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

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

5. Particular Users Uses
Internal
Users & Uses
-work directly in
the organization
Owner Interested in the profits earned from their
investment in the business and the
financial stability.
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
Users & Uses
-indirectly
involved with the
organization
Creditors/
Bankers
Interested to know whether the business can
pay the amount owing to them.
Current &
Potential
investor
Requires information regarding the
solvency and financial strength of the
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. Transactions Source
Documents
Journals
Ledgers
Trial Balance Adjustments
Financial
Statements
Journalizing
Posting
Yes
No
1
2
3
4
5
6
6

8. 1. Identifying and recording the transactions in the journal; a process called journalizing.
2. Making entries in the ledger from the journal; a process called posting
3. Extracting the balances of the accounts in the ledger.
4. Preparing a pre-adjusted trial balance.
5. Recording adjusting entries in the journal.
6. Posting the adjusting entries to the ledger.
7. Extracting the balances of the accounts in the ledger.
8. Preparing a post-adjusted trial balance.
9. Journalizing the closing entries.
10. Posting closing entries to the ledger.
11. Balancing off the accounts in the ledger.

9. Thank you