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Introduction to Accounting

Its related to basic concept of accounting

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Introduction to Accounting

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  1. Accounting Principles, 7th Edition Weygandt • Kieso • Kimmel Chapter 1 INTRODUCTION TO ACCOUNTING (ch.no.01 in book) Prepared by Mr. SafdarIqbal (ACMA) Lecturer AbasynUniversity Peshawar John Wiley & Sons, Inc. © 2005

  2. WHAT IS ACCOUNTING? STUDY OBJECTIVE 1 • Accounting is an information system that • Identifies • Records • Communicates the economic events of an organization to interested users

  3. THE ACCOUNTING PROCESS

  4. Users or Decision Makers • Internal Decision Makers • Board of Directors • Chief Executive Officers (CEO) • Chief Finance Officer (CFO) • Vice President • Business Unit Managers • Plant Managers • Store Managers • External Decision Makers • Creditors • Investors • Labor Unions • Government Agencies • Suppliers • Customers • General Public

  5. QUESTIONS ASKED BY INTERNAL USERS STUDY OBJECTIVE 2

  6. QUESTIONS ASKED BY EXTERNAL USERS

  7. Definition of Business Any activity undertaken for the purpose of earning profit such as buying and selling of goods & services. OR An organization that provides goods & services to others who need or want them.

  8. BUSINESS ENTERPRISES • Proprietorship Owned by one person. • Partnership Owned by two or more persons. • Corporation Organized as a separate legal entity under state corporation law and having ownership divided into transferable shares of stock.

  9. Types of Accounting Financial Tax Managerial

  10. Financial Accounting Financial Accounting refers to the information describing the financial resources, obligations and activities of an economic entity. Financial Accounting is aimed at providing information to parties outside the organization.

  11. Managerial Accounting Managerial Accounting mainly concerns with the selection of best among various alternations. Managerial Accounting is aimed at helping managers within the organization to make decisions.

  12. Tax Accounting Anticipating the “tax effects” of business transaction and structuring these transactions in a manner that will minimize the income tax burden. Tax planning & preparation of income tax return is a specialized field with in accounting.

  13. BOOKKEEPING DISTINGUISHED FROM ACCOUNTING • AccountingIncludes bookkeepingAlso includes much more • BookkeepingThe recording of economic eventsOne part of accounting

  14. THE ACCOUNTING PROFESSION • Public Accountants Service to the general public through the services they perform. • Private Accountants Individuals in companies involved in activities including cost and tax accounting, systems, and internal auditing. • Not For Profit Accountants Reporting and control for government units, foundations, hospitals, labor unions, colleges/universities, and charities.

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