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A comprehensive introduction to the field of accounting, covering its definition, nature, purpose, and essential elements. It delves into the various branches of accounting, the functions of accounting in a business, and the different types of users of accounting information, both internal and external. The document also explores the history and origins of accounting, tracing its development from prehistoric times to the formulation of the double-entry recording system by fra luca pacioli in the 15th century. Additionally, it examines the common forms of business organizations and the types of businesses based on their activities, highlighting the advantages and disadvantages of each. This thorough overview serves as a solid foundation for understanding the fundamentals of financial accounting and reporting, making it a valuable resource for students, professionals, and anyone interested in the field of accounting.
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Chapter 1: Introduction to Accounting (FAR by: Millan)
Chapter 1: Introduction to Accounting (FAR by: Millan)
Essential elements of the definition
of accounting
1. Identifying – The accountant analyzes each business transaction and identifies whether the transaction is an “accountable event” or “non-accountable event.” This is because only “accountable events” are recorded in the books of accounts. “Non-accountable events” are not recorded in the books of accounts. 2. Recording – The accountant recognizes (i.e., records) the “accountable events” he has identified. This process is called “journalizing.” After journalizing, the accountant then classifies the effects of the event on the “accounts.” This process is called “posting.” 3. Communicating – At the end of each accounting period, the accountant summarizes the information processed in the accounting system in order to produce meaningful reports. Accounting information is communicated to interested users through accounting reports, the most common form of which is the financial statements.
Chapter 1: Introduction to Accounting (FAR by: Millan)
Nature of accounting
purpose of providing information about
economic activities intended to be useful in
making economic decisions.
Chapter 1: Introduction to Accounting (FAR by: Millan)
Functions of Accounting in Business
that is useful in making investment and
credit decisions; and
that is useful in managing the business.
Chapter 1: Introduction to Accounting (FAR by: Millan)
Brief history of accounting
Chapter 1: Introduction to Accounting (FAR by: Millan)
Common Branches of Accounting
Chapter 1: Introduction to Accounting (FAR by: Millan)
Common Branches of Accounting
Chapter 1: Introduction to Accounting (FAR by: Millan)
Users of Accounting Information
1. Internal users – those who are directly involved in managing the business. Examples:
Chapter 1: Introduction to Accounting (FAR by: Millan)
Forms of Business Organizations
Chapter 1: Introduction to Accounting (FAR by: Millan)
Advantages and Disadvantages
Chapter 1: Introduction to Accounting (FAR by: Millan)
Advantages and Disadvantages
Chapter 1: Introduction to Accounting (FAR by: Millan)
Advantages and Disadvantages
Chapter 1: Introduction to Accounting (FAR by: Millan)
Advantages and Disadvantages
Chapter 1: Introduction to Accounting (FAR by: Millan)