Accounting

• 14th Century


  Luca Pacioli
• Tax Avoidance
• Accounting as a Process

  1. Identifying and analyzing financial information

  2. Recording or journalizing financial information into different accounting books

  3. Communicating results through financial statements
• Simple Accounting in Business

  • Marketing Department
  • Finance Department
  • Production Department
  • Human Resource Department
• 19th Century

  Queen Victoria of British Empire
• Accountant


  Supplies accounting information
• Internal Auditing

  Performed by someone within the company
• Decisions by Management

  • Ensuring compliance with law
  • Focusing within the company's budgeting
• Natures of Accounting

  • Service Activity
  • Process
  • Art and Discipline
  • Deals with Financial Information
  • An Information System
• External Auditing


  Performed by someone outside the company
• Branches of Accounting

  • Financial Accounting
  • Management Accounting
  • Government Accounting
  • Tax Accounting
  • Auditing
  • Cost Accounting
  • Accounting Research
  • Accounting Education
• Bookkeeper

  Maintaining accounting records
• 3,500 B.C


  Messopotamian Era
• Tax Evasion
• Accounting


  The process of identifying, measuring, and communicating financial information
• The Process of Accounting

  1. Recording

  2. Classifying

  3. Summarizing

  4. Interpreting
• 17th & 18th Century


  Industrial Revolution
• Decisions by Owners

  Monitoring investment
• Objectivity Principle


  Reporting based on solid evidence
• Business Entity Concept

  Recognize the business as a separate entity
• Types of Accounting Information

  • Statement of Profit or Loss
  • Statement of Financial Position
  • Statement of cash flows
  • Schedule of Goods Manufactured
  • Information of Tax management
• Going Concern Principle


  If the business entity would continue its operations
• Matching Principle


  Reporting revenues and related expenses together
• Accrual Accounting Principle

  Recording revenue and expenses
• Conservatism Principle


  • Assets and revenue should not be overstated
  • Liabilities and expenses should not be understated
• Materiality Principle


  Significant information that is considered business-critical
• Revenue Recognition Principle


  Recognizing revenue when it is earned
• Cost Principle

  Recording assets, liabilities, and equity without considering inflation
• Full Disclosure Principle


  Including all relevant and necessary information that would affect the user's understanding
• External Users


  • Outside of the organization
  • Gaining information of accounting information from the organizations of their interest
• Monetary Unit Concept


  Include only information on transactions that can be quantified
• Time Period Principle

  • Reporting financial reports over a standard period
  • One accounting report per year
• Generally Accepted Accounting Principles (GAAP) is a guideline that companies and accountants follow when preparing financial statements
• shows the financial performance 


  Statement of Profit or Loss
• shows the current balance of assets, liabilities, and equity

  Statement of Financial Position
• the flow of money

  Statement of Cash Flow
• Accounting Standards are rules set by professional bodies such as the Institute of Chartered Accountants of India (ICAI), which govern how financial statements must be prepared and presented.