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NIF A1-A5 by Mind Map: NIF A1-A5

1. Accounting

1.1. Is an information system that measure business activities, processes information and communicates financial information.

1.1.1. Its purpose is to provide information to users to make economic desicions.

2. Standars of Financial Accounting

2.1. CINIF-Regulates the financial information contined in the financial statements.

3. Basic Characteristic of Financial Information

4. Basic Postulates

4.1. Economic substance: only transaction data that can be expressed in terms of money can be included in the accounting records.

4.1.1. Entity: The business and its owner(s) are two separate entities. Going concern: Assumes the continuity of the company, unless it is in liquidation. Revenues: are recognized when they are earned, independently of cash received. Expenses: are recognized as they are incurred, independently of cash paid.

4.2. Information feature is the USEFULNESS.

4.2.1. Adapt to user needs. Satisfy the general requirements.

5. Basic concepts of financial information

5.1. Assets. Economic resource owned by an entity that is expected will give benefits in the future. Inventory.

5.1.1. Liabilities . What the business owes to other persons or entities known as creditors. Accounts payable.

5.1.2. Capital. The contribution of owners known as shareholders. Capital stock Revenues. Resources that the business receives from the sale of a product or service, cash or credit. Sales revenue. Expenses Assets that have been used or consumed in the business in order to earn income. Cost of goods sold.

6. Basic Financial Statements

6.1. Income Statement. Reports on the profitability of the operation. Revenues – Expenses = Net Income.

6.1.1. Balance Sheet. Presents a list of resources (assets) of the company, as well as the funding sources (liabilities and equity) of these resources. Assets = Liabilities + Stockholders equity (Capital) Satement of Cash Flows. Provides information about the liquidity of the business, a list of sources and disbursements of cash: Operation, Investment, Financing. Owner’s Equity Statement. Shows changes in the investment of the owners of the company. Initial Balance + - changes = Final Balance