9/22/2010 An Introduction to Accounting

AN INTRODUCTION TO ACCOUNTING

Allan Shah
Faculty of Business 1
 What is accounting?

9/22/2010 An Introduction to Accounting

 Generallyaccepted definition: “Accounting is
the process of identifying, measuring,
summarizing and communicating economic
information to permit informed judgments and
decisions by users of the information.”

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Where Did Accounting come from?

9/22/2010 An Introduction to Accounting

 Watch the video to find out.

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Purposes of Accounting

9/22/2010 An Introduction to Accounting

Providing useful information to users.
Providing assistance in decision making.
Performance evaluation tools.
Controlling purposes

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Characteristics of good accounting information

9/22/2010 An Introduction to Accounting

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Users of accounting information

9/22/2010 An Introduction to Accounting

 Internal
 Managers
 Employees

 External
 Shareholders
 Potential investors
 Creditors
 Government agencies

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Accounting Equation

9/22/2010 An Introduction to Accounting

Asset = Liability + Owners Equity

Asset Liability Owners Equity

2009 8,997,500  3,986,500  5,011,000 

2010 9,437,500  4,110,000  5,327,500 

2011 10,345,000 4,527,300  5,817,700 

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 9/22/2010 An Introduction to Accounting
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Accounting Equation-Chart