Accounting is the process of recording, reporting, and interpreting financial information pertaining to an organization.

1. Introduction to
Accounting

2. Accounting is the process of recording, reporting,
and interpreting financial information pertaining to
an organization.

3. Book-keeping is the recording, routine-like and clerical
aspect of the accounting process. However, accounting
includes other aspects which require analytical and
communicative skills.

4. Note 1: Book-
keeping only
involves stage 1 to 3
in a cycle
Note 2: Accounting
involves stage 1 to 5
in a cycle

5. Who are the users of
accounting
information?Internal Users:
Management – planning, control
and running of the business
Employees – stability and
prospects of their jobs

6. • Investors – safety and profitability of
their investment
• Lenders – ability of the business to
repay loans
• Suppliers – ability of the business to pay
for goods and services provided.
• Customers – continuity of the business
• Government – observation of
regulations and taxation obligation
• Public – general economic interest and
business opportunities

7. > A transaction refers to any economic event or activity that
affects the financial condition of a business and must be
entered into the accounting records.
There are two types of transactions:
• · Cash transaction – for which immediate payment is made.
• · Credit transaction – for which payment is postponed to a
future date.

8. Accounting information is mainly about past activities,
i.e. it is historical in nature. It may be used to predict
certain matters and to help in planning for the future.
However, accounting does not capture non-
financial information such as:
• The environment in which the business operates;
• The level of technology used;
• How skilful or capable the employees are

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