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Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
Ac chapter 1
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Ac chapter 1

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  • by: SHAHI YAR KHAN
  • Transcript

    • 1. Well ComeWell Come ToTo Principles of AccountingPrinciples of Accounting With:With: SHAHI YAR KHANSHAHI YAR KHAN
    • 2. Basic Accounting Recommended Book Accounting: The basis for business decisions Eleventh Edition By: Meigs William Haka Bettner Focus of Study Chapters to be focused… 1,2,3,4,5
    • 3. Chapter # 1 Accounting: The Language of Business
    • 4. Accounting  The Art of  Recording  Classifying  Summarizing and  Communicating the results  Of business transactions
    • 5. Accounting Accounting is the art of recording, classifying, summarizing and communicating the results of the business transactions. Accounting also called the language of business
    • 6. Accounting  The Art of  Interpreting the financial activities  Measuring the financial activities  Getting the results from such activities  And communicating these results
    • 7. Accounting The Art of interpreting, measuring and communicating the results of financial activities.
    • 8. Accounting  Is a process  That create  Useful  Financial information  For its users (basic purpose of Accounting)
    • 9. The Purpose of Accounting The basic purpose of Accounting is to provide information to decision makers that is useful in making economic decisions.
    • 10. Accounting Information needed by:  Management  Investors  Creditors  Government Agencies  Researchers  Labor  Etc Internal External
    • 11. Types of Accounting  Financial Accounting General Purpose (Profit, loss, assets, obligation etc)  Management Accounting Helps in Planning and Control  Tax Accounting Helps in preparation of Income Tax Return etc
    • 12. Economic Activities Human Activities Non-Economic Activities Economic Activities Profession Business
    • 13. Functions of Accounting System  In every Accounting System, the economic activities of the organization are Recoded in the books of accounts.  Next, the recorded data are Classified in the system to accumulate sub-total for various types of economic activities.  Finally, the information is Summarized in Accounting Repots i.e. designed to meet the information needs of the various decision makers.
    • 14. Business Business is a legal financial activity, for which on specific education is required and in which return is also not definite
    • 15. Financial Statements A set of Financial Statements consist of four related accounting reports that summarizes the financial resources, obligations, profitability and cash transaction of a business in the few pages 1. Balance Sheet: Financial resources and obligations 2. Income Statement: Profitability of business 3. Statement of Owner’s Equity: Obligation of business to Owner 4. Statement of Cash Flow: Cash Transaction of a Business.
    • 16. Distinguish b/w Accounting and Book-keeping Book-keeping  It refers to the daily operation of an accounting system i.e. Recording and classifying  It requires little skill of accounting Accounting  It refers to the preparation of Accounting system  Recording and classifying the transactions  Summarize the data  Prepare the Final Reports  It requires Professional Judgment and high skill of accountancy
    • 17. GAAP: Generally Accepted Accounting Principles GAAP are the “ground rules” for financial reporting. Generally Accepted Accounting Principles provide the general frame work that determines; 1. What information is to be included in the financial statements? & 2. How these information are to be presented ?
    • 18. Basic Accounting Concepts 1. Cost Principle 2. Objectivity Principle 3. Monetary Principle 4. Business Entity Concept
    • 19. Accounting Equation Assets = Equities Assets = Owner’s Equity + Liabilities This is the characteristic of the Balance Sheet that Assets always be equal to Liabilities plus Owner’s Equity
    • 20. Example of Accounting Equation Mr. “A” is started the business by investing $ 100,000… Assets = O/Equity + Liabilities 100,000 = 100,000 + 0
    • 21. Example of Accounting Equation Further the business borrows a loan from the bank of $ 40,000 Assets = O/Equity + Liabilities 100,000 = 100,000 + 0 40,000 = 0 + 40,000 ---------------------------------------------------- 140,000 = 100,000 + 40,000 ________________________________
    • 22. Accounting Equation Assets = O/Equity + Liabilities $ 80,000 = $ 60,000 + $ ? 80,000 -60,000 20,000
    • 23. End of Chapter 1End of Chapter 1 Your views will be highly appreciated

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