Accounting is defined as the art of recording, classifying, summarizing, analyzing, interpreting and communicating the results of financial transactions and events. It involves generating financial information through recording transactions, classifying accounts, preparing documents like the trial balance, income statement, balance sheet, and cash flow statement. The resulting financial information is used by internal parties like managers and directors, as well as external parties like investors, lenders, and government agencies.

1. Chapter 1. Accounting an Introduction Unit 1: Meaning and Scope of Accounting Transaction denotes “a business, performance of an act, an agreement”, while Event is used to mean “a happening, as a consequence of a transaction, a result”. Events are the end results of transactions Accounting is defined as the art of recording, classifying, summarizing, analyzing, interpreting and communicating the results of transactions and events which are of financial character. Hence, it includes preparation of final accounts, ascertainment of profit or loss and its communication to users. Revision Notes - Fundamentals of Accounting © www.cptsuccess.com

3. Recording – i.e. making journal entries

4. Classifying – i.e. under different accounts in Ledger

5. Summarizing – preparation of trial balance, P&L account, Balance sheet and Cash flow statement

6. Analyzing

7. Interpreting

8. Communicating

9. Using the financial information

10. Internal users – Board of directors, Partners, Managers, Officers

11. External users – Investors, Lenders, Suppliers, Government agencies, Employees and CustomersRevision Notes - Fundamentals of Accounting © www.cptsuccess.com

13. Posting to ledger

14. Preparation of trial balance

15. Preparation of final accountsManagement accounting is concerned with internal reporting to the managers of a business unit. The different ways of grouping information and preparing reports as desired by managers for discharging their functions are referred to as management accounting. It is not a clerical work or accounting for future, although it is based on historical data Revision Notes - Fundamentals of Accounting © www.cptsuccess.com

17. Posting to ledger

18. Preparation of trial balance

19. Preparation of final accountsManagement accounting is concerned with internal reporting to the managers of a business unit. The different ways of grouping information and preparing reports as desired by managers for discharging their functions are referred to as management accounting. It is not a clerical work or accounting for future, although it is based on historical data Revision Notes - Fundamentals of Accounting © www.cptsuccess.com