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Introduction to Accounting


Introduction to Accounting Accounting 11 Ms. Stewart What is Accounting? Accounting can be defined simply as the recording, summarising and interpretation of ... – PowerPoint PPT presentation

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Title: Introduction to Accounting

Introduction to Accounting
  • Accounting 11
  • Ms. Stewart

What is Accounting?
  • Accounting can be defined simply as the
    recording, summarising and interpretation of
    financial information.
  • The origins of accounting can be traced back to
    ancient times, with the need for accurate records
    of trading transactions. A logical system of
    recording financial information, known as
    double-entry bookkeeping, was in use in medieval
    Italy, and the first published accounting work
    was written in 1494
  • by a Venetian monk, Luca Pacioli.

Key Aspects of Accounting
  • The key aspects of accounting are identifying,
    recording and communicating
  • 1) First, economic events are identified. A sale
    at a clothing store, payment of employee benefits
    by a business, or purchase of equipment are all
    examples of economic events.
  • 2) All economic events are recorded. Recording
    provides a history of a company's financial
    activities. In this step, economic events are
    also classified and summarized.
  • 3) Finally, information about classified and
    summarized economic events is communicated to
    interested parties. Such communication may take
    several forms, one such form is a financial
    statement which you will learn about later in
    this course.

Types of Accounting
  • Financial Accounting provides information to
    satisfy the needs of external users.
  • Managerial Accounting provides information that
    is useful in running a company by internal users.

Who uses Accounting Information?
  • External users are parties outside the reporting
    entity or company who are interested in the
    accounting information.
  • Examples?
  • Investors, lenders/suppliers, government,
  • Internal users are parties inside the reporting
    entity or company who are interested in
    accounting information.
  • Examples?
  • Management, employees

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Why do businesses need to do accounting?
  • Businesses must establish accounting systems in
    order to keep accurate records of their financial
    standing and to monitor profits and losses.
  • Both businesses organized for profit and
    non-profit organizations must keep accounting

How do we keep accounting consistent?
  • People and organizations make decisions based on
    financial information prepared by accountants.
    That is why it is important for people and
    organizations to understand the ways in which
    accounting information is measured.
  • To ensure consistency, rules are established that
    business people can use to make sure they are
    comparing oranges to oranges.

Generally Accepted Accounting Principles (GAAPS)
  • Generally Accepted Accounting Principles (GAAP)
    are common standards that guide accountants in
    reporting economic events.
  • GAAP places all companies on a level playing
    field by ensuring that any financial information
    presented is uniformly consistent, relevant,
    feasible and objective.
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