Professional Documents
Culture Documents
INTRODUCTION TO
ACCOUNTING
What is Accounting?
Accounting is an information system that measures
business activities, processes data into reports, and
communicates results to decision makers.
(Harrison & Hongren, 2004)
Accounting is the process of identifying, measuring, and
communicating economic information to permit
informed judgment and decisions by users of the
information.
(Anthony, Hawkins & Merchant, 1999)
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2.
3.
Individuals
Businesses
Investors and creditors
Government regulatory agencies
Tax authorities
NGOs
Individuals
People use accounting to manage their bank
accounts and to decide whether to rent an
apartment or to buy a house. Accounting helps
them decide which automobile they can afford and
how to pay for it.
Businesses
Business manager use accounting information to
set goals, evaluate progress and to take corrective
action.
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Tax authorities
Tax authorities (Inland Revenue Department)
collect taxes from individuals and businesses and
most taxes are based on accounting data.
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Partnership
Corporation
owner
One owner
Two to twenty
Two to fifty
Life of entity
Limited by
Limited by
indefinite
owners choice or owners choice
death
or death
Accounting
status
Partners are
personally
liable
Stockholders
are not liable
Accounting
entity is
separate
from 12
stockholders
Differences between
Bookkeeping and Accounting
Bookkeeping is the process of recording
business
transactions accurately and systematically in accordance
with certain principle or rules.
Accounting covers not only the process of recording but
also other processes such as identifying, measuring, and
communicating economic information to the users of
accounting information.
recording
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Employment opportunities
CEO
Auditor (internal/external)
Accountant
Financial Executive
Bookkeeper
Tax executive
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