This document provides an overview of fundamentals of accounting theory and practice through a series of slides. It defines accounting as a system that helps businesses track economic events and the accounting process of recording, summarizing, and reporting on relevant financial information. The nature of accounting is described as being a process, an art, dealing with financial data and transactions, serving as a means rather than an end, and functioning as an information system. The functions of accounting are identified as keeping financial records, protecting business assets, communicating financial results, and meeting legal obligations.

1. Fundamentals of
Accounting:
Theory &
Practice
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2. Slide
Content
Introduction to Accounting
Nature of Accounting
Functions of Accounting
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Accounting is, broadly speaking, a system
that helps businesses track events that affect
them.
Introduction
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These events are called Economic Events.

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RELEVANT
ECONOMIC
EVENTS
Introduction
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RECORD
RELEVANT
ECONOMIC
EVENTS
SUMMARIZE
RELEVANT
ECONOMIC
EVENTS
The Accounting Process

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Nature of Accounting
The basic features of accounting are as follows:
1. Accounting is a process.
2. Accounting is an art.
3. Accounting deals with financial information and
transactions.
4. Accounting is a means and not an end.
5. Accounting is an information system.
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Accounting is a process
A process is composed of multiple steps that
lead to a common end goal.
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Accounting is art
• Art refers to a way of performing
something.
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• Accounting is the art of recording,
classifying, summarizing, and finalizing
financial data.

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Accounting deals with financial
information and transactions
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• Accounting deals only with quantifiable
financial transactions.

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Accounting is a means and not
an end
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• Accounting is a tool to achieve specific
objectives. It is not the objective itself.

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Accounting is an information
system
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• Accounting is recognized and
characterized as a storehouse of
information.

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Functions of Accounting
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The American Accounting Association (AAA) defines
accounting as “the process of identifying,
measuring, and communicating economic
information to permit informed judgments and
decisions by the users of information.”
American Institute of Certified Public Accountants
(AICPA) defines accounting as 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 a financial
character and interpreting the results thereof.”

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Functions of Accounting
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1. Keeping systematic record of business
transactions
2. Protecting properties of the business
3. Communicating results to various parties in or
connected with the business
4. Meeting legal requirements

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The Father of Modern
Accounting
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LUCA PACIOLI
The Double-Entry
Bookkeeping

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Thanks for
Listening with
great patience