Accounting involves recording, classifying, and summarizing financial transactions and events in a systematic manner. It provides information to both internal and external users of the business such as investors, creditors, employees and the government. The objectives of accounting are to maintain systematic records, ascertain financial position and performance, and communicate financial information to users.

1. Meaning of Accounting
Recording
“Accounting is the art of -
✔recording,
✔classifying and
✔summarising
in a signified manner and in term of money, transactions and events, which are, in part
at least, of financial character, and interpreting the result thereof.”
Summarising
Classifying
– American Institute of Certified Public Accounting (AICPA) in 1941

2. Meaning of Accounting
Recording
• Accounting is the process of recording,
classifying, analysing & interpreting the
business transactions which can be measured
in terms of money.
• Accounting keeps a permanent record of all
business transactions.
Analysing
Classifying Interpreting

3. Accounting as a source of information
Investors Lenders Creditors Customers
Employee Government
• Remuneration
• Employment
• Retirement
benefits
• Activities
• Taxation policy
• National income
• Continuity
• Stability
• Involvement
• Safety
• Decision
• Determination
• Ability
• Past performance
• Decision
• Ability
• Past performance
• Maintain

4. Objectives of Accounting
Maintain Systematic
Accounting Records
Ascertain Financial
Position
Ascertain Financial
Performance
Communicate
Information To Users

5. Accounting
Introduction To Accounting

6. Objectives of Accounting
If the transactions are more,
human brain would not be able to
remind all the transactions. In
order to remind all the entries a
systematic record is maintained.
Maintain Systematic
Accounting Records
Ascertain Financial
Position
Ascertain Financial
Performance
Communicate
Information To Users

7. For a particular accounting period
an income statement (profit and
loss account) is prepared based on
the systematic record.
Objectives of Accounting
Maintain Systematic
Accounting Records
Ascertain Financial
Position
Ascertain Financial
Performance
Communicate
Information To Users

8. To know what the business owes
to other and what it owns. A
systematic position of assets and
liabilities is answered by position
statement.
Objectives of Accounting
Maintain Systematic
Accounting Records
Ascertain Financial
Position
Ascertain Financial
Performance
Communicate
Information To Users

9. It communicate information to the
internal as well as external users.
Information is required at all
levels of the management.
Objectives of Accounting
Maintain Systematic
Accounting Records
Ascertain Financial
Position
Ascertain Financial
Performance
Communicate
Information To Users

10. Role of Accounting
Process
Recording
Classifying
Summarising
Interpretation
Output
Information
to users
Input
Economic
events
measured in
financial terms

11. Basic Terms In Accounting
Term Explanation
Entity Entity is economics unit that is accounted for
separately.
Events Events are happening of consequence to an entity.
Assets
Assets are Anything tangible or intangible that is
capable of being owned or controlled to produce value
and that is held to have positive economic value is
considered an asset.
Current Assets
Current asset is an asset on the balance sheet which
can either be converted to cash or used to pay current
liabilities within 12 months.
Fixed Assets Fixed assets is a term used in accounting for assets
and property which cannot easily be converted
into cash.
Liabilities Liabilities are the financial obligation of an enterprise
other than owner’s fund.
Current Liability Current liabilities are often understood as
all liabilities of the business that are to be settled in

12. Basic Terms In Accounting
Entity Entity is economics unit that is accounted for separately.
Events Events are happening of consequence to an entity.
Assets
Assets are Anything tangible or intangible that is capable
of being owned or controlled to produce value and that is
held to have positive economic value is considered an
asset.
Current Assets
Current asset is an asset on the balance sheet which can
either be converted to cash or used to pay current
liabilities within 12 months.
Fixed Assets Fixed assets is a term used in accounting for assets
and property which cannot easily be converted into cash.

13. Basic Terms In Accounting
Liabilities Liabilities are the financial obligation of an enterprise
other than owner’s fund.
Current Liabilities
Current liabilities are often understood as all liabilities of
the business that are to be settled in cash within
the fiscal year or the operating cycle of a given firm.
Long-term Liabilities Long-term liabilities are those liabilities which do not fall
due for payment in a relatively short period.
Capital Capital means that amount or asset which is invested in
business by businessman or owner of business.
Drawings Drawings is any money taken out of the business for the
owners own personal use.

14. Purchases
Purchases are total amount of goods obtained by an
enterprise for resale or for use in production of goods in
the normal course of business.
Basic Terms In Accounting
Sales Sales are total amount of goods which are sold and
services are rendered.
Debtors
Debtors are the person from whom the amount are due
for goods sold or services rendered on credit basis.
Creditors Creditors are the person to whom the amount are due
for goods purchased or services rendered on credit
basis.