The essence of the accounting

 mission statement provides an overview of the overall purpose of an organisation. It is a short statement that describes what the company does, who they do it for, and what its benefits are. The company vision describes what it aims to achieve in the future, to fulfil its mission. It should provide guidance and inspiration to employees.

3. Fundamental Qualitative Characteristics

1. Relevance

Relevant information is capable of making a difference in the decisions made by users. Relevance requires financial information to be related to an economic decision. Otherwise, the information is useless.
Financial information is useful if it has predictive value and confirmatory value. Predictive value helps users in predicting or anticipating future outcomes. Confirmatory value enables users to check and confirm earlier predictions or evaluations.
Materiality is an aspect of relevance which is entity-specific. It means that what is material to one entity may not be material to another. It is relative. Information is material if it is significant enough to influence the decision of users. Materiality is affected by the nature and magnitude (or size) of the item.

Ticket № 2

1. 
   The two fundamental qualitative characteristics of financial reports are relevance and faithful representation. The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.
   

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.
2.2 The elements of financial statements (https://www.accountingtools.com/articles/financial-statements) are the general groupings of line items contained within the statements. These groupings will vary, depending on the structure of the business. Thus, the elements of the financial statements of a for-profit business vary somewhat from those incorporated into a nonprofit business
The main elements of financial statements are as follows:
Assets. These are items of economic benefit that are expected to yield benefits in future periods. Examples are accounts receivable, inventory, and fixed assets.
Liabilities. These are legally binding obligations payable to another entity or individual. Examples are accounts payable, taxes payable, and wages payable.
Equity. This is the amount invested in a business by its owners, plus any remaining retained earnings.
Revenue. This is an increase in assets or decrease in liabilities caused by the provision of services or products to customers. It is a quantification of the gross activity generated by a business. Examples are product sales and service sales.
Expenses. This is the reduction in value of an asset as it is used to generate revenue. Examples are interest expense, compensation expense, and utilities expense.
2.3 Framework introduces us to the most basic and important elements needed to understand any financial statements. If we see any annual report published by a Company, we can see multiple sections available and multiple information relating to Company Such as Directors report, Industry outlook, management discussion and analysis , standalone and Consolidated Financial statements
These are financial statements prepared and presented to all with a general purpose and governed by GAAP giving common information required by the users of financial statements which have consistency and uniformity across the industry.
Whereas, special purpose financial statements, cater to specific need of the preparer or requestor.
Financial statements include Balance Sheet, Statement of Profit and Loss, Cash Flow Statement , Statement to Changes in Equity and Notes to Accounts.
All the other categories, provided in annual reports are not part of Financial statements and out of the purview of framework.
Ticket № 5

1. 
   Accounts receivable (AR) are the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Accounts receivable are listed on the balance sheet as a current asset. Any amount of money owed by customers for purchases made on credit is AR.
   

Accounts receivable (AR) are an asset account on the balance sheet that represents money due to a company in the short term.
Accounts receivable are created when a company lets a buyer purchase their goods or services on credit.
Accounts payable are similar to accounts receivable, but instead of money to be received, they are money owed. 
The strength of a company’s AR can be analyzed with the accounts receivable turnover ratio or days sales outstanding. 
A turnover ratio analysis can be completed to have an expectation of when the AR will actually be received.

2. 
   Cost of capital is the minimum rate of return that a business must earn before generating value. Before a business can turn a profit, it must at least generate sufficient income to cover the cost of the capital it uses to fund its operations. This consists of both the cost of debt and the cost of equity used for financing a business. A company’s cost of capital depends, to a large extent, on the type of financing the company chooses to rely on – its capital structure. The company may rely either solely on equity or solely on debt or use a combination of the two.
   

The choice of financing makes the cost of capital a crucial variable for every company, as it will determine its capital structure. Companies look for the optimal mix of financing that provides adequate funding and minimizes the cost of capital.
In addition, investors use the cost of capital as one of the financial metrics they consider in evaluating companies as potential investments. The cost of capital figure is also important because it is used as the discount rate for the company’s free cash flows in the DCF analysis model.

3. 
   This delicate balance is why it can be helpful to better understand how to track, understand and improve inventory costing on your books. Put simply, inventory costing helps retailers estimate the value of their merchandise.
   

In this article, we’ll take you through the five ways to value your inventory: 

4. 
   The retail inventory method
   
5. 
   The specific identification method
   
6. 
   The First In, First Out (FIFO) method
   
7. 
   The Last In, First Out (LIFO) method
   
8. 
   The weighted average method
   

Ticket № 7

1. 
   As you have already studied, accounting is regarded as the language of business as it is the medium of recording business transactions. The affairs of a business unit are communicated to all interested parties (internal and external) through accounting information which has to be appropriately recorded, classified, summarised and presented.
   

To make the language convey the same meaning to all people, accountants have agreed on a number of basic concepts that they attempt to follow in accounting activities. These concepts are fundamental ideas or basic assumptions.
Let us now discuss these accounting concepts in detail:

• 
  Business Entity Concept
  
• 
  Money Measurement Concept
  
• 
  Cost Concept
  
• 
  Going Concern Concept
  
• 
  Dual Aspect Concept
  
• 
  Realisation Concept
  
• 
  Accrual Concept
  

2.