stakeholders. This allows the board of directors, creditors, stockholders, potential investors and financial institutions to see how the company has performed over a period of time.
These reports are filled on a daily basis.

Ii. Managerial Accounting:
Managerial accounting analyzes the information gathered from financial accounting.
It is the process of preparing reports about business operations. The reports assist the management team in making strategies and tactful business decisions.
1b. The major differences between financial accounting and managerial accounting are:
A. Managerial accounting is presented to a company’s internal community, while financial accounting is prepared for an external audience. Though it is also used by managers to make current and future financial decisions for their business
B. Financial accounting is exact and must adhere to the principles of accounting, while managerial accounting can be based off a guess or estimate since most managers do not have time to get exact numbers by the time a decision needs to be made.
C. Managerial accounting focuses on short-term growth strategies relating to economic maintenance, while financial accounting focuses on long-term financial strategies relating to organizational growth
2. The qualitative attributes of accounting are:
A. Comparability: this implies that users of financial statements must be able to compare aspects of an entity at one time and over a period of time.
B. Verifiability: this is the assurance to that the information faithful represents what it purports to be representing.
C. Timeliness: this is the availability of accounting information to all stakeholders in time for decision-making purposes
D. Understandability: this implies that the preparers of the financial information have classified, characterized and presented the information clearly and concisely so it can be understood.
E. Relevance: this implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions.
F. Faithful representation: this implies that financial information faithfully represents the information without errors.

3. Fundamental Principles of Accounting:
A. Revenue Recognition Principle:
This is the recognition of revenues through the income statement of the company in a particular period of time.
If it is a period when services are provided, it will be recorded on accrual basis but If it is the period when cash was received, the revenue will be recognized on the cash basis.
B. Cost principle:
this advocates that companies should list everything on the financial statements at the cost price. It is important to record the acquisition price of anything you spend money on.
C. Matching principle:
Expenses should match the revenues recognized in the same accounting period and be recorded in the period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.
D. Full closure principle:
The information on financial statements should be complete so that nothing is misleading. In this way, partners and clients will be aware of relevant information concerning the company.
E. Objectivity Principle:
The accounting data should consistently stay accurate and be free of personal opinions. The data must be supported by evidence that include vouchers, receipts and invoices.

Nwadike Franklin Uchenna. 2021/244769
nixonnwadike04@gmail.com
1a) Financial accounting
Financial accounting involves capturing and summarizing all of a business’s financial transactions and creating reports to provide a clear overview of those business transactions. Financial accountants also generate financial records that provide valuable information about a company’s fiscal health, such as balance sheets, cash flow statements, and income statements. Financial accounting is always focused on past performance, not the future.

The statements created by financial accountants are useful for internal purposes, providing business executives with a clear snapshot of a company’s performance. Creditors who have loaned business money and tax authorities like the Internal Revenue Service (IRS) may also request such statements in audits. Finally, companies that are traded publicly must issue statements in line with the International Financial Reporting Standards (IFRS) that investors can access.

Since a company’s financial statements can be used for official purposes, financial accounting experts must stick to strict guidelines as outlined by the Generally Accepted Accounting Principles (GAAP). These guidelines ensure consistent financial reporting across companies and are set by the Financial Accounting Standards Board (FASB).
2. Managerial accounting
The management accounting method is used by businesses to gain greater insights into a company’s operations. Since managerial accounting is strictly focused on providing accounting information for internal use, it doesn’t have to stick to the same strict GAAP guidelines as financial accounting. Rather, it focuses on things like financial analysis, budgeting, and cost analysis.

By analyzing past financials and forecasting future outcomes—for example, how much a company could cut expenditures by switching software providers—managerial accountants provide business owners with the data they need to make savvy business decisions. Generally, the emphasis is on strategic management, risk management, or performance management. It depends on what kind of data business owners and investors want.

Techniques commonly used by management accountants include margin analysis, capital budgeting, and constraint analysis. Trend analysis—which identifies patterns in business expenditures over time—is also useful. Ultimately, the primary goal of managerial accounting is to improve business outcomes by ramping up profits and minimizing losses.
b)
The difference between financial and managerial accounting is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

The certification for each of these types of accounting is different as well. People who have been trained in financial accounting have a Certified Public Accountant designation, while those with a Certified Management Accountant designation are trained in managerial accounting.

The perception that more training is required for financial accounting might be reflected in the higher pay rates of financial accountants over managerial accountants.Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.

2) Relevance
Representation faithfulness
Verifiability
Understandability
Comparability
Timeliness

3) It’s essential for any business to have basic accounting principles in mind to ensure the most accurate financial position. Your clients and stakeholders maintain trust within your company, so recording reliable and certified information is key. What are the 5 basic principles of accounting? To better understand the principles, let’s take a look at what they are.

1. Revenue Recognition Principle

When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

2. Cost Principle

Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

3. Matching Principle

Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

4. Full Disclosure Principle

The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

5. Objectivity Principle

The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

NAME : BASSEY MICHEAL EKANEM
REG NO : 2021/244123
EMAIL : basseymicheal30@gmail.com
LEVEL : LEVEL 100

ANSWERS:
1. Accounting can be classified into two major categories namely Managerial Accounting and Financial Accounting.

a) Managerial Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of information that is being used by the management of an organization to plan, evaluate, control and make decisions within that organization and to assure appropriate use of and good accountability for its resources”. It also refers to accounting information developed for managers within an organization. Furthermore, it is the phase of accounting concerned with providing information to managers for use in planning and controlling operations and in decision making.

b) Financial Accounting on the other hand involves recording, summarizing, and reporting the stream of transactions and economic activity resulting from business operations over a period of time to the public or regulators. Financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an organization. Financial accounting provides the scorecard by which a company’s past performance is judged.

Major Differences between Managerial Accounting and Financial Accounting:
Despite many similarities in approach and usage, there are significant differences between the financial and managerial accounting. These differences primarily center around compliance, accounting standards, and target audiences.

The intended purpose of managerial accounting is to assist users internal to the company in making well-informed business decisions while that of financial accounting is to assist external users or investors of the organization to know the condition or progress of the organization.
Managerial accounting statements helps the organization’s internal management to make decisions while Financial accounting helps auditors, Investors and creditors create forecasts of their own to know how well to trade with the company or withdraw from it.
Reports generated through managerial accounting are only circulated internally. Each company is free to create its own system and rules on managerial reports. This means there is no centralized system regulating reports, and it can often take much longer to find what you need. In contrast, financial accounting reports are highly regulated, especially the income statement, balance sheet, and cash flow statement. Since this information is released for public consumption and is highly anticipated by investors, companies must be very careful about how they make calculations, how figures are reported, and in what order those reports are constructed.
Financial accounting reports tend to be aggregated, concise, and generalized. Information is simultaneously more transparent and less revealing while Managerial accounting reports are highly detailed, technical, specific, and often experimental.

2. Qualitative attributes or characteristics of accounting are traits that should be found in accounting informations that allow financial professionals to more easily understand and make decisions on accounting reports. There are six qualitative characteristics of accounting information. Two of the six qualitative characteristics are fundamental (must have), while the remaining four qualitative characteristics are enhancing (nice to have). They include :
Fundamental attributes; Relevance and Faithful Representation.
Enhancing attributes; Verifiability, Understandability, Comparability, Timeliness.

3. The Fundamental principles of Accounting are defined as the various world recognized guidelines, rules or standards that companies must follow when documenting, recording, and reporting financial transactions and information. These rules help to ensure uniformity and accuracy in reporting and analyzing financial data. The ultimate goal of any set of accounting principles is to ensure that a company’s financial statements are complete, consistent, and comparable. Also having companies record and report their financial data using the same standards allows for the easy and accurate comparison and analysis of data and information. It allows investors to gain an accurate picture of a company’s financial health, and it allows for transparency in identifying fraud and inaccuracies in the data.
There are two primary systems of accounting principles. The United States uses an accounting system known as Generally Accepted Accounting Principles (GAAP), which is established and overseen by the Financial Accounting Standards Board (FASB). On an international scale, the standards and rules, known as the International Financial Reporting Standards (IFRS), are set by the International Accounting Standards Board (IASB).
The International Financial Reporting Standards (IFRS) are the key accounting principles that are applied worldwide. Several methodological differences exist between the two systems. For instance, GAAP allows companies to use either first in, first out (FIFO) or last in, first out (LIFO) as an inventory cost method. LIFO, however, is banned under IFRS.
Whether it’s GAAP in the U.S. or IFRS elsewhere, the overarching goal of these principles is to boost transparency and basically make it easier for investors to compare the financial statements of different companies.

Some of the most fundamental accounting principles include the following:
Accrual principle
Conservatism principle
Consistency principle
Cost principle
Economic entity principle
Full disclosure principle
Going concern principle
Matching principle
Materiality principle
Monetary unit principle
Reliability principle
Revenue recognition principle
Time period principle.
The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle. Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements. Consistency refers to a company’s use of accounting principles over time.

1.
I.) Two major categories of accounting;

a.) cash accounting
b.) accrual accounting

a.) CASH ACCOUNTING is the art and science of recording, classifying, summarizing, and analyzing costs to help management make prudent business decisions. It focuses on business transactions involving cash. Cost accounting is helpful because it can identify where a company is spending its money, how much it earns, and where money is being lost.

b.) ACCRUAL ACCOUNTING is an accounting method in which payments and expenses are credited and debited when earned or incurred. It records transactional data. The cash accounting method is used, but accrual accounting accounts for all transactions that make up company’s operating activities.

II.) Differences between cost and accrual accounting:

a.) Cash accounting records revenue and expenses when actual payments are received or disbursed. It doesn’t account for either when the transactions that create them occur. On the other hand, accrual accounting records revenue and expenses when those transactions occur and before any money is received or paid out.

b.) Cost accounting is a sub field in accounting whereas Accrual accounting is a method of recognizing business transactions.

c.) Cost accounting can use the concept of Accrual accounting but Accrual accounting cannot use the concept of Cost accounting.

2. The qualitative attributes of accounting?

a.) UNDERSTANDABILITY: The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. Information too difficult to understand should not be excluded, complex situations should be included.

b.) RELEVANCE: The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions. Information should be; accurate, neutral, prudent and complete.

c.) RELIABILITY: it should not be misleading, informations should be free from error and bias.

d.) COMPARABILITY: The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. You should be able to compare information with other periods.

3. FUNDAMENTAL PRINCIPLES OF ACCOUNTING
Fundamental principles of accounting can be referred to the rules and guidelines followed by companies while reporting their financial data. These principles ensure that the quality of the financial information reported by companies is improved. The aim of accounting fundamental principles is to compare multiple financial statements on the same level. Some of the most fundamental accounting principles include the following:
* Accrual principle.
* Conservatism principle.
* Consistency principle.
* Cost principle.
* Economic entity principle.
* Full disclosure principle.
* Going concern principle.
* Matching principle.

1.) Accounting can be classified into two major categories which are cash and accrual accounting. Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are actually paid. while Accrual accounting is an accounting method that recognizes revenue in the period in which it’s earned and realizable, but not necessarily when the cash is actually received. Cash basis lets businesses record income and expenses only when cash is actually received or paid. Accrual accounting involves tracking income and expenses as they are incurred instead of when money actually changes hands. Cash basis accounting records revenue and expenses when actual payments are received while accrual basis accounting is an account method that records revenue and expenses before payments are received. Cash basis is simple in nature while accrual basis is complex in nature. Cash basis of accounting is suitable for micro to small business while accrual basis of accounting is suitable for large corporations. Cash basis of accounting has low accuracy while accrual basis of accounting is more accurate than the cash basis of accounting .

2.) The qualitative attributes of accounting are comparability, consistency,neutrality,Relevance,Understandability,Reliability.

3.) The most notable principles of accounting include the revenue recognition principle, matching principle, materiality principle and consistency principle .Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements.

Name: Raymond Chiamaka Sylvia
Reg no:2021/243700
Email: sylviachiamaka208@gmail.
1. What is Cash accounting?
Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are actually paid. In other words, revenues and expenses are recorded when cash is received and paid, respectively. Transactions are recorded only when money goes in or out of an account.Small businesses often use cash accounting because it is simpler and more straightforward and it provides a clear picture of how much money the business actually has on hand.

What is Accrual accounting?
When transactions are recorded in the books of accounts as they occur even if the payment for that particular product or service has not been received or made, it is known as accrual based accounting. This method is more appropriate in assessing the health of the organisation in financial terms.
In accrual accounting, revenue is recognized when it is earned, regardless of when the payment is received. This means that if a company provides a service to a customer in December, but does not receive payment until January of the following year, the revenue from that service would be recorded in December, when it was earned. Similarly, expenses are recorded when they are incurred, regardless of when they are paid. For example, if a company incurs expenses in December for a service that will be received in January, the expenses would be recorded in December, when they were incurred.

1b.What are the major difference between them?
1.Cash accounting does not track long term liabilities,loans and inventory while Accrual accounting tracks long term liabilities,loans and inventory.
2.Cash accounting records expenses when you pay and income when you receive it while Accrual accounting records income when the transaction takes place and expenses when the bill is received.
3.Cash accounting is suitable for small business and accrual accounting is suitable for large organization.
4.The objective of cash accounting Is to know the cash balance of the business while Accrual accounting is to know the actual profit or loss of the business in the particular business period.
5.Cash accounting doesn’t follow international accounting standard while Accrual accounting follows the international accounting standard

2 What are the Qualitative attributes of accounting ?
Answer:
a.Understandability:
Understandability is the quality of information that enables users to perceive its significance. The benefits of information may be increased by making it more understandable and hence useful to a wider circle of users.

b.Comparability:
Comparability implies to have like things reported in a similar fashion and unlike things reported differently.

c.Consistency:
Consistency of method over a period of time is a valuable quality that makes accounting numbers more useful. Consistent use of accounting principles from one accounting period to another enhances the utility of financial statements to users by facilitating analysis and understanding of comparative accounting data.
d.Verifiability:
The quality of verifiability contributes to the usefulness of accounting information because the purpose of verification is to provide a significant degree of assurance that accounting measures represent, what they purport to represent.
e.Reliability:
Reliability is described as one of the two primary qualities (relevance and reliability) that make accounting information useful for decision-making. Reliable information is required to form judgments about the earning potential and financial position of a business firm. Reliability differs from item to item.
3 The fundamental principles of accounting

a.Consistency Principle:
Any working entity should set economic principles to work by it to record all the revenue, cost, and exchange. Moreover, these standards should be saved and continue working by it till find something that is 100% better than the previously used methods.

This consistency principle avoids balance problems, activities reporting, or bill confusion.

b.Going Concern Principle:
It works on the rule of believing in the business and the fact that it has the liabilities to last for years to come.

As these accounting principle concepts help a corporate divide the permanent, the general, and the ongoing cost in a better method without any suffocation in a specific period, this principle also builds explicit recognition for all the considered systems.

c.Accrual Principle:
A basic accounting principle that highlights the importance of making a complete accounting bookkeeping statement by the time of the action and deal, not by the period of the cost and revenue entry, this accrual principle helps you to know your money flow statics better and attach it to different times, so, here you are highlighting the financial static rather than the monetary flow.

d.Conservatism Principle:
A two-step accounting principle separates the financial balance into immediate credits that contain costs and needs. In contrast, the second step records the revenues, transactions, and assets when they happen and become a real profit in your budget.

In other words, this principle gives you a more realistic look into your firm accounting principle without any assumptions.

e.Objectivity Principle:
In this principle, all the entity’s accounting and cost details should always be realistic and separate from any personal assumption or the need to create a well drawn image for your firm materiality ledger. Thus, you must build this basic financial accounting principle on statements basis on data, research, and proper formation without including any personal opinions.

f.Matching Principle:
By setting an archive for your entity’s revenue and cash income accounts, you should create a record for the related expenses by this principle. Moreover, connect this financial statement by number and time to know each project or transaction’s small or big value on your basic known accounting principles.

g.Full Disclosure Principle:
It is a vast accounting concept within the basic accounting principles, particularly if you have stockholders, as announcing complete information and details will help you reach them better with verifiable transparency and maintaining integrity. Thus, the entire disclosure principle will build a fantastic public image for your entity and public relationships.

1. Major categories in accounting
Financial Accounting
Financial accounting involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal management use to help make decisions.

Managerial Accounting
Managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team in making strategic and tactical business decisions.
An example of managerial accounting is cost accounting. Cost accounting focuses on a detailed break-up of costs for effective cost control. Managerial accounting is very important in the decision-making process.

Differences
• Financial accounting reports on the results of an entire business. Managerial accounting almost always reports at a more detailed level, such as profits by product, product line, customer, and geographic region
• Financial accounting requires that records be kept with considerable precision, which is needed to prove that the financial statements are correct. Outside auditors rely on this information when auditing a firm’s financial statements. Conversely, managerial accounting frequently deals with estimates, rather than proven and verifiable facts.
• Financial accounting reports on the results of an entire business. Managerial accounting almost always reports at a more detailed level, such as profits by product, product line, customer, and geographic region
• Financial accounting reports on the profitability (and therefore the efficiency) of a business, whereas managerial accounting reports on specifically what is causing problems and how to fix them.

2. Qualities attributes of accounting
• Comparability:Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions
• Relevance:Relevance, regarding accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. 
• Timeliness:Timeliness involves how rapidly accounting information is available to professionals. There is often a period before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. 
• Reliability:Reliability is described as one of the two primary qualities (relevance and reliability) that make accounting information useful for decision-making. Reliable information is required to form judgments about the earning potential and financial position of a business firm. Reliability differs from item to item.
• Consistency:Consistency of method over some time is a valuable quality that makes accounting numbers more useful. Consistent use of accounting principles from one accounting period to another enhances the utility of financial statements to users by facilitating analysis and understanding of comparative accounting data.
3. Fundamentals principles accounting
• Full disclosure principle. This is the concept that you should include in or alongside the financial statements of a business all of the information that may impact a reader’s understanding of those statements. The accounting standards have greatly amplified this concept by specifying an enormous number of informational disclosures.

• Going concern principle. This is the concept that a business will remain in operation for the foreseeable future. This means that you would be justified in deferring the recognition of some expenses, such as depreciation, until later periods. Otherwise, you would have to recognize all expenses at once and not defer any of them.

• Matching principle. This is the concept that, when you record revenue, you should record all related expenses at the same time. Thus, you charge inventory to the cost of goods sold at the same time that you record revenue from the sale of those inventory items. This is a cornerstone of the accrual basis of accounting. The cash basis of accounting does not use the matching principle.

• Materiality principle. This is the concept that you should record a transaction in the accounting records if not doing so might have altered the decision-making process of someone reading the company’s financial statements. This is quite a vague concept that is difficult to quantify, which has led some of the more picayune controllers to record even the smallest transactions.

• Monetary unit principle. This is the concept that a business should only record transactions that can be stated in terms of a unit of currency. Thus, it is easy enough to record the purchase of a fixed asset, since it was bought for a specific price, whereas the value of the quality control system of a business is not recorded. This concept keeps a business from engaging in an excessive level of estimation in deriving the value of its assets and liabilities.

• Reliability principle. This is the concept that only those transactions that can be proven should be recorded. For example, a supplier invoice is a solid evidence that an expense has been recorded. This concept is of prime interest to auditors, who are constantly in search of evidence supporting transactions.

• Revenue recognition principle. This is the concept that you should only recognize revenue when the business has substantially completed the earnings process. So many people have skirted around the fringes of this concept to commit reporting fraud that a variety of standard-setting bodies have developed a massive amount of information about what constitutes proper revenue recognition.

• Period principle. This is the concept that a business should report the results of its operations over a standard period. This may qualify as the most glaringly obvious of all accounting principles but is intended to create a standard set of comparable periods, which is useful for trend analysis.
• Cost principle. This is the concept that a business should only  its assets, liabilities, and equity investments at their original purchase costs. This principle is becoming less valid, as a host of accounting standards are heading in the direction of adjusting assets and liabilities to their fair values.
• Economic entity principle. This is the concept that the transactions of a business should be kept separate from those of its owners and other businesses. This prevents intermingling of assets and liabilities among multiple entities, which can cause considerable difficulties when the financial statements of a fledgling business are first audited
• Accrual principle. This is the concept that accounting transactions should be recorded in the accounting periods when they occur, rather than in the periods when there are cash flows associated with them.

Name : Agbo ifeanyi Samuel
Department: economics
Course:eco 121
Reg no: 2021/244128
Date: 12-02-23

(1) accounting are classified into two categories which is :
1 Financial accounting
2 managerial accounting

( 1) FINANCIAL ACCOUNTING: financial accounting involves the the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. while financial statements are for external use, they may also be for internal management use to help make decisions.
Financial accountants produce documents such as income statements and balance sheets , which external parties (investors, industry regulators)use . The statements documents an organizations financial performance over a period of time, as well as it’s overall financial health. agencies such as the securities and exchange commission (SEC) regulates the work of financial accountants who produce these statements.
Accounting principles and standard, such as GAAP(generally accepted accounting standard), or ASPE(accounting standard for private enterprises), are standard that are widely adopted in financial accounting. The accounting standard are important because they allow all stake holders and shareholders to easily understand and interpret the reported financial statements from year to year.
(2) MANAGERIAL ACCOUNTING: managerial accounting analyzes the information gathered from financial accounting. it refers to the process of preparing reports about business operations. The reports serve to assist the management team to make tactical decisions. Managerial accounting is a process that allows an Enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following steps to take and then broadcasting the required steps to all internal business managers.
DIFFERENCE BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING.
(1) financial accounting focuses on statements based on financial information, to be shared with both internal and external shareholders while managerial accounting focuses on operational reporting and looks to the future by using forecasting. These reports are shared internally within the company, typically with managers and senior employees.
(2) financial accounting need to follow various accounting standards , financial accounting are tightly regulated especially when it comes to company’s balance sheet, income statement and cash flow statements. While managerial are purely for internal use, there is no specific set of accounting standards they need to adhere to.
(3) financial accounting look at the past by examining financial information while managerial accounting looks to the future using forecasting.
(4) financial accountants needs to prepare reports at designated time of the year, typically quarter and annually, while managerial accountants prepare reports much more frequently but the frequency is highly dependent on the company’s needs.

QUESTION 2
Qualitative attribute of accounting are:
(1) RELIABILITY: this implies that the information must be factual and verifiable.
(2) RELEVANCE: information depicted by financial statements must be relevant to the objectives of enterprise , unnecessary and irrelevant information should not be included in the financial statements
(3) UNDERSTANDABILITY: accounting information should be presented in such a simple and logical manner that they are understood easily by their users such as investors , lenders, employees etc . A person who does not have any knowledge of accounting terminology should be able to understand them without much difficulty.
(4) COMPARABILITY: comparability is very useful quality of accounting. The financial statements should contain the figure of previous year along with the figure of current year so that the current performance can be compared with the past performance.
(5) FAITHFUL REPRESENTATION: accounting aims at preparing those financial statements that depict the true and fair view of profitability, liquidity and solvency position of an Enterprise.
QUESTION 3
FUNDAMENTAL PRINCIPLES OF ACCOUNTING
Fundamental principles of accounting refers to common rules or guidelines for accounting financial transactions and preparing financial statements. Accounting principles are the foundational guidelines for recording and preparing financial statements.the accounting principles are commonly referred to as generally accepted accounting principles (GAAP)
Accounting principles helps to bring the uniformity in accounting and preparing financial statements and it is followed world wide. The regulators and authorities of each country may have their own accounting principles like UK GAAP, USA GAAP, IFRS etc. But at the core , the fundamental and objectives accounting principles remain the same.
Some of the most Fundamental accounting principles includes the following:
1 , accurual principles
2, conservatism principles
3,consistent principles
4, cost principles
5 ,economic entity principles
6,Matching principles
7, revenue and recognition principles ,e.t.c

NAME: Ogbedeh Chukwudalu Frances
REG.NO.:2021/241352
EMAILADDRESS:franceschukwudalu@gmail.com

1: Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the major differences between them?

Answer: Financial accounting and Managerial accounting
Financial Accounting is a specific branch of accounting involving a process of recording, summarizing and reporting the myriad of transactions resulting from business operations over a period of time.
Managerial accounting also called management accounting, is a method of accounting that creates statements, reports,and documents that help management in making better decisions related to their business performance. Managerial accounting is primarily used for internal purposes.

The difference is that Managerial accounting focuses on an organizations internal financial processes, while financial accounting focuses on an organization’s external financial processes.

2:What are the qualitative attributes of account?

Answer:The four enhancing qualitative characteristics are comparability, verifiability, timelines and understandability.

3:Discuss the fundamental principles of Accounting:

Answer:
A: Accrual Principle: it is an accounting method where revenue or expenses are recorded when transaction occurs and when payment is received or made. The method follows the matching principle, which says that revenues and expenses should be recognized in the same period.

B: Conservatism Principle: This is a principle that requires company accounts to be prepared with caution and high degrees of verification. All probable losses are recorded when they are discovered, while gains can only be registered when they are fully realized.

C: Consistency Principle: This means that once your organization, or more specifically, your book keeper or accounting department, adopts an accounting principle or method of documenting and reporting information, that method has to be used consistency moving forward.

D: The Cost Principle: It means items need to be recorded as the actual price paid. It is the same way when a buyer buys products and the recording is done based on the price paid. In short, the cost Principle is equal to the amount paid for each transaction.

E: The Economic Entity Principle: It is an accounting principle that states that a business entity’s finances should be kept separate from those of the owner, partners, shareholders, or related businesses.

F: The Full Disclosure Principle : It states that all information should be included in an entity’s financial statements that would affect a readers understanding of those statements.

G: Going Concern Principle: It is an accounting term for a company that has the resources needed to continue operating indefinitely until it provides evidence to the contrary.

H: The Matching Principle: It is an accounting concept that dictates that companies report expenses at the same time as the revenue they are related to.

NAME: Tabansi Johnbosco chijindu
REGISTRATION NUMBER: 2021/245662
Questions
Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the Major differences between them.
Answers
1) we have two major categories of Accounting which is
Cash Accounting and Accrual accounting
Cash accounting is the simplest and most basic method of accounting which focuses on cash inflows and outflows . It is predominantly used by individuals for personal accounting as well as by small business . In a cash based accounting system, revenues and expenditures are recognized only when money is exchanged. Irrespective of when goods and services are delivered. This means that this method does not introduce the additional complexities of accounts payables, receivables, or current assets and liabilities . It also means that any sale or expenses aren’t reflected in the financial statements untill the amount is realized, again investments in inventory are shown as expenses until they can be sold for cash. With cash Accounting, it’s more difficult to accurately assess your business financial performance..
B) Accrual accounting…
Is used in moste professional organizations and business around the world, accrual accounting recognizes income only when goods and services are delivered, and expenses are recorded especially when they are incurred. For example. If you were hired to construct a house, you would record revenues from the project as it was completed, irrespective of when the customer paid the money. The same applies for expenses. Which are reported when they are incurred not when you pay them. Again, Accrual accounting also uses double entry accounting with accounts for receivables, payables and inventories.
DIFFERENCE BETWEEN COST ACCOUNTING AND ACCRUAL ACCOUNTING .. In cost basis of Accounting .. it is where any income or expenses is recognized only when there is an inflows or outflows of cash … While Accrual accounting is the basis of Accounting where any income or expenses is recognized when it is earned/ incurred, irrespective of the time when it is paid/ collected.
ii) cash basis of Accounting is simple in naruy wheres the Accrual accounting is complex in nature.
III) Cash basis of Accounting follows the single entry system that records either inflow or outflow of cash. While Accrual accounting follows a double entry system of Accounting where each transaction has two outcomes in the form of debit and credit.
III) income statement will show a relatively lower income under Cash basis of Accounting .. while income statement will show higher income levels under the accrual basis of Accounting..
iv) Cash basis of Accounting has low Accuracy while Accrual basis of Accounting is more accurate than the Cash basis of Accounting..
V) Cash basis of Accounting is suitable for micro to small business while Accrual basis of Accounting is suitable for large corporation..
Question 2
What are the qualitative attributes of Accounting . answers
a) relevance (b) Reliability (c) understandability (d) comparability (e) consistency (f) representation faithfulness.
Question 3
Discuss the fundamentals of principles of Accounting..
Answers
Fundamentals of principles of Accounting includes the monetary unit… Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with it…
B) principles of conservatism… accountants aree said to be very conservative by nature. They want to hope fore the best and be prepared for the worst. This is displayed in the rules that they have created fore their profession. One of the central tenets of Accounting is the principle of conservatism, According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must State the lowest possible revenue and highest possible costs.
iii) cost principle .. closely related to the principle of conservatism ..
Is cost principle .
It advocates that companies should list everything on the financial statements at the cost price usually assets like Land , building, gold etc.

Name: Anyanwu Chinwe Hephzibah
Department: Economics
Reg number: 2021/241307
Question 1. Accounting can be classified into two major categories deeply discuss what the categories are? What are the major differences between them.
Answer: Financial accounting is a specific branch of accounting involving a process of recording, summarizing and reporting transactions resulting from business operation over a period of time. While cost accounting is a process of assigning cost to cost objects that typically include a company’s projects, services, and any other activities that involves the company.
Where cost accounting is a system that keeps tracks of the costs incurred by a business, financial accounting focuses on the financial position of the business
Question 2. What are the qualitative attributes of accounting
Answer: Relevance: This means that the information can influence the economic decisions made by users. Information is also relevant is it is able to help decision makers evaluate past decision.
Reliability: This means that the user is assured that the information presented represents, faithfully without bias the transactions and event being reported
Question 3. Discuss the fundamental principles of accounting
Monetary principle: Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system.

Going Concern Concept: A company is said to have an external existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do.

Principle of Conservation: Accountants are said to be very conservative by nature. They went to hope for the best and prepared for the worst. This is displayed in the rules that they have created for their profession.

Name:Udeh Beatrice Chinaza.
Reg No:2021/244045
Department:Economics.

1)Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business.This involves the preparation of financial statements available for public use. Stockholders, suppliers, banks, employees, government agencies, business owners, and other stakeholders are examples of people interested in receiving such information for decision making purposes.
Financial accountancy is governed by both local and international accounting standards. Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting used in any given jurisdiction. It includes the standards, conventions and rules that accountants follow in recording and summarizing and in the preparation of financial statements.
ii)Managerial Accounting : simple definition of management accounting is the provision of financial and non-financial decision-making information to managers. In other words, management accounting helps the directors inside an organization to make decisions. This can also be known as Cost Accounting. This is the way toward distinguishing, examining, deciphering and imparting data to supervisors to help accomplish business goals.The information gathered includes all fields of accounting that educates the administration regarding business tasks identifying with the financial expenses and decisions made by the organization. Accountants use plans to measure the overall strategy of operations within the organization.
B) Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.
Managerial accountants focus on short-term growth strategies relating to economic maintenance. For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product.
Financial accountants focus on long-term financial strategies relating to organizational growth.
2) Relevance
Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances.
ii) Representational faithfulness
Representational faithfulness, sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.
iii) Verifiability
To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results.
iv) Understandability
Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand. Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information
v) Timeliness
Timeliness involves how rapidly accounting information is available to professionals. There is often a period of time before financial information can reach an accounting department after a transaction occurs, the speed of which depends on how efficient a company’s communication is. If information reaches a company quickly, it allows an accounting team to make timely decisions.
Vi) Comparability
Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance.
3) Integrity.:
A professional accountant should be straightforward and honest in all professional and business relationships
ii) Objectivity.:
A professional accountant should not allow bias, conflict of interest or undue influence of others.
iii) Professional Competence and Due Care.:
A professional accountant has a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services based on current developments in practice, legislation and techniques. A professional accountant should act diligently and in accordance with applicable technical and professional standards when providing professional services.
iv) Confidentiality.:
A professional accountant should respect the confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without proper and specific authority unless there is a legal or professional right or duty to disclose. Confidential information acquired as a result of professional and business relationships should not be used for the personal advantage of the professional accountant or third parties.
v) Professional Behavior.:
A professional accountant should comply with the relevant laws and regulations and should avoid any action that discredits the profession.

1. i.Cash Basis Accounting
ii. Accural Accounting
I. Cash Basis Accounting: Revenue is reported on the income statement only when is cash is received.Expenses are recorded only when cash is paid out. The cash method is typically used by small businesses and for personal finances.
II. Accural Accounting: Revenue is accounted for when it is earned. The accural method records revenue when a product or service is delivered to a customer with the expectation that money will be paid in the future.
Differences between cash Basis Accounting and Accural Accounting.
I. Cash accounting recognizes revenue only when money is received but Accural accounting recognizes revenue when it is earned.
II. Cash accounting recognizes expenses when cash has been spent while Accural accounting recognizes expenses when they’re billed.
III. In cash accounting taxes are not paid on money that hasn’t been received yet while in Accural accounting taxes are paid on money that you’re still owed.
IV. Cash accounting is used mostly used by small businesses while Accural accounting is used for businesses with large revenue.

2. Qualitative Attributes of Accounting
I. Comparability
II. Verifiability
III. Timeliness
IV. Understandability

I. Comparability: implies that users of financial statements must be able to compare aspects of an entity at one time and over time and between entities.
II. Verifiability: it provides assurance that the information faithfully represents what it’s supposed to be representing.
III. Timeliness: it means that the accounting information is available to all stakeholders in time for decision making process.
IV. Understandability: implies that the financial statement, information must be classified,characterized and presented clearly and concisely.

3. Principles of Accounting
I. Revenue Recognition Principle
II. Cost principle
III. Matching principle
IV. Objectivity principle
V. Full Disclosure Principle

I. Revenue Recognition Principle: this is the period of time when revenue are recognized through the income statement of your company. In order for your revenue to be recognized in the period that the service were provided if you’re on the accural basis and if you’re on the cash Basis then the revenues need to be recognized in the cash was received.
II. Cost Principle: it is important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
III. Matching principle: Expenses should be matched to the revenue recognized in the same accounting period and be recorded in the period the expenses was incurred.
IV. Objectivity principle: Accounting data should consistently stay accurate and be free of personal opinions.
V. Full Disclosure Principle: Each piece of information should be included in the financial statement of an entity. It is important to disclose information about events that have a material impact on the financial position of an entity.

NAME: Ogeobuma Janet Jennifer
FACULTY: Education
DEPARTMENT: social science education
UNIT: Economics Education
reg no: 10156354JD

1)The two main accounting methods are cash accounting and accrual accounting. Cash accounting records revenues and expenses when they are received and paid. Accrual accounting records revenues and expenses when they occur. Generally accepted accounting principles (GAAP) requires accrual accounting.

1b)Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed.

Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.

Accrual accounting provides a more accurate view of a company’s health by including accounts payable and accounts receivable.

The accrual method is the more commonly used method by large companies, especially by publicy traded companies, as it smooths as out earning over time.

2)The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability

3)
The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle. Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements.

1. Financial Accounting
Financial accounting involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. While financial statements are for external use, they may also be for internal management use to help make decisions.
2. Managerial Accounting
Managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team in making strategic and tactical business decisions.
DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING
1. Financial Accounting is a discipline that deals with the preparation of financial statements, and communication of the information to the users. As against, management accounting is all about the provision of information that is useful to the management, to assist the management in the formulation of policies and day to day operations for efficient operation of the business.
2. Financial Accounting uses the monetary records of past financial activities, so it is historically oriented. As against, management accounting is future-oriented, as it provides both present and future information in the form of forecasts and budgets which are duly analysed and presented in a detailed manner, so as to act as a base for management decision making.
3. In financial accounting, the reports prepared are mainly used by external users, but internal users also use them. It reflects how the business enterprise uses resources during a particular period of time. External users use it for decision-making purposes. However, it is the members of management who use the reports generated under management accounting.
QUALITATIVE ATTRIBUTES OF ACCOUNTING
Relevance
Relevance means that the information can influence the economic decisions made by users. For example, the information may help users to predict future events, such as future cash flows, and help determine alternative courses of action under consideration.
Reliability
Reliability means that the user is assured that the information presented represents faithfully, without bias, the transactions and events being reported. This is a major reason that accountants record assets at their original historical cost.
Timeliness
For accounting information to be relevant, it must be timely, i.e. it must be available to the decision makers before it loses its capacity to appropriately inform decisions.
Comparability
Comparability results when different companies use the same accounting principles.
Materiality
It is important that users are not overwhelmed with so much detail that they cannot clearly understand the message. The concept of materiality relates to the extent to which information can be omitted, misstated or grouped with other information without misleading the statement users when they are making their economic decisions.
FUNDAMENTAL PRINCIPLES OF ACCOUNTING
1.Principles of Conservatism
The conservatism philosophy states that any expenditure and liabilities should be reported as soon as practicable. In contrast, profits and assets should be registered only after an accountant is confident they will arise.
2. Principle of Accrual
The accrual theory in accounting states that all expenses should be recorded in the amounts they occur instead of when cash flow is correlated with them.
3. Principle of Cost
The expense theory in accounting states that a company can report all equity contributions, profits, and liabilities at their initial purchasing prices. This theory says that the quantities reported cannot be modified for market value increases or inflation.
4. Principle of Consistency
The accounting concept that allows an organization to use the same accounting system practices and standards for publishing its financial statements is the consistency principle.
5. Principle of Economic Entity
According to the Business Entity Definition or Business Entity Principle, a business company’s operator has separate legal liabilities. According to this definition, the company must distinguish all purchases from its owners, shareholders, and other businesses.

1) Financial accounting involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible .
Accounting principles and standards, such as US GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards), are standards that are widely adopted in financial accounting. The accounting standards are important because they allow all stakeholders and shareholders to easily understand and interpret the reported financial statements from year to year.

b) Managerial accounting analyzes the information gathered from financial accounting. It refers to the process of preparing reports about business operations. The reports serve to assist the management team in making strategic and tactical business decisions.
Managerial accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing accounting information, deciding on the best next steps to follow, and then communicating these next steps to internal business managers.
An example of managerial accounting is cost accounting.
B)Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes

b) Managerial accountants focus on short-term growth strategies relating to economic maintenance. For example, managerial accountants can perform a make-or-buy analysis to determine the financial soundness of producing a part to help with manufacturing a product.
Financial accountants focus on long-term financial strategies relating to organizational growth.

c)Compliance with established formats is vital for financial accountants, who must prepare reports for shareholders and potential investors as well as executives. Managerial accountants, however, generally prepare their reports for internal audiences.

2)Relevance
The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions.
a)Faithful representation
The characteristic of faithful representation implies that financial information faithfully represents the phenomena it purports to represent.
b) Comparability
The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time.
c) Verifiability
The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.
d)Timeliness
The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.
e)Understandability
The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely.

3) Monetary Unit
Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.
b) Going Concern
A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
c) Principle Of Conservatism
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
d) Cost Principle
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

1. a) CATEGORIES OF ACCOUNTING
the two major types of accounting are;
I) FINANCIAL ACCOUNTING: This is a process of recording, summarizing, and reporting various transactions that occur over a period of time during the course of business.
We gather and convert all the daily transactions into financial statements, balance sheet, income statements, and cash flow statements and in preparation, financial accounting uses a bunch of accounting principles. These contain different rules and assumption set out for the preparation of financial statements. Furthermore, there are two different methodology financial accounting uses to prepare financial statements:
*Accrual method which entails recording transaction as and when the transaction occurs and revenue is recognizable or expenses are certain and payable and cash method, which records transactions on the basis of the exchange of cash.
And the combination of the above two methods.

II. COST ACCOUNTING,
This is a process of recording, summarizing, analyzing, and allocating the cost over the process of manufacturing a product or providing services.
It helps management to determine the cost involved in manufacturing a product or services by use of different cost accounting method.
Further, it helps management to make organization cost-efficient and capable. Cost accounting acts as a controlling tool.
Elements of cost accounting are Material, Labor
Other expenses etc.

b)MAJOR DIFFERENCES BETWEEN THE CATEGORIES OF ACCOUNTING
**In Financial accounting, Ratio analysis of financial information are contained in financial statements.

**Comparative analysis of past and current financial information.

**Through an analysis of fund flow statements and cash flow statements.

**Analysis of Return on capital employed.

WHILE BASED ON COST ACCOUNTING INFORMATION,cost volume and profit volume analysis.
**Incremental and differential costing method.
**Standard costing and variance analysis.

2. QUALITATIVE ATTRIBUTES OF ACCOUNTING
Qualitative characteristics of accounting information are traits that allow financial professionals to more easily understand and make decisions on accounting reports and they are six different types of qualitative characteristics of accounting information, including:
a)Relevance
b)Representational faithfulness
c)Verifiability
d)Understandability
e)Comparability
f)Timeliness

3.FUNDAMENTAL PRINCIPLES OF ACCOUNTING
1) Accrual Principle:
This is a concept in accounting that mandates the recording of transactions in the time period in which they occur. It is regardless of the time when actual cash flows for the transactions are received. Through this principle, one can gain an accurate insight into the financial status of a business. Most large-scale businesses adopt an accrual system to determine the cash flow of the business operations. Along with this, revenues and related expenses are recorded in the same time period of reporting. In case, a business has more than $5 million in revenue, then such businesses must adopt this system for the purpose of taxations.

2. Consistency Principle :
According to this principle, when an organisation adopts a specific accounting method of reporting or documentation, then it should stay consistent with the method. The aim of this basic accounting principle is to make financial statements comparable across industries and companies. This principle has two issues associated with it. First, the principle is not properly followed when many people are recording data and compiling reports. To combat this issue, organizations need to have a set method internally. The second issue is related to switching between the financial reporting methods. Some organizations do this in order to manipulate the data to their advantage.

3. Conservatism Principle
The principle gives you a realistic perspective of unexpected situations. According to this principle, one should recognize expenses and liabilities at the early stages even if there is uncertainty about the outcome. However, the principle recognizes revenues and assets when there is an assurance of its receival. This principle can be applied to recognizing the estimates. The conservatism principle is the foundation of lower cost or market rule. As per this rule, one should record inventory at a lower end of its current market value or at its acquisition cost.

4. Cost Principle
Whenever a business acquires an asset, its initial value is recorded in its financial reports of the business. This value might not be improved in the market value of inflation. It is also not updated to reflect any depreciation or even appreciation. This value is known as the cost principle. As per the principle, companies keep a record of their tangible assets without reflecting the market value. Through this principle, companies can assess the actual cost of using financial services for calculating the historical cost principles of the assets of the company.

5. Matching Principle
The matching principle is a concept in accounting that states that companies must report their expenses and revenues simultaneously. The revenues and expenses are matched on income statements for a specific time period. It is a part of the accrual accounting method that provides an accurate representation of operations on the income statement. This principle is quite useful for investors as investors can match revenue and expenses to get a better sense of the finances of a business. Along with the income statement, there is a need to assess the cash flow statement as well.

6. Materiality Principle
As per the materiality principle, any item that may impact the decision-making process of an investor must be recorded. These details must be recorded in length in the financial statements using Generally Accepted Accounting Principles (GAAP). The material principle states that the accounting standard can be ignored if the end result is small. It is an important principle for deciding if a transaction should be recorded as a part of closing process.

7. Going Concern Principle.
According to this accounting principle, a company will complete its recent plans, meet its financial obligations and use its existing assets. This process of continuing operations indefinitely must go on until the company has any evidence on the contrary. Through this principle, the company continues to make money to avoid going bankrupt. In case, the company is unable to adopt this principle properly, the chance of liquidation and bankruptcy increases. Going concern concept is also known as the continuing concern concept. A company continues to be a going concern till the time the sale of assets does not hamper its operations. If a company is no longer a continuing concern, it needs to start reporting specific information on financial statements. Through this principle, accountants can make decisions related to which information should be reported on financial statements.

8.Revenue Recognition Principle.
This is a part of GAAP that identifies certain conditions in which the revenue is recognized. The revenue is recognized when a critical event has occurred. This principle uses the accrual method of accounting. According to this, revenues are recognized when realised and earned. It is a straightforward principle when revenue is recognized when customers make payments. Whenever the production takes longer, the accounting for revenue becomes more complicated. This is one of the standard accounting principles in the industry.

Name: Acholonu Chidubem Wisdom
Reg no: 2021/243697

1) Two major categories of accounting are:
a) Cash accounting: This involves revenues and expenses as they are received and paid through cash inflows and outflows
b) Accrual accounting: These are revenues and expenses that are earned and incurred through sales and purchases on credit and by using accounts receivable and payable
The major difference between them is that cash accounting focuses on only on corporate transactions involving cash while Accrual accounting focuses on recording transactions when they are incurred even if it has not been received immediately
2) Qualitative attributes of accounting are:
a) Comparability: This involves the process of evaluating one’s financial period with another to understand a company’s trend and overall performance
b) Relevance: This is an attribute that can help individuals make decisions related to a business’ finance
C) Understandability: This is the measure of how easily an individual can comprehend a company’s financial report or accounting information
D) Reliability: This is an attribute that makes accounting information useful for decision making
3) Fundamental principles of accounting are:
A) Objectivity: The accounting data should consistently stay accurate and be free of personal opinion
B) Matching principle: Expenses should be matched to the revenues recognized in the same accounting period
C) Revenue recognition principle: Revenue is reported when it’s earned, regardless of when payment is actually received
D) Full disclosure principle: The information on financial statements should be complete so that nothing is misleading

Azubuike Emmanuel Ayomide 2021/241308
1.) Cash accounting is the methodology under which transactions are recorded when they actually happen. For example, income will be recorded when the company receives cash and expenses are recorded when they are actually paid out and not when the bill is raised.
Accrual accounting is where a business records revenue or expenses when a transaction occurs using the double-entry accounting method.
Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed. Cash basis accounting records revenue and expenses when cash related to those transactions actually is received or dispensed.
2.). Relevance; In regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.
Representational faithfulness; Sometimes known as financial reliability, is information that properly indicates a company’s transactions, resources and overall financial assets.
Verifiability; To create accurate financial predictions, a company ensures that its financial information is verifiable. Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results.
Understandability; Since decision-making for a company often involves professionals outside of the accounting department, such as managerial professionals, it’s important that financial reports are easy to understand.
Comparability
Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions.
3) The Fundamental Principles of Accounting :

i) Revenue Recognition Principle

When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

ii) Cost Principle

Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

iii) Matching Principle

Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

iv) Full Disclosure Principle

The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

v) Objectivity Principle

The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

Name: Neboh odinakachukwu Maria
Reg no: 2021/241342
1. TWO CATEGORIES OF ACCOUNTING
a: Financial Accounting -It involves the preparation of accurate financial statements. The focus of financial accounting is to measure the performance of a business as accurately as possible. Accounting principles and standards,such as GAAP (General Accepted Accounting Principles) or IFRS (international Financial Reporting Standards).
b: Managerial Accounting: Is the process of identifying, analyzing, interpreting, and communicating financial information to managers so that they can make informed decisions about how to run their business. Managerial accounting reports and often includes financial statements as well as other types of financial information, such ad cost of goods sold ,budget variances, and financial ratios.
DIFFERENCE BETWEEN MANAGERIAL AND FINANCIAL ACCOUNTING
Managerial accounting focuses on an organization’s internal financial processes ,WHILE Financial accounting focuses on an organization’s external financial processes.
2. THE QUALITATIVE ATTRIBUTES OF ACCOUNTING
a: Reliability – It means that the users must be able to depend on the information and should be free from error and bias and faithfully represents what it is meant to represent.
b: Relevance – Information must help in prediction, feedback and must influence the decisions of users in a positive manner.
c: Understandability – It must interpret accounting information in the she sense as it is prepared and conveyed to them.
d: Compatibility – It is believed that it is not sufficient that the financial information is relevant or for a particular time , in a particular circumstance or for a particular reporting entity.
3. FUNDAMENTAL PRINCIPLE OF ACCOUNTING
a. Integrity -It imposes upon professional accountants , a duty of straightforwardness and honesty at all times. It prevents our work from being corrupted by self – interest or d interest of other parties .
b. Professional competence and due care – The principle prevents us from providing a low – quality or incompetent service and to act in accordance with the generally accepted accounting principles.
c. Objectivity – It tells a professional accountant to focus on the task and nothing else .
d. Behavior – We shall not engage with any behavior that doesn’t follow the law and the ethical guidelines that all accountants must follow.

Reg No:2021/214333
1a. The categories are:
Financial accounting:it involves the preparation of financial statements meaning the aim is to measure the finances, financial basis, records and performance of a business as accurately as possible.They also gather information which the managerial sector analyse as to process of decision making. Financial statement are for external use as they handle the finances as book as loan statement, cash invoice etc they may also be for internal management use to help make decisions.
Managerial accounting: it refers to the process of preparing report about business operation, and the report help assist the management team to make decisions.it is a process that allows an Enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the steps to take and broadcasting the steps to all internal business managers e.g cost accounting.
B. Differences are:
Financial accounting helps in measuring the performance of a business or financial statement accurately while managerial accounting analysis the information gathered from financial accounting reports and statement to prepare report about business operation, the report serve to assist the team in making decisions.
2. Qualitative attributes are:
Reliability
Relevance
Comparability
Faithful representation
Understandability
3. Principle are:
Cost principle
Matching principles
Revenue recognition principle
Full disclosure principle
Objectivity principle.

1. Deeply discuss what the categories of accounting and the major differences between them.
Financial accounting is the process of recording, summarizing and reporting a company’s business transactions through financial statements. These transactions are summarized in the preparation of financial statements, including the balance sheet, income statement and cash flow statement, that record the company’s operating performance over a specified period. Financial reporting occurs through the use of financial statements such as the income statement, the balance sheet, the cash flow statement and the statement of retained earnings. The financial statements used in financial accounting present the five main classifications of financial data: revenues, expenses, assets, liabilities and equity. Revenues and expenses are accounted for and reported on the income statement. They can include everything from research and development to payroll. Financial accounting differs from managerial (or cost) accounting as financial reporting is more for reporting to external parties while cost accounting is more for strategic planning internally.
Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization’s goals. Managerial accounting involves the presentation of financial information for internal purposes to be used by management in making key business decisions. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Managerial accounting encompasses many facets of accounting, including product costing, budgeting, forecasting, and various financial analysis. Managerial accounting differs from financial accounting because the intended purpose of managerial accounting is to assist users internal to the company in making well-informed business decisions.
Major Differences between managerial accounting and financial accounting
1. Managerial accounting information is aimed at helping managers within the organization make well-informed business decisions, while financial accounting is aimed at providing financial information to parties outside the organization.
2. Managerial accounting focuses on an organization’s internal financial processes, while financial accounting focuses on an organization’s external financial processes.
3. A financial accounting system is aimed at external decision-makers such as investors, regulators, and creditors, while a managerial accounting system is aimed at internal decision-makers such as managers.

2. What are the qualitative attributes of accounting

1. Relevance: This simply means that the information given should be available in time and also able to aid the users in making decisions and/or predictions.
2. Reliability: This means that all information given should be accurate and dependable, and can be used for inferences or decision making.
3. Understandability: This means that the information presented should be in such a way that will make it easy for you the users to comprehend.
4. Comparability: This is the quality of information that helps decision makers compare their findings with other information and reports to determine relative financial strengths and weaknesses.
5. Faithful representation: This is the quality of financial statements produced ti accurately reflect the condition of a business.

3. Discuss the fundamental principles of accounting

1. Revenue recognition: This is an accounting principle that asserts that revenue must be recognized as it is earned. It identifies the specific conditions in which revenue is recognized and determines how to account for it. The revenue recognition principle using accural accounting requires that revenues are recognized when realized and earned -not when the cash is received. Revenue recognition standards can vary based on a company’s accounting method, geographical location, whether they are a public or private entity etc.
2. Matching principle: This is an accounting principle that dictates that companies report expenses at the same time as the revenues they are related to. It is part of the accural basis of accounting and ensures that expenses are matched to revenues recognition in the accounting period. Using this principle will show how well the business has done financially and how effective it was.
The main goal of the matching principle is to be able to look at an income statement and know how much revenue was performed during the year and to also see the expenses we incurred to produce that revenue.
3. Materiality principle: This is an accounting principle which states that all material items that are reasonably likely to impact investors’ decision making must be recorded or reported in details in a business’s financial statements using GAAP(Generally Accepted Accounting Principles) standards.
Material items are considered as those items whose inclusion or exclusion results in significant changes in the decision making for the users of the business information.
In materiality principle, an accounting standard can be ignored if the impact of doing so has a small impact on the financial statement.
4. Consistency principle: This states that, once you adopt an accounting principle or method, continue to follow it consistently in future accounting periods so that the results reported from period to period are comparable. However, companies can change an accounting principle or method if the new version in some way improves the usefulness of the reported financial results.

.The two major categories of accounting are financial accounting and management accounting.

Financial accounting is concerned with the preparation of financial statements that summarize the financial activities of an organization and provide relevant information to external users, such as investors, creditors, and regulatory agencies. Financial accounting information is used to make investment and credit decisions and to assess the performance and financial health of the company.

Management accounting, on the other hand, is focused on providing information to internal users, such as managers and executives, to help them make decisions about the company’s operations and strategy. Management accounting information is used to support planning, decision-making, and control activities and includes cost analysis, budgeting, and performance evaluation.

The major differences between financial and management accounting are:

1.Purpose: Financial accounting provides information to external users, while management accounting provides information to internal users.

2.Focus: Financial accounting focuses on the past and present financial performance of the company, while management accounting focuses on the future and how to improve future performance.

3.Audience: Financial accounting is intended for external stakeholders, while management accounting is intended for internal stakeholders.

4.Timing: Financial accounting reports are typically prepared on a regular basis, such as quarterly or annually, while management accounting information is updated continuously.

5.Regulations: Financial accounting is subject to various regulations, such as the Generally Accepted Accounting Principles (GAAP), while management accounting is not subject to the same level of regulation.

2. The qualitative attributes of accounting refer to the characteristics or features that make accounting information useful and relevant to decision-makers. There are four main qualitative attributes of accounting:

1 Relevance: Information is relevant if it is capable of making a difference in a decision.

2.Reliability: Information is reliable if it is trustworthy and can be depended upon.

3.Comparability: Information is comparable if it can be easily compared across different companies, industries, or time periods.

4.Understandability: Information is understandable if it is easy to comprehend by those who will use it.

These attributes help ensure that accounting information provides valuable insights and supports effective decision-making.

3.The fundamental principles of accounting are a set of guidelines and rules that are used to ensure that financial information is reported accurately and consistently. These principles help to ensure that financial statements are comparable across different companies and time periods. The following are the main principles of accounting:

1. Historical cost principle: This principle states that financial transactions should be recorded at their original cost, as opposed to their current market value. This helps to ensure that transactions are recorded objectively, as the cost is a known and verifiable amount.

2.Going concern principle: This principle assumes that a business will continue to operate into the future, unless there is evidence to suggest otherwise. This assumption helps to ensure that the financial statements are based on realistic expectations of the future.

3.Revenue recognition principle: This principle states that revenue should only be recognized when it is earned, regardless of when the cash is received. This ensures that revenue is recorded in the correct period, and that financial statements accurately reflect the performance of a business.

4.Matching principle: This principle states that expenses should be matched with the revenue they helped to generate. This helps to ensure that the financial statements accurately reflect the cost of generating revenue, and that expenses are recorded in the same period as the revenue they helped to generate.

5.Full disclosure principle: This principle states that financial statements should be transparent, and that all relevant information should be disclosed. This helps to ensure that financial statements are complete, and that users can make informed decisions based on the information provided.

6.Objectivity principle: This principle states that financial transactions should be recorded in an objective and impartial manner, without any personal bias. This helps to ensure that financial statements are based on accurate information, and that they are free from manipulation or manipulation.

These principles are essential for ensuring the accuracy and consistency of financial statements, and they help to build confidence in the financial information that is provided. They form the foundation of modern accounting practice, and are widely recognized and used around the world.

Name:Okafor Chike Charles
Reg No:2021/241351
Email: okaforchike2005@gmail.com

1) Accounting can be classified into two major categories. Deeply discuss what the categories are? What are the major differences between them?
Ans: Cash Accounting
Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transactions are only recorded when cash is spent or received.

Accrual Accounting
Accrual accounting is based on the matching principle, which is intended to match the timing of revenue and expense recognition. By matching revenues with expenses, the accrual method gives a more accurate picture of a company’s true financial condition.
Major Differences Between Them Are;
The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method provides an immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

2) what are the qualitative attributes of accounting?
Ans:
1)Comparability
The characteristic of comparability implies that users of financial statements must be able to compare aspects of an entity at one time and over time, and between entities at one time and over time. Therefore, the measurement and display of transactions and events should be carried out in a consistent manner throughout an entity, or fully explained if they are measured or displayed differently.
2)Verifiability
The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.
3)Timeliness
The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.
4)Understandability
The characteristic of understandability implies that preparers of information have classified, characterised and presented the information clearly and concisely. The financial reports are prepared with the assumption that its users have a ‘reasonable knowledge’ of the business and its economic activities.

3) Discuss the fundamental Principles of Accounting.
Ans:
Some of the most fundamental accounting principles include the following:

1)Accrual principle
2(Conservatism principle
3)Consistency principle
4(Cost principle
5)Economic entity principle
6)Full disclosure principle
7)Going concern principle
8)Matching principle
9)Materiality principle
10)Monetary unit principle
11)Reliability principle
12)Revenue recognition principle
13)Time period principle.

The most notable principles include the revenue recognition principle, matching principle, materiality principle, and consistency principle. Completeness is ensured by the materiality principle, as all material transactions should be accounted for in the financial statements. Consistency refers to a company’s use of accounting principles over time.

Reg no: 2021/241953

1a .Financial accounting:
Financial accounting is the systematic procedure of recording, classifying, summarizing, analyzing, and reporting business transactions. The main objective is revealing the profits and losses of a business. Financial accounting provides a true and fair evaluation of a business, therefore safeguarding the interests of stakeholders.

Financial accounting is made up of the bookkeeping of financial transactions like purchases, sales, and payables.It includes classification, and interpretation of business transactions. The profitability and financial position of a firm are ascertained.
It represents revenue, expenses, assets, liabilities, and equity in respective financial statements, i.e., income statements, cash flow statements, and balance sheets.
This information serves as the basis for many critical decisions.

Eventually, the data is used accordingly by managers, shareholders, creditors, lenders, and investors.
Types of Financial Accounting
A company can record its transactions in two ways.

i.Cash Accounting: This kind of financial accounting considers cash transactions. Thus, each transaction has a debit and credit entry.
ii.Accrual Accounting: Most corporations prefer this method to record cash and non-cash business transactions
This method emphasizes the documentation of trades as and when they occur, irrespective of monetary exchange.

b.Managerial accounting: Managerial accounting, also known as management accounting and cost accounting, is a branch of accounting that involves the creation of reports and other necessary documents that help a manager in the decision-making processes of running his/her company and taking steps to improve its operations.

Managerial accounting consists of various processes involved in the identification, measurement, analysis, interpretation and communication of information that aids the management of a company in its managerial functions. This is in contrast to financial accounting that typically provides similar information to external parties.
Managerial accounting involves the step by step analysis of various events and operational metrics by managerial accountants in order to facilitate the translation of the data into serviceable information. The management of the company then leverages this information in their decision-making process. Managerial accountants typically analyze the company’s individual line of products, operating activities, facilities, and other similar parameters. These accountants especially focus on the costs of products or services purchased by the company as well as its actual results vis–vis its various budgets, in order to quantify the company’s plan of operation. Other topics for analysis during the managerial accounting process include ratio analysis, cost behavior and cost-volume-profit analysis, job order costing, process costing, and standard costing and variance analysis.

According to the Association of International Certified Professional Accountants (AICPA), management accounting explicitly serves the following three domains:

Strategic management, i.e. fostering the role of the managerial accountant as a strategic partner within the company.
Performance management, i.e. advancing the process of business decision-making and managing the performance of the company.
Risk management, i.e. formulating a workable framework for the identification, measurement, management and reporting of risks in such a way as to achieve the objectives of the company.

Difference between financial and managerial accounting:

Although managerial accounting is akin to financial accounting in that both procedures report the performance of the company’s financial transactions, there is one principal attribute that essentially differentiates the two while financial accounting is concerned with reporting the company’s financial performance to external parties such as investors and lenders, etc., managerial accounting utilizes the same (or similar) data internally in order to aid in management decision-making processes

2.The qualitative characteristics of accounting information are as follows

a.Reliability: The first qualitative characteristic of accounting information is reliability. Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent.

b.Relevance: The second qualitative characteristic of accounting information is relevance. It is believed that a relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.

c.Understandability: Understandability is the third most important qualitative characteristic of accounting information. Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.

d.Comparability: The last qualitative characteristic of accounting information is comparability. It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.

e. Consistency:
Consistency of method over a period of time is a valuable quality that makes accounting numbers more useful. Consistent use of accounting principles from one accounting period to another enhances the utility of financial statements to users by facilitating analysis and understanding of comparative accounting data.

It is relatively unimportant to the investor what precise rules or conventions are adopted by a company in reporting its earnings, if he knows what method is being followed and is assured that it is followed consistently from year to year. Lack of consistency produces lack of comparability. The value of inter-company comparisons is substantially reduced when material differences in income are caused by variations in accounting practices.

f. Neutrality:
Neutrality is also known as the quality of ‘freedom from bias’ or objectivity. Neutrality means that, in formulating or implementing standards, the primary concern should be the relevance and reliability of the information that
results, not the effect that the new rule may have on a particular interest or user(

A neutral choice between accounting alternatives is free from bias towards a predetermined result. The objectives of (general purpose) financial reporting serve many different information users who have diverse interests, and no one predetermined result is likely to suit all users’ interests and purposes.

Therefore, accounting facts and accounting practices should be impartially determined and reported with no objective of purposeful bias toward any user or user group. If there is no bias in selection of accounting information reported, it cannot be said to favour one set of interests over another. It may, in fact, favour certain interests, but only because the information points that way.

3.The fundamental principles of accounting:
a.Cost principle:
Oftentimes, the financial records may track the depreciation or growing value of acquired assets, however, the cost principle will remain the same. Additionally, the cost principle is also referred to as the historical cost principle, meaning that no matter the appreciation or depreciation an asset goes through over time, the original cost of the asset at the time of acquiring is the value that is kept as the cost principle.

b.Materiality Concept:
Anything that would change a financial statement user’s mind or decision about the company should be recorded or noted in the financial statements. If a business event occurred that is so insignificant that an investor or creditor wouldn’t care about it, the event need not be recorded.

c.Revenue recognition: Under the Revenue Recognition Principle, revenue must be recorded in the period when the product or service was delivered (i.e. “earned”) – whether or not cash was collected from the customer.

d.Matching: states that all expenses must be matched and recorded with their respective revenues in the period that they were incurred instead of when they are paid. This principle works with the revenue recognition principle ensuring all revenue and expenses are recorded on the accrual basis.

e.Accural:
The company should record accounting transactions
in the same period it happens, not when the cash flow was earned. For example, let’s say that a company has sold products on credit. As per the accrual principle, the sales should be recorded during the period, not when the money would be collected.

f.Going concern:
As per the going concern principle, a company would operate for as long as it can in the near or foreseeable future. Therefore, by following the going concern
principle, a company may defer its depreciation or similar expenses for the next period.

g.Consistency:
If a company follows an accounting principle, it should keep following the same principle until a better one is found. If the consistency principle is not followed, the company will jump around here and there, and financial reporting
will be messy. As a result, it would be difficult for investors to see where the company has been going and how it is approaching its long-term financial growth.

h. Conservatism:
As per the conservatism principle, accounting faces two alternatives – one, report a more significant amount, or two, report a lesser amount. To understand this in detail, let’s take an example. Let’s say that Company A has reported that it has machinery worth $60,000 as its cost. Now, as the market changes, the selling value of this machinery comes down to $50,000. Now the accountant has to choose one from two choices – first, ignore the loss the company may incur on selling the machinery before it’s sold; second, report the loss on machinery immediately. As per the conservatism principle, the accountant should go with the former choice, i.e., to report the loss of machinery even before the loss would happen.

1a) 2 main Characteristics of accounting

1. Financial Accounting

Financial accounting entails creating accurate financial statements. The goal of financial accounting is to accurately measure a company’s performance. While financial statements are intended for external use, they may also be used to assist internal management in making decisions.

Accounting principles and standards, such as US GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards), are widely used in the financial accounting industry. Accounting standards are important because they enable all stakeholders and shareholders to easily understand and interpret the financial statements reported year after year.

Financial accountants create documents such as income statements and balance sheets that are used by third parties (investors and industry regulators). The statements provide information about an organization’s financial performance over time as well as its overall financial health. Financial accountants, who create these statements, are regulated by agencies such as the Securities and Exchange Commission (SEC).

2. Managerial Accounting

The data gathered from financial accounting is examined by managerial accounting. It refers to the process of preparing business operations reports. The reports are designed to help the management team make strategic and tactical business decisions.

Managerial accounting is a process that allows an enterprise to maximize efficiency by reviewing accounting data, determining the best next steps to take, and communicating these next steps to internal business managers.

Cost accounting is an example of managerial accounting. Cost accounting focuses on a detailed breakdown of costs in order to achieve effective cost control. Managerial accounting plays a critical role in decision-making.

Managerial accountants create financial documents that are used internally by organizations. The documents account for company resources such as raw materials, labor, and equipment in ways that assist executives in increasing efficiency.

Organizations can develop comprehensive strategies to maintain and grow their business using both financial accounting and managerial accounting.

1b) Major Differences between them;

1. Financial accounting focuses on an organization’s external financial processes, whereas managerial accounting focuses on the internal financial processes of the organization.

2. Managerial accountants concentrate on short-term growth strategies for economic maintenance. Financial accountants concentrate on long-term financial strategies for organizational growth.

3. Managerial accountants earn more than financial accountants.

2)What are the qualitative attributes of accounting?

Understandability

This implies the expression, with clarity, of accounting information in such a way that it will be understandable to users – who are generally assumed to have a reasonable knowledge of business and economic activities

Relevance

This implies that, to be useful, accounting information must assist a user to form, confirm or maybe revise a view – usually in the context of making a decision (e.g. should I invest, should I lend money to this business? Should I work for this business?)

Consistency

This implies consistent treatment of similar items and application of accounting policies

Comparability

This implies the ability for users to be able to compare similar companies in the same industry group and to make comparisons of performance over time. Much of the work that goes into setting accounting standards is based around the need for comparability.

Reliability

This implies that the accounting information that is presented is truthful, accurate, complete (nothing significant missed out) and capable of being verified (e.g. by a potential investor).

Objectivity

This implies that accounting information is prepared and reported in a “neutral” way. In other words, it is not biased towards a particular user group or vested interest

Verifiability

The characteristic of verifiability provides assurance that the information faithfully represents what it purports to be representing.

Timeliness

The characteristic of timeliness means that the accounting information is available to all stakeholders in time for decision-making purposes.

3)Discuss the fundamental Principles of Accounting

1. Revenue Recognition Principle

When you are recording information about your business, you need to consider the revenue recognition principle. This is the period of time when revenues are recognized through the income statement of your company. In order for your revenues to be recognized in the period that the services were provided if you are on the accrual basis, If you are on the cash basis, then the revenues need to be recognized in the period the cash was received.

2. Cost Principle

Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.

3. Matching Principle

Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized.

4. Full Disclosure Principle

The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

5. Objectivity Principle

The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.

NAME: OROKO CHINAGOROM VIVIAN.
REG NUMBER :11046850ic.
DEPARTMENT: SOCIAL SCIENCE EDUCATION.
UNIT: ECONOMICS EDUCATION
SCHOOL: UNIVERSITY OF NIGERIA NSUKKA.
DATE:9th FEBUARY,2023.
The TWO MAJOR CATEGORIES OF ACCOUNTING ARE:
FINANCIAL ACCOUNTING AND MANAGERIAL whaACCOUNTING
FINANCIAL ACCOUNTING is the collection of accounting data to create financial statement.it also a specific branch of accounting involving a process of recording, summarizing and reporting the myriad of transactions resulting from business operation over a period of time.
MANAGERIAL ACCOUNTING:is the internal processing used to account for business transaction.it also called management accounting,a method of accounting that creates statements,reports and documents that help management in making better decisions related to their business performance.
THEIR MAJOR
DIFFERENCES BETWEEN THEM ARE:
SYSTEM:
FINANCIAL ACCOUNTING only cares about generating a profit and not the overall systems of how the company works.conversely, MANAGERIAL ACCOUNTING looks for bottle neck operations and examines various ways to enhance profit by eliminating bottle neck issues.
REPORTING FOCUS:
FINANCIAL ACCOUNTING is focused on creating financial statement to be shared internal and external stakeholders and the public.while MANAGERIAL ACCOUNTING focuses on the operational reporting to be shared within a company.
AGGREGATION:
FINANCIAL ACCOUNTING look at the entire business while MANAGERIAL ACCOUNTING reports at a more detailed level.
EFFICIENCY:
A business profitability and efficiency are reported through FINANCIAL ACCOUNTING.while MANAGERIAL
ACCOUNTING report on what is causing a problem and how to fix that problem.
TIMING:
FINANCIAL STATEMENT are due at the end of accounting period while MANAGERIAL REPORT may be issued more frequently,to provide managers with relevant information they can act on immediately.
PROVEN INFORMATION:
considerable precision is needed to proved that financial records are collect. FINACIAL ACCOUNTING relies on this accurate data for reporting,while MANAGERIAL ACCOUNTING frequently deals with estimate opposed to proven facts.
STANDARD:
When MANAGERIAL ACCOUNTING is made for internal consumption there is no set of standards to compile that information.on the other hand, FINANCIAL ACCOUNTING must follow various accounting standards.
TIME PERIOD:
FINANCIAL ACCOUNTING looks to the past to examine financial result that have already been acheived,so it is historically focused. MANAGERIAL ACCOUNTING looks to the future with forecasting.
VALUATION:
FINANCIAL ACCOUNTING is concerned with knowing the proper value of a company’s assets and liabilities. MANAGERIAL ACCOUNTING is only concerned with the value these items have on a company’s productivity.

THE QUALITATIVE ATTRIBUTES OF ACCOUNTING ARE:
Comparability
Verifiability
Timeless
Understability.

THE FUNDAMENTALS PRINCIPLES OF ACCOUNTING
First and foremost, you have to be able to practice objectivity. What’s objectivity, you wonder? In accounting, objectivity is having the ability to rely on documented information to record financial information. This makes you believe what you’re saying when you look at the numbers in accounting. You have to believe to be a part of this whole thing.

The next thing that you have to do is to know how to be a part of an arm’s length transaction. An arm’s length transaction is one where the people involved in the transaction are not personally related. This makes it fair and just so that each party is looking out for their self and isn’t being shoved around by the other person.

The third thing that you’re going to have to accomplish is to understand cost. Cost, in accounting, is the amount of cash given up to acquire a specific item. For me, it cost an awful lot of gym fees to get these muscles that I have!

The next major concept that you have to tackle is called going-concern. Going-concern means that you believe that a company is going to keep on keeping on far into the future. It makes you have faith in the financial statements that they present to you, and that faith builds up the core muscles in accounting.

You also have to get a grasp of the monetary measurement concept. This concept makes you see that every single accounting action deals with money. After all, isn’t that what accounting is all about? It’s all about the Benjamins!

Still looking at those Benjamins, the next part of transforming yourself into Mr. Accounting requires that you know how and when to recognize revenue. Because of that, we have the revenue recognition principle to assist you. The revenue recognition principle states that revenue is realized when it is earned, regardless of when it is received.

That one kind of gets you, doesn’t it? I think I will explain it a little more. In accounting, you can choose to use cash basis accounting or accrual accounting. Either of these types is fine, as long as you use it consistently.

In cash basis accounting, revenue is recognized when cash is placed in the hand of the seller or supplier, and expenses are realized when they are actually paid. In accrual basis accounting, which is where the revenue recognition principle comes into play, revenue is recognized when it is earned, regardless of when it is received, and expenses are recognized when a bill comes in, regardless of when it is paid.

The last tool that I need to give you to help you become an accounting giant is the separate entity principle. The separate entity principle states that no matter what you do as a business owner, you must keep your personal dealings completely separate from your company dealings. You can’t mix the two at all.

NAME:ILO DESTINY CHINASA
REG NO:2021/243714
CLASS: 100 LEVEL
DEPT: COMBINED SOCIAL SCIENCES
COURSE: ECONOMICS/PSYCHOLOGY
COURSE CODE: ECO 121
DATA: 9/01/2023

ASSIGNMENT
1:Two major categories of accounting are CASH ACCOUNTING and ACCURAL ACCOUNTING
(a): CASH ACCOUNTING- which is also known as basis accounting is an accounting method where payment receipts are recorded during the period in which they are received and expenses are recorded in the period in which they are actually paid.
(b): ACCRUAL ACCOUNTING -Is an accounting method in which payments and expenses are credited and debited when earned or incurred. in other words its an accounting method that recognizes revenue in the period in which its earned and realized, but necessarily when the cash is actually received
2:the qualitative attributes of accounting are ” Comparability, Verifiability,timeliness, and underbility”.
(a) comparability:is the level of standardization of accounting information that allows the financial statement of multiple organizations to be compared to each other.
(b): Verifiability: is the divergence of data from it’s mean value and is commonly used in statistical and financial sections.it is most commonly applied to variability of return where investors prefer investments that have high return with less variability.
(c)Timeliness:this is how quickly information is available to users of accounting information, the less timely (thus resulting in older information ),the less useful information is for decision – making.
(d) understability:is the concept that financial information should be presented so that a reader can easily comprehend it. this concept assumes a reasonable knowledge of business by the reader but does not require advanced business knowledge to gain a high level of comprehension.
3. The Fundamental Principles Of Accounting
the most notable principle of accounting includes :
(a) . Revenue recognition principle: this means that companies revenues are recognized when the service or product is considered delivered to the customer.
(b).matching principle:this is accounting principle for recording revenue and expenses it requires that a business record expenses alongside revenue earned
(c). materiality principle states that all items that are reasonably likely to impact investors decision making must be recorded or reported in detail in a business financial statement using GAAP standards.
(d) consistency principle: this states that business should maintain the same accounting method or principle throughput the accounting period, so that users of the financial statement or information are able to make meaningful conclusion from data.

Name: Chibuko Chidiuto Delight
Reg : 2021/241311
No 1:
Financial Accounting and Managerial Accounting are the two main types of accounting
a: Financial Accounting:
This involves the preparation of accurate financial statement. The aim of financial accounting is to measure the performance of a business as accurately as possible.
Accounting principles and standards, such as GAAP ( General accepted principles), IFRS ( Financial Reporting Standards) are standards that widely adopted in financial accounting
b: Managerial Accounting:
Managerial accounting analysis the information gathered from financial accounting. It refers to the process of preparing reports about business organisation. The report self to assist the management team to make tactical decisions.
Managerial accounting is a process that allows an enterprise to achieve maximum efficiency by reviewing financial accounting, deciding on the best following step take, and then broadcasting the required steps to all internal business managers.
The major difference between financial accounting and managerial accounting is that financial accounting is based on measuring the performance of a business or overview of the business Wiley managerial accounting deals with using the information prepared ( about the performance of the business) to make important decisions about the business in order to maximize efficiency in the business.
No 2
Qualitative attributes of accounting include:
1: Reliability
2: Relevance
3: Understandability
4: Comparability
5: Faithful Representation
1: Reliability:
Reliability implies that information must be factual and verifiable. The accounting information has said to have verifiability if such information can be verified from source documents such as purchase invoice, cash memmos, sales invoice etc
2: Relevance:
Accounting information depicted by financial statements must be relevant to the objectives of Enterprise. All necessary and irrelevant information should not be included in financial statement
3: Understandability
Accounting information should be presented in such a simple and logical manner that they are understood easily by their uses such as investor, lenders, employees etc.
4: Comparability
Comparability is a very useful quality of accounting. The financial statement issued contain the figures of previous year along with figures of current year so that the current performance can be compared with the first performance. Financial statement should be preparing in such a way that profitability our financial position of the concern may be compared with the other concerns of the similar type.
5: Faithful Representation
Accounting aimed at preparing does initial statements that depict the true and fair view of profitability, liquidity and solvency position of an enterprise
No 3:
In the beginning, different countries and organisations had their own method of accounting. This brought about confusion and inconsistency. For this reason the accounting board setup a rule known as GAAP (Generally accepted accounting principle) so that accounting method will be accepted by all nations.
The GAAP principles are explained below
a: Matching principle:
This means matching cost with revenue in a financial year. Eg: product produced in 2017 but sold in 2018 will recorded in 2017 records. Source of cost must generate revenue (profit/loss)
b: Prudency principle:
Don’t anticipate prophet when it has not come. Be prudent or careful in your spending. Residency provide for losses so if losses do not come it is an added advantage.
c:. Accrual principle:
Revenue that are not paid for yet are recorded on the day the transactions are carried out note on the day payment was made.
d: Full-Disclosure Principle:
This principle should be adopted while preparing financial statements. This means that every transaction (credit and cash) show the should be recorded even discount etc
e: Principle:
This means the guide or pattern is to be followed. Eg the price of a commodity cannot be written as the current price of the product in the market, but the price it was purchased should be recorded.

Name: Egwuda David Oluebeube
Reg No: 2021/241318

1.) CATEGORIES OF ACCOUNTING
A.) Financial Accounting: It involves the process of aggregation, compiling, and production of the financial information of the company in the form of financial statements used by the stakeholders of the company. The various financial statements of the company include Balance Sheet, Profit and loss account, Cash flow statement
, and the statement of change in equity. Financial statements of the company
are prepared by adhering to the principles which are led down in Generally Accepted Accounting Principles
(GAAP).

B.) Management Accounting: It mainly focuses on accumulating the information to be used for internal operational reporting, i.e., it is primarily for the internal working of the company. It is more detailed than the information given to the external users of the company.

DIFFERENCE BETWEEN FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING

The following categories will show the difference between financial accounting and management accounting
A.) SYSTEM: Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.
B.) REPORTING FOCUS: Financial accounting is focused on creating financial statements to be shared internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company.
C.) AGGREGATION: Financial accounting looks at the entire business while managerial accounting reports at a more detailed level. Managerial accounting focuses on detailed reports like profits by product, product line, customer and geographic region.

2.) QUALITATIVE ATTRIBUTES OF ACCOUNTING
A.) Compatibility: Comparability is an essential part of accounting information because it helps professionals differentiate and analyze financial reports that help make decisions. Comparability involves the process of evaluating one financial period with another to understand a company’s trends and overall financial performance. A company can compare financial statements by using accounting methods such as balance sheets, cash flow statements or income reports.

B.) Understandability: Understandability is the measure of how easily an individual can comprehend a company’s financial report or accounting information. Often, financial reports can be dozens of pages long and contain complex financial vocabulary and extensive calculations.

C.) Relevance: Relevance, in regards to accounting information, is a characteristic that can help individuals make decisions related to a business’s finances. For accounting information to have relevance, it first requires confirmatory value, which provides information about past financial events, and then predictive value, which can provide predictions about future financial events. A business should have both confirmatory and predictive value to develop accurate accounting information.

D.) Verifibility: Verifiability involves authenticating financial information and calculations by using several independent sources to develop the same results. This means that external auditors and professionals may evaluate a company’s financial reports and develop the same results as the company’s accountants.

3. FUNDAMENTAL PRINCIPLES OF ACCOUNTING
A.) Cost Principles: Recording your assets when you purchase a product or service helps keep your business’s expenses orderly. It’s important to record the acquisition price of anything you spend money on and properly record depreciation for those assets.
B.) Matching Principle: Expenses should be matched to the revenues recognized in the same accounting period and be recorded in the period the expense was incurred. If there is a period of time where revenue was recognized on sold products or services, then the cost of those things should also be recognized
C.) Objectivity Principle: The accounting data should consistently stay accurate and be free of personal opinions. Make sure the data is also supported by evidence that can include vouchers, receipts, and invoices. Having an objective viewpoint, in this case, helps rely on financial results. For example, your viewpoint may not be objective if you once worked for the same company that you are now an auditor for because your relationship with this client might skew your work.
D.) Full Disclose Principle: The information on financial statements should be complete so that nothing is misleading. With this intention, important partners or clients will be aware of relevant information concerning your company.

THE Discussion OF ACCOUNTING ARE
1) financial accounting is the process of recording summarizing and reporting a companys business transactions through financial statement these statements are the income statement the balance sheet the cash flow statement and the statement of retained earnings it also the process of classifying summarizing analyzing and reporting an organization financial transaction for a specific period. For instance, every month Mr x purchases goods from company ABC. In this case, the company will record all invoices and receipts concerning mr x
It is also the process of recording, summarizing and reporting transaction and revenue expenses generations in a time period for example investors or sponsors need to verify and account statement before showing interest in associating with the business
2. Managerial accounting also called management accounting is a method of accounting that creates statement, report and documents that help management in making better decisions related to their business preference managerial accounting is primarily use for internal purpose.
Managerial accountants use capital budget and access portential cash inflows and outflows of specific business decisions. Example if a manufacturer was planning to open a new production facility they would first need to determine the total cost of the project and expected ROI. We have two types of Managerial accounting namely capital and operational budgeting.
2. THE DIFFERENCE BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING
a. Managerial accounting focuses on an organizations internal financial process, why financial accounting focuses on external financial process
b. Managerial accounting focuses on short term growth of strategies relating to economic maintenance for example managerial accounting can perform a make or buy analysis to determine the financial soundness of producing a part to help with manufacturing a product.
Financial accountants focus on long-term financial strategies relating to organization growth.
c. Managerial accounting, however generally prepare their report for internal audience while financial accounting must prepare report for shareholders and potential investors as well as executives
d. Managerial accounting typically command high salaries than financial accounting.
2) THE QUALITATIVE ATTRIBUTE OF ACCOUNTING.
a. Understandability.. this implies the expression with clarity of accounting information in such a way that it will be understandable to users who are generally assumed to a reasonable knowledge of business and economic activities
b. Relevance this implies that to useful accounting information must assist a user to form confirm or maybe revise a view usually in the context of making a decision.
c. Consistency…this implies consistent treatment of similar items and application iof accounting of policies.
d. Comparability…this implies the ability for users to able to compare similar companies in the same industry group and to make comparison of performance over a time .
e. Reliablity.. This implies that the accounting information that is presented is truthful accurate complete.
3. DISCUSS OF THE FUNDAMENTAL PRINCIPLE OF ACCOUNTING ARE..
a Money measurements principle.. in accounting all the business transaction are measured in terms of money as a common unit of measurement. Since money is the common unit of measurement, as an accounting principle, uare allowed to record those transaction or events which can be measured or expressed in terms of money
b. Business entity concept …this concept of accounting principle veiws business and business owner separately as far as their financial transaction are concerned legally, your business can exist in independently of you and your firm can sue or can be used in its own name.
c. Going _ concern principle… This principle implies that all the transaction are recorded on the assumption that the business we remain in operation for a long time and will be able to carry out it’s obligation as per the plan
d. Cost principle …this accounting principles sets the rules for accounting the fixed access. According to the cost principle all the fixed access are accounted at the original price i.e the price paid so precure it and subsequently, every year , value is depreciated based on usage,wear and tear, accidents, the passage of time
e) dual_aspect concept,:this accounting principle.states that for every debit , corresponding credit it made. This is the foundation on which the accounting system is carried out. This is important for you to understand in detail.

NAME: EZEH TOBENNA CHISOM
REG. NO: 2021/244048
EMAIL: ezeh1tobs@gmail.com
1. The two categories of accounting are:
a. Financial Accounting: Financial Accounting is branch of accounting concerned with the summary, analysis, and reporting of financial transactions related to a business. These transactions are summarized in the preparation of financial statements, including the balance sheet, income statement and cash flow statement, that record the company’s operating performance over a specified period.
Financial accounting involves the preparation of accurate financial statements for public use e.g. stockholders, tax auditor, creditors, as well as private use e.g. board of director. Private users of financial accounting need it for decision making.
Financial accounting is governed by general standards such as Generally Accepted Accounting Principal (GAAP), International Financial Reporting Standard (IFRS), and Accounting Standard for Private Enterprises (ASPE).
b. Managerial Accounting: Managerial Accounting is a method of accounting that creates statements, reports, and documents that help manage, measure, analyze, interprete, and communicate financial information to managers for the pursuit of an organization’s goals. It is primarily used for internal purposes because information recorded only concerns decision makers in a company e.g. board of directors or managers.
Managerial accounting uses information relating to the cost and sales revenue of goods and services generated by the company. Its aim to provide detailed information regarding the companys operations by analyzing each individual line of products, operating activity, facility, etc.
Difference between financial accounting and managerial accounting are:
i. Unlike financial accounting, which is primarily concentrated on the coordination and reporting of the companys financial transactions to outsiders (e.g., investors, lenders), managerial accounting is focused on internal reporting to aid decision-making.
ii. Financial accounting can be used by internal and external users while managerial accounting is used by only internal uses
iii. Financial accounting is generally governed by specific standard e.g. Generally Accepted Accounting Principal (GAAP), while managerial accounting may be modified to suit its user.
iv. Financial accounting focuses primarily on the entire company, while managerial accounting focuses on segments of the company
v. Financial accounting involves the preparation of financial statements e.g. balance sheet, cash flow, while managerial accounting involves the preparation of reports such as inventory report, sales report.
vi. The information created through financial accounting is entirely historical; financial statements contain data for a defined period of time, while managerial accounting looks at past performance and creates business forecasts.
vii. Financial accounting reports tend to be aggregated, concise, and generalized. Information is simultaneously more transparent and less revealing, while managerial accounting reports are highly detailed, technical, specific, and often experimental.
2. The qualitative attributes of accounting include:
a. Reliability: Reliability means the users must be able to depend on the information. It is believed that reliable information should be free from error and bias and faithfully represents what it is meant to represent. Accounting information must be verifiable from source documents such as cash memo, invoice, journals e.t.c.
b. Relevance: It is believed that a relevant information must be available in time, must help in prediction and feedback and must influence the decisions of users in a positive manner.
c. Understandability: Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent.
d. Comparability: It is believed that it is not sufficient that the financial information is relevant and reliable at a particular time, in a particular circumstance or for a particular reporting entity. But it is equally important that the users of the general-purpose financial reports are able to compare various aspects of an entity over different time periods and with other entities.
e. Faithful Representation: Accounting communicates financial statements that show true, or at least, fair view of profitability, liquidity, or solvency of a business. This is the result of correct application of accounting standards.
3. The fundamental principles of accounting include:
a. Money Measurement Principle: Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.
b. Going Concern Principle: A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
c. Principle of Conservatism: Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.
d. Cost Principle: The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.
e. Consistency Principle: Any working entity should set economic principles to work by it to record all the revenue, cost, and exchange. Moreover, these standards should be saved and continue working by it till find something that is 100% better than the previously used methods. This consistency principle avoids balance problems, activities reporting, or bill confusion.
f. Accrual Principle: A basic accounting principle that highlights the importance of making a complete accounting bookkeeping statement by the time of the action and deal, not by the period of the cost and revenue entry, this accrual principle helps you to know your money flow statics better and attach it to different times, so, here you are highlighting the financial static rather than the monetary flow.
g. Matching Principle: By setting an archive for your entity’s revenue and cash income accounts, you should create a record for the related expenses by this principle. Moreover, connect this financial statement by number and time to know each project or transaction’s small or big value on your basic known accounting principles.
h. Business Entity Principle: This implies that business unit or a company is a body corporate and having a separate legal entity distinct from its proprietor. For example, if the proprietor of the business invests N10,000 in her business, it is deemed that the proprietor has given that amount to the business as loan which will be shown as a liability for the business

Reg number : 2021/241349
Answers
1) Divisions of accounting:
i: )financial accounting: financial accounting involves the preparation of accurate financial statements with the aim of ascertaining the financial performance of a business or organisation within a specific period.
(ii) managerial accounting: managerial accounting is an aspect of financial accounting which makes use of accumulated financial statements to make tactical decisions within an organization.
The major difference between Financial accounting and managerial accounting is the fact that financial accounting only deals with the financial statements of the business while managerial makes used of already presented financial statements for decision making as it concerns the business. Also while results from financial accounting can be used by external person’s managerial focuses on action taken within the organization using the financial statements.
2) Qualitative attributes of accounting
I) reliability ii) relevance iii) understanding iv) comparability v) faithful representation
3) principles of accounting
I) Accounting is an art as well as science: as an art accounting had it’s own way of recording, classifying, summarizing, analysing, and interesting the accounting records.
ii) Recording of financial transaction only: financial accounting records only those transaction and events expressed only in monetary form, events are not put into consideration
iii) Classifying transaction: this refers to grouping the transaction of some nature at one place
Iv) summarizing: this is the act of presenting classified data in a manner which is understandable and useful to management and other users.
V) Analysing of information: information taken from income statement or balance sheet must be group and relationship shown.
Vii) interpretation and communication.

DEPARTMENT OF EDUCATIONAL FOUNDATION
(SPECIAL EDUCATION)
NAME:. EZUGWU PETER NNAEMEKA
REG NUMBER: 2021/244727
ECO 121 ASSIGNMENT

ANSWERS

NO 1
Accounting can be classified into two categories
1. Financial Accounting and
2. Management Accounting

Financial Accounting: Financial Accounting is the original form of accounting that deals with recording business transactions and summarizing the data into reports, which are presented to the users so that financial decisions can be made rationally. On the other hand, management accounting is a new field of accounting that studies managerial aspects. It deals with the provision of financial data to the company’s management so that they can make rational economic decisions. Financial accounting emphasizes on giving true and a fair view of the financial position of the company to various parties. On the contrary, management accounting aims at providing both qualitative and quantitative information to the managers, so as to assist them in decision making and thus maximizing the profit.

2. Management Accounting: Another name for management accounting is managerial accounting. It is the accounting for managers that facilitates management in formulating policies, forecasting, planning and controlling the deviations. It captures and analyses both quantitative and qualitative information. Any format that is simple and understandable can be used to prepare management reports. It can include tables, charts, graphs, etc. for a better presentation. Simply, management accounting is a process that involves the preparation of management reports and accounts to provide accurate and timely information, that managers require for decision-making purposes. Further, depending on the requirement of the management, these reports can be prepared, – daily, weekly, monthly or yearly. There is no format set on the basis of which it is to be reported.

Major Differences between Financial Accounting and Management Accounting

1. Financial Accounting is a discipline that deals with the preparation of financial statements, and communication of the information to the users. As against, management accounting is all about the provision of information that is useful to the management, to assist the management in the formulation of policies and day to day operations for efficient operation of the business.
2. Financial Accounting uses the monetary records of past financial activities, so it is historically oriented. As against, management accounting is future-oriented, as it provides both present and future information in the form of forecasts and budgets which are duly analysed and presented in a detailed manner, so as to act as a base for management decision making.
3. Financial Accounting reports only those events which can be described in monetary terms, but non-monetary events which have a positive or negative impact on the company’s success or failure are completely ignored. Conversely, management accounting records and reports both financial and non-financial events, for better decision making. Measures like a number of employees. labour hours, machine hours and product units are also important for analysis and decision making.
4. In financial accounting, the reports prepared are mainly used by external users, but internal users also use them. It reflects how the business enterprise uses resources during a particular period of time. External users use it for decision-making purposes. However, it is the members of management who use the reports generated under management accounting.
5. For the purpose of recording, classifying, summarizing and reporting business transactions, in financial accounting. Generally Accepted Accounting Principles (GAAPs) are used. Conversely, in the case of management accounting, there is no such compulsion of using Generally Accepted Accounting Principles (GAAPs).
6. Financial Accounting generates information and reports that are public in nature. These are general purpose financial statements that serve the informational needs of multiple users. It keeps a track of the financial performance of the entire firm and not just of an individual segment or department. As against, in management accounting reports are prepared for private use by the company’s management and so they are confidential. These are specific purpose reports and are meant to determine the performance of entities, product lines and departments. Data produced comprise facts, estimates, analysis forecasts, budgets etc.
7. Financial Accounting looks at the big picture, as it looks at the business as a whole. As against, management accounting looks at business in segments, commonly known as responsibility centres.
8. Maintenance of records and preparation of the periodical financial statements, as per the financial accounting system is compulsory. In contrast, management accounting is optional.

NO 2
1. Reliability
2. Relevance
3. Understability
4. Comparability and
5. Faithful Representation

NO 3
Fundamental principles of Accounting

1. Monetary Unit
Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

2. Going Concern
A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.
In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

3. Principle Of Conservatism
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.
This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

4. Cost Principle
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.
Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.

Ugwu Onyinyechi precious
2021/246081
Economics education
1: categories of accounting quantitative and qualitative accounting. Quantitative accounting is a field of applied mathematics that is directly concerned with using existing monetary values of derive other value.it uses an actual numbers disclose an amount or to show a change e.g” net income for the year was $1000000 is a quantitative measure while qualitative accounting simplifies and expands on the financial figures to ensure easy understanding and comparability of result.
Difference of quantitative accounting and qualitative accounting.
Quantitative accounting often uses calculation while qualitative accounting uses analysis by grouping the data into categories theme, quantitative accounting uses number based, countable or measurable while qualitative accounting is interpretation based, descriptive and relating to language.
Principle of accounting
Time period principle
Reliability Principle
Monetary unit principle
Going concern principle
Consistency principle
Cost principle
Full disclosure principle

NAME: OKECHUKWU CLETUS CHIBUEZE
REG NO: 10647613DH
COURSE: ECO 121
DATE: 07/02/2023
1. ACCOUNTING CAN BE CLASSIFIED INTO TWO MAJOR CATEGORIES, DEEPLY DISCUSS WHAT THE CATEGORIES ARE? WHAT ARE THE MAJOR DIFFERENCE BETWEEN THEM?
a. Financial accounting.
b. Managerial accounting
* Financial accounting ÷ financial accounting is the frame work that dictates the rules, processes, and standards for financial record keeping.
* Managerial accounting ÷ This is also called Management accounting, this is a method of accounting that creates statements, reports and documents that help management in making better decisions related to their business performance.
* MAJOR DIFFERENCE BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING:
Financial accounting focuses on an organization external financial process while Managerial accounting focuses on an organization internal financial processes.
2. WHAT ARE THE QUALITATIVE ATTRIBUTES OF ACCOUNTING?
a. Comparabilty
b. Verifiability
c. Timeliness
d. Understandability
3. DISCUSS THE FUNDAMENTAL PRINCIPLE OF ACCOUNTING?
* Accrual principle
* Conservatism principle
* Consistency principle
* Cost principle
* Economics entity principle
* Full disclosure principle
* Going concern principle
* Matching principle
* Reliability principle
* Revenue recognition principle
* Time period principle
The most notable principles include the revenue recognition principle, matching principle materiality principle, completeness is ensured by the materiality principle, as all material transaction should be accounted for in the financial statements consistency refers to a company’s use of accounting principles over time.

Matric number – 2021/244130

1. Cash basis accounting records revenue and expenses when actual payments are received or disbursed. It doesn’t account for either when the transactions that create them occur. On the other hand, accrual accounting records revenue and expenses when those transactions occur and before any money is received or paid out.The major differences between the categories of accounting is that Cash basis lets businesses record income and expenses only when cash is actually received or paid. Accrual accounting involves tracking income and expenses as they are incurred (when an invoice is sent or a bill received) instead of when money actually changes hands.

2. The qualitative attributes of accounting are:
i) comparability
ii) verifiability
iii) Timeliness
iv) understandability

3. The fundamental principle of accounting are:
i) Monetary Unit
Accounting needs all values to be recorded in terms of a single monetary unit. It cannot account for goods like the barter system. Assigning values to goods and items therefore becomes a problem since it is subjective. However, accounting has prescribed rules to deal with the same.

ii) Going Concern
A company is said to have an eternal existence. Once it is formed, the only way to end it is by dissolution. It does not die a natural death like humans do. Hence, accountants assume the going concern principle. This principle implies that the firm will continue to do its business as usual till the end of the next accounting period and that there is no information to the contrary. Because of the going concern principle, organizations can function on credit, account for accounts receivables and payables which intend to receive or pay in the future and charge depreciation assuming that the machine will be used for many years.

In case, the management has information that the operations will be suspended in the near future, normal accounting ceases. A special type of accounting meant for dissolution purpose is used.

iii) Principle Of Conservatism
Accountants are said to be very conservative by nature. They want to hope for the best and be prepared for the worst. This is displayed in the rules that they have created for their profession. One of the central tenets of accounting is the principle of conservatism. According to this principle, when there is doubt about the amount of expected inflows and outflows, the organization must state the lowest possible revenue and the highest possible costs.

This can be seen in the fact that accountants value inventory at lower of cost or market price. However, such conservatism helps the company be prepared for any forthcoming financial crises.

iv) Cost Principle
Closely related to the principle of conservatism is the cost principle. The cost principle advocates that companies should list everything on the financial statements at the cost price. Usually assets like land and building, gold, etc appreciate. However, the accountants will not allow this appreciation to be reflected on the financial statements of the company till it is realized.

Accountants believe that the market value of anything is just an opinion. Accountants cannot account on the basis of opinions because there are many of them. The selling price of something is a fact since someone has paid for it and the same can be verified. Hence accounting works on cost principle and therefore on facts.