This chapter provides an overview of basic accounting concepts. It distinguishes types of business organizations, defines accounting and bookkeeping, and identifies users and uses of accounting information. The accounting cycle is also described. It involves classifying, recording, summarizing transactions, and interpreting financial statements. Bookkeeping is the mechanical recording of transactions systematically, while accounting also involves analyzing, interpreting, and communicating financial information to internal and external users for decision making.

1. Chapter 1
Introduction to Accounting

2. Studying this chapter should provide you with the overview of
basic accounting, which this knowledge needed to:
◦ Distinguish between the different types of business
organization
◦ Define, explain and differentiate the terms bookkeeping and
accounting
◦ Identify the users and the uses of the accounting information
◦ Describe the accounting cycle

3. Particular Sole Partnership Companies
Proprietorship
Public Private
(Bhd) (Sdn Bhd)
Own by 1person 2-20 persons 2-based on ASC 2-50 members
Contribution of Owner Partner Through issue Through issue
Capital by -Cash or Property based on of shares of shares
their
-i.e motor van
agreement
Control and Owner or get help Partners or BOD appointed BOD appointed
manage by from family by board by shareholders by shareholders
Liability Unlimited Unlimited Limited Limited
Legal No legal requirement Partnership Govern by Govern by
requirement for its formation Agreement Companies Act Companies Act
1965 1965
Profit/losses Belong to the owner Shared Paid to Paid to
based on shareholders in shareholders in
sharing ratio form of form of
dividend dividend

4. Particular Accounting Bookkeeping
Definition - The art of 1classifying, - It is the mechanical
2
recording, 3summarizing of aspects of accounting
transactions and business such as classifying,
events in monetary terms and recording, summarizing
4
interpreting the results to of transactions
interested parties to enable systematically in
them to make decision. accordance with certain
principles or rules.
Explanation & Involve 4 stages; - Only a part of
Differences a) Classifying – sorting out to accounting
category i.e sales,payments - The needs of recording
b) Recording-ledger,journal transactions
c) Summarizing- TB,TPL,BS systematically give rise
to the double entry
d) Interpreting- analyzed FS principles

5. Particular Users Uses
Internal Owner Interested in the profits earned from their
investment in the business and the
Users & Uses
financial stability.
-work directly in
the organization
Manager To guide them in planning,organizing,
and controlling the organization and
analyzing the operations of the business.
Employees Business ability to progress and expand
and other monetary benefits that are
gained from a financially stable business

6. Particular Users Uses
External Creditors/ Interested to know whether the business can
Bankers pay the amount owing to them.
Users & Uses
-indirectly
involved with the Current & Requires information regarding the
organization Potential solvency and financial strength of the
investor business, its present and future earning
capacity.
Government For tax purposes
Consumers Establishments of cost accounting controls.
When there is reduction on cost production,
there is reduction of the prices of goods
they purchase.

7. 1 Source
Transactions
Documents
2 Journalizing
Posting
Ledgers 3
Journals
6
4 Yes
5
Trial Balance Adjustments
6
No
Financial
Statements

9. Thank you

10. Thank you