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    ACC406 - Chapter 1

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    Carol Lesly
    This chapter introduces accounting concepts and processes. It discusses [1] the basic definitions and objectives of accounting, [2] the accounting process which involves recording, classifying, and reporting financial information, and [3] the different types of business organizations and their characteristics. The key users of accounting information and their needs are also identified.

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    ACC406 - Chapter 1

    Uploaded by

    Carol Lesly
    40 views14 pages
    This chapter introduces accounting concepts and processes. It discusses [1] the basic definitions and objectives of accounting, [2] the accounting process which involves recording, classifying, and reporting financial information, and [3] the different types of business organizations and their characteristics. The key users of accounting information and their needs are also identified.

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    ACC406_Chapter 1

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    This chapter introduces accounting concepts and processes. It discusses [1] the basic definitions and objectives of accounting, [2] the accounting process which involves recording, classifying, and reporting financial information, and [3] the different types of business organizations and their characteristics. The key users of accounting information and their needs are also identified.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    40 views14 pages

    ACC406 - Chapter 1

    Uploaded by

    Carol Lesly
    This chapter introduces accounting concepts and processes. It discusses [1] the basic definitions and objectives of accounting, [2] the accounting process which involves recording, classifying, and reporting financial information, and [3] the different types of business organizations and their characteristics. The key users of accounting information and their needs are also identified.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 14

    ACC 406

    INTERMEDIATE FINANCIAL
    ACCOUNTING AND REPORTING

    Chapter 1:
    Introduction to Accounting

    Prepared by:
    Afaf Izzati Nafhah binti Radzi
    2 Learning objectives
    At the end of this chapter, you should be able to:

    Explain difference terms and basic concepts of


    financial accounting
    Identify the users of accounting information
    Distinguish the different types of business
    organization
    Differentiate between bookkeeping and accounting
    Definition of Accounting

    Accounting is a process of recording,


    classifying and reporting financial information
    to the relevant users of accounting information
    in a business organization.
    Accounting Process
    • Involves entering the transactions into accounting records.

    • Its start with extracting the relevant information from sources documents
    Recording such as invoices and official receipts.

    • Then, the data or transactions have to be sorted out or classified into


    various categories, namely assets, liabilities, capital, revenue and expenses.
    Classifying

    • Involves process of extracting and communicating information by way of


    financial statements.

    Reporting • Enable user to answer question like;


    • What is the amount of assets owned by the business?
    Accounting Process

    Business Business Accountant/


    Entity Transactions Bookeeper

    Process

    Analyze,
    Record,
    Summarize,
    Review
    Final Report
    Functions of Accounting

    Keeping track of
    Obtain detailed info about
    routine business
    a particular transaction
    activities

    Evaluating the efficiency and


    performance of various Maintaining documentary evidence of the
    departments within the company’s business activities
    organisation
    Owner
    Management

    Creditors/Bankers

    Users of the
    Financial Statement Government

    Employees Potential Investors


    1. Owners:
    Interested in profit earned
    from investments, financial
    stability & growth of
    business

    2. Management:
    Internal As a guidance in planning,
    organizing and controlling
    Users the operation

    3. Employees:
    Interested in business
    ability to progress and
    expand (focus on employee
    benefit)
    1. Creditors/ Bankers:
    To know the ability of the
    business in repaying the
    amount owed to them
    External
    Users

    2. Government:
    Tax purposes
    Government
    How much tax they are going
    to pay us???
    3. Potential Investors:
    Evaluate future earning capacity
    on their investment
    Types and various forms of Business
    Basis Sole Proprietorship Partnership Company
    Ownership Business owned by one Business owned by two Business owned by
    person (2) to twenty (20) people two or more people
    (minimum 2)
    Incorporation Register with the The basic agreement in Register with the
    Registrar of Business in the partnership are Malaysian Companies
    the Companies outlined in the Partnership Formed under the
    Commission of Act 1966 or have on Companies Act 1965
    Malaysia (CCM) agreement
    Control Full control SHARED by Partners SHARED by
    Shareholders
    Profit/Loss Full Entitlement SHARED among the SHARED among the
    Partners Shareholders
    Liability Unlimited liability Unlimited liability Limited Liability

    Life Limited life Limited life Unlimited life


    12 EXAMPLES

    Sole Proprietorship Partnership Company: Private Company: Public


    Limited Limited

     Kedai Runcit  Usually in  Syarikat Amran  Zuhairi Bhd


    Pak Ali professional area, Sdn. Bhd.  Bank Islam
    for medical or law Malaysia Bhd.
    Poliklinik Dr
    Azhar dan Rakan-
    Rakan
    Difference between bookkeeping and
    accounting

    Bookkeeping involves only the recording of economic events


    and is therefore just one part of accounting process

    Accounting involves the entire process of identification,


    measurement, recording and communication

    The bookkeeping function is often performed by individuals


    with limited skills in accounting
    THANK YOU

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