Accounting is defined as the process of recording, classifying, summarizing and interpreting financial information about an entity's economic activities. It involves quantifying transactions and events in monetary terms, and communicating this information to interested users externally and internally to help them make informed economic decisions. The key functions of accounting are to maintain records of financial transactions, prepare financial statements, meet legal requirements, and assist management in decision making. Some major branches of accounting include financial accounting, management accounting, cost accounting, government accounting, auditing and tax accounting.

1. Unit 1:
Introduction to
Accounting

2. Learning Objectives
Define accounting and explain its purpose.
Describe the nature and scope of accounting.
Identify the different types of accounting and
their functions.
Explain the importance of accounting in
business decision-making.
Identify the users of accounting information
Recognize the history of accounting

3. ACCOUNTING
Decision-making recording
Classifying
economic entities
Quantitative information
Reasoned choices interpreting
summarizing

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What is Accounting?

5. Accounting
Accounting is a services activity. Its
function is to provide quantitative
information, primarily financial in
nature, about economic entities that is
intended to be useful in making
economic decision, making reasoned
choices among alternative course of
action.
Accounting Standards Council (ASC)

6. Accounting
Service activity
About quantitative
information & Financial in
nature
Useful in making
economic decisions
“
Accounting

7. Accounting is
a service
activity

8. The function is to
provide
quantitative
information,
primarily financial
in nature.

9. About economic
entities

10. Intended to be
useful in making
economic
decisions

11. Making
reasoned
choices among
alternative
course of
action.

12. Accounting
The art of recording, classifying, and
summarizing in a significant manner
and in terms of money, transactions and
events which are, in part at least of
financial character, and interpreting the
results thereof.
American Institute of Certified Public
Accountants (AICPA)

13. Accounting
Recording (journal)
Technically, transactions must be analyzed first before
they are being recorded. In some references, you'll see
that the 1st step is ANALYZING while some would
start at JOURNALIZING with the presumption that
transactions have already been analyzed.
Classifying (ledger)
Entries from the journal are transferred to the ledger
account per account.

14. Accounting
Summarizing (trial balance)
Accounts from the ledger are presented in an
organized fashion together with their corresponding
amounts.
Interpreting the results (financial statements)
This deals with the using of Financial Statement

15. Accounting Process

16. Accounting Process
1. Analyze Business Transactions
2. Journalize transactions
3. Post to Ledger Account
4. Prepare Trial Balance (Unadjusted)
5. Adjusting Entries
6. Prepare Adjusted Trial Balance
7. Prepare Financial Statements
8. Make Closing Entries
9. Post Closing Trial Balance
10. Reversing Entries

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Nature of Accounting

18. Nature of Accounting
Art
Financial
Process
Information System

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Function of Accounting

20. Function of Accounting
Maintenance of systematic records
Financial results of an entity can be
communicated
Meeting legal requirements
Protecting assets of a business
Assistance to management

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Branch of Accounting

22. Branches of Accounting
• Financial Accounting
• Management Accounting
• Cost Accounting
• Government Accounting
• Auditing
• Tax Accounting
• Accounting Education
• Accounting Research

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Accounting vs
Bookkeeping

24. Difference
Accounting
Bookkeeping
Analysis and interpretation of financial
information, conduct of audit and
preparation of financial statements
Routine recording of economic
activities. It is mechanical in process
Accounting vs Bookkeeping

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Users of Accounting
Information

26. USERS
INTERNAL EXTERNAL
Accounting Information
 Owners
 Managers
 Investor
 Creditor
 Government
 Employees
 Customers
 General Public

27. INTERNAL
Users of Accounting Information
 Owners- May provide capital to the business and they
assess if needs funding
 Managers- They need financial information because they
plan and organized firm

28. EXTERNAL
Users of Accounting Information
 Investors – The information they need is related to
deciding whether they should buy, sell or hold their
shareholdings or ownership in a business
 Creditor- They are the people from whom the company
borrows funds for business use. It is in their interest to
know if the company is in good shape and can pay back the
loans
 Government- Certain information are required by the
government from the businesses for activity regulation,
taxation policies, etc.

29. EXTERNAL
Users of Accounting Information
 Employees- These people seek employment opportunities,
benefits and security. They want to assess the company’s
profitability and stability
 Suppliers- Suppliers provide business with the items
required to run the actual business. They include suppliers
of raw material or other services that help business
produce goods or provide services to its customers.
 Tax Authorities- These bodies use business information to
determine whether the amount of declared tax in tax
return is correct

30. EXTERNAL
Users of Accounting Information
 Customers- Over time, people (customers) may become
highly involved or dependent upon an enterprise. With
this, this group of users would like to know about the
company’s continuance.
 General Public- The general public normally would look
into the business trends and recent progress of an
enterprise including the coverage of its activities

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History of Accounting

32. History of Accounting
Accounting can
be traced to the
ancient
civilizations.

33. History of Accounting
Accounting records dating back more
than 7,000 years have been found in
Mesopotamia.
Other early accounting records were
also found in the ruins of ancient
Babylonia, Assyria, and Sumeria.

34. History of Accounting
The Roman Empire had access to
detailed financial information as seen
in the “The Deeds of the Devine
Augustus.

35. History of Accounting
Records of cash, commodities, and
transactions were kept by the
military personnel of the roman
army.

36. History of Accounting
The merchants
during the
Goryeo Dynasty
of the Korea kept
track of their
businesses and
trades through
record-keeping
methodologies.

37. History of Accounting
Records of cash, commodities, and
transactions were kept by the
military personnel of the roman
army.
Father of Accounting

38. Luca Bartolomeo de Pacioli
Summa de arithmetica, geometria,
proportioni et proportionalita
(Publish in 1494)
Details of calculation and recording
describes the accounting methods, then in use among
northern-Italian merchants, including double-entry
bookkeeping , trial balances, balance sheets and
various other tools still employed by professional
accountants

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THANK YOU!