Accounting involves recording, classifying, and summarizing financial transactions and interpreting the results. There are several types of accounting including financial, cost, management, and tax accounting. Financial accounting provides information on the resources, obligations, and activities of an economic entity. Cost accounting determines the cost of products and helps management control costs. Management accounting provides information to assist management in decision making and controlling activities. Tax accounting prepares tax returns based on financial accounting information but adjusted for tax reporting requirements.

2. DEFINITION
• Accounting is an art of recording,
classifying and summarizing in terms
of money transactions and events of
a financial character and interpreting
the results thereof.

3. FUNCTIONS OF
ACCOUNTING
• Recording
• Classification
• Summarizing
• Deals with financial transactions
• Interprets

4. Types Of Accounting
Information
• Financial Accounting
• Cost Accounting
• Management Accounting
• Tax Accounting

5. Financial Accounting
Financial Accounting refers to
information describing the financial
resources, obligations and activities of
an economic entity.

6. Cost Accounting
Function of cost accounting is to
ascertain the cost of a product and to
help the management in the control of
cost.

7. Management
Accounting
It is accounting for the management i.e,
accounting which provides necessary
information to the management for
discharging its functions. It is the
reproduction of financial accounts in
such a way as will enable the
management to take decisions and to
control activities.

8. Tax Accounting
The preparation of income tax returns is
a specialized field within accounting. To
a great extent, tax returns are based on
financial accounting information.
However the information often is
adjusted or reorganized to confirm with
income tax reporting requirements .

9. CLASSIFICATION OF
ACCOUNTS
• Assets
• Liabilities
• Owner’s equity
• Revenues
• Expenses

10. Assets
Assets means the resources of the
business or the commodities possessed
by the business. E.g: land, building, cash,
stock or inventory etc.

11. Liabilities
Liabilities mean the claims of the
suppliers of cash or commodities on
credit up to his/her balance due on the
date. E.g: suppliers of goods and cash.

12. Owner’s equity
It means the claims of owner of the
business for his interest up to his/her
investment after finalizing the expenses
and revenue up to the date. E.g: capital
invested by the owner.

13. Revenue
Revenue means any type of income
directly or indirectly of the business.
E.g: interest received, sale of goods,
dividend received.

14. Expenses
Expenses means any type of expenses
directly or indirectly of the business.
E.g: rent expense, salary expense etc.

15. ACCONTING
TERMINOLOGIES
• TRANSACTIONS
• BUSINESS
• PROPERIETOR
• CAPITAL
• DRAWINGS
• PURCHASES
• PURCHASES RETURNS
• SALES
• SALES RETURNS
• TRADE DISCOUNT
• CASH DISCOUNT
• COMMISSION
• EXPENDITURE
• EXPANSE

16. ACCOUNTING
TERMINOLOGIES
• ACCOUNT
• DEBTOR (ACCOUNT RECEIVABLE)
• CREDITOR (ACCOUNT PAYABLE)
• ASSETS
• LIABILITIES
• VOUCHER
• GOODS (MERCHANDISE)
• STOCK (INVENTORY)
• EQUITY

17. Transaction
Any dealing between two persons or
things is a transaction. It may relate to
purchase e.g sale of goods, receipt and
payment of cash etc
• Cash transactions
• Credit transactions

18. Business
It includes any activity undertaken for
the purpose of earning profit e.g
banking business, insurance business
etc

19. Proprietor
He is the owner of the business. He
invests capital in it, gives his time
& attention. He is entitled to
receive the profit or bear loss
arising.

20. Capital
The amount with which the trader
starts his business or the amount
which is actually invested in the
business at any given time.

21. Drawings
The cash or goods taken away by the
proprietors from the business for
his personal use.

22. Purchases
Goods purchased are called
purchases.
• Cash purchases
• Credit purchases

23. Purchases Returns
If goods purchased are found
defective or unsatisfactory, they
are returned to the persons from
whome they were purchased or to
suppliers.

24. Sales
Goods sold are called sales.
• Cash sales
• Credit sales

25. Sales return
If a person to whome goods have
been sold finds that they are
defective or unsatisfactory &
returns them are called sales
return or returns inward.

26. Trade Discount
It is rebate or allowance from the
scheduled price granted by the
seller to the buyer.

27. Cash Discount
It is the deduction or allowance
allowed by a creditor to a debtor.

28. Commission
It is the form of remuneration for
the services rendered by one
person to another.

29. Expenditure
An expenditure takes place when
assets or services are acquired.

30. Expense
An expenditure whose benefit is
finished or enjoyed immediately
such as salaries, rent etc.

31. Account
A summarize record of transactions
relating to a person or thing is
called an account.

32. Debtor
A person who owes money to another is
a debtor.

33. Creditor
A person who pays out something or
to whome money is owing is a
creditor.

34. Assets
These are the things of value
possessed by a trader such as
building, land, machinery, furniyure
etc

35. Liabilities
They are debts due by a business to its
proprietor & others.

36. Voucher
Any written evidence in support of a
business transaction is called a
voucher.

37. Goods (Merchandise)
It includes all merchandise
commodities which are purchased
by a business for selling.

38. Stock (Inventory)
Goods or merchandise on hand, that
is goods remaining unsold is called
stock, stack in trade or
inventory.

39. Equity
A claim can be enforced against the
assets of the film is called equity.

40. Recommended book
• Accounting by MEIGSWILLIAMS
HAKA BETTNER