Accounting basis lecture 1


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Accounting basis lecture 1

  2. 2. LEARNING OBJECTIVES• AAccounting – A I f ti An Information system ti t• History of accounting• UUsers of A f Accounting I f ti Information ti• Role of accounting•TTypes of accounting f ti
  3. 3. Accounting g- a process of identifying, recording, summarizing, and di i i d reporting economic information to decision makers. makers3
  4. 4. ACCOUNTING –THE LANGUAGE OF BUSINESSAccounting is the information system that... measures business activities, processes data into reports, and communicates results to decision makers. 4
  5. 5. The primary objective of accounting is to p g provide useful information for decision d i i makers.k
  6. 6. ACCOUNTING INFORMATION SYSTEM Process to:INPU Analyze OUTPUT Record T Summarize Report
  7. 7. A HISTORY OF ACCOUNTING Account records date back to the ancient civilizations of China, Babylonia, Greece, and Egypt. y gyp The rulers of these civilizations used accounting to keep track of the cost of labour and materials used in building structures like the great pyramids. 7
  8. 8. Accounts Table with Cuneiform Script, S i t circa 2400 BCby Mesopotamian y p Bookkeeper 8
  9. 9. A HISTORY OF ACCOUNTING Accounting developed further as a result of the g p information needs of merchants in the city-states of Italy during the 1400s. The Th monk Luca Pacioli, a mathematician and friend of kL P i li th ti i df i d f Leonardo da Vinci, published the first known description of double-entry bookkeeping in 1494. 9
  10. 10. A HISTORY OF ACCOUNTING In the Industrial Revolution of the nineteenth century, the growth of corporations spurred the development of accounting. The corporation owners—the shareholders— were no longer necessarily the managers of their business. Managers had to create accounting systems to report to the owners how well the company was h h ll h performing 10
  11. 11. HISTORY OF ACCOUNTING IN MONGOLIA1911 . Governing by Bogd Khan1924 -1964.Memorial order1964-1990 . Journal order1993 . Law of “Accounting “.
  12. 12. ROLE OF ACCOUNTING Information Control Managing
  13. 13. Types of accounting fFinancial Cost and Tax accountingaccounting g management accounting
  14. 14. DIFFERENCE Financial Management accountingg accounting gPrimary users External users Internal usersPurpose of p Helpp Help managers p ginformation information plan and control users make business decision operationsTiming Information Information about past p about future performance performanceType of report Financial Internal reports statements t t t not regulated by t g l t db regulated by GAAP GAAP
  15. 15. Users of Accounting Information • investors investors • creditors creditors di • regulators regulators • customers EXTERNAL USERS • customers competitors competitor s15
  16. 16. Users of Accounting Information • investors • Creditors C di • Regulators EXTERNAL USERS • Customers • owners Owners INTERNAL USERS • managers Managers • employees Employees16
  17. 17. GAAP- Generally accepted accounting p y p g principles pThe FASB currently sets accounting standards.IAS -40 standardsIFRS-8 standardsLaws in Mongolia in field of accounting: Accounting law Audit law Tax laws T l
  18. 18. Organizations That constitute the body of GAAP in g y Mongolia. Ministry of Finance Mongolian Institute of Certified Public Accountants
  19. 19. FORMS OF BUSINESS ORGANIZATION Sole proprietorship p p p Partnership Corporation
  20. 20. BUSINESS ACTIVITY Investing g Financing Operating