topic 1 ( introduction)

• Accounting is the process of identifying, measuring, and communicating financial information to allow users to make informed judgments and decisions, as defined by the American Accounting Association in 1966.
• Accounting is also the art of recording, classifying, and summarizing transactions and events which are financial and are quantifiable in terms of money, as defined by the American Institute of Accountants in 1956.
• The purpose of accounting is to provide quantitative financial information to help make decisions.
• The start of the accounting process involves identifying financial transactions to the business and analyzing the effects of transactions on the business.
• The recording or journalizing phase of accounting involves recording or journalizing filtered out transactions into different accounting documents, also known as bookkeeping.
• The third phase of accounting is communicating the results of the first two phases to internal and external users through financial statements.
• A bookkeeper is responsible for developing and maintaining accounting records.
• The Hammurabi Code is a set of rules and regulations for commercial transactions from the 18th century BC.
• A system of checks and balance was implemented during the Industrial Revolution to monitor the process and expenses in production.
• Queen Victoria of the British Empire, who reigned in the 19th century, is recorded as the first person to have formalized accounting standards during her reign and monitored the reported transactions of companies, evolving into the modern process of auditing.
• Luca Pacioli is considered the father of accounting and introduced the double-entry system of debit and credit in the 14th century, paving the way for modern accounting.
• Informal recording of money and trade-related information was done using stone tablets to record sales and loans.
• The Industrial Revolution, which occurred in the 17th and 18th centuries, was a period of development of machines and factories for mass production of goods, and accounting was emphasized with utmost importance and relevance.
• An accountant supplies financial information to make informed judgments and better decisions, addresses the essence of accounting: the “decisionusefulness” of data.
• Accounting is a service activity, as all the processes that an accountant undergoes and accomplishes are used by the business organization and its units in day-to-day operations.
• Accounting is a process, it is a step-by-step and systematic procedure to produce results relevant to the management and other potential users.
• Accounting is an art and discipline, accountants could still devise their own tactics while adhering to well-defined procedures and regulations.
• The production department uses the information to determine which of the processes implemented incurred fewer costs.
• All departments and units in a company use accounting information in their operations.
• Accounting protects the properties of the business by ensuring that the business's assets are monitored and performing well.
• The finance department needs the information to decide how much funds would be needed to implement the expansion plan.
• Accounting ensures that the company meets all the legal requirements and regulations set forth by the government.
• Accounting provides users, such as the management and investors, with relevant information needed to make informed decisions.
• Accounting in the Mesopotamian Era was documented around 3,500 B.C.
• Auditing is an independent undertaking where the information from a completed accounting process is evaluated to determine whether it abides with established accounting standards.
• Accounting systems continually adapt to the needs of the global market and the business environment.
• The human resources department looks at the information to determine performance bonuses and other benefits.
• The existence of multinational and transnational corporations required uniform accounting standards across different countries and industries.
• Accounting ensures that the correct and relevant data is organized and detailed to reflect the business's economic standing.
• The marketing department analyzes the information to determine the impact of their promotional strategy on monthly sales.
• Accounting aims to communicate the financial health and performance of a company effectively.
• An Information System measures business activities, processes information into reports, and communicates these to decision-makers.
• Accounting produces accurate information essential for internal and external users to make sound decisions.
• Accounting deals with financial information, if accounting information is useful, it must be expressed as a common financial denominator, as accountable economic transactions and events have monetary values.