fabm

• Accounting


  A system that helps businesses track events that affect them. It involves identifying the events, recording them, and communicating the summarized results to interested parties.
• Accounting process


  • Identification of economic events relevant to a business
  • Recording of relevant economic events systematically and chronologically
  • Summarizing recorded economic events into accounting reports (e.g. financial statements)
• Relevant economic events


  • Sale of Toyota cars
  • Provision of services by a hospital
  • Payment to suppliers
  • Purchase of equipment for manufacturing
• For an event to be identified as a relevant economic event, there should be a transfer of things with value
• Accounting books


  Records where events are inputted
• Accounting as a process

  A process composed of multiple steps (identification, recording, communication) that lead to the common end goal of providing information
• Accounting as an art


  Accounting involves creativity and skills in recording, classifying, summarizing, and finalizing financial data
• Accounting deals with quantifiable financial transactions and information
• Accounting as a means, not an end


  Accounting is a tool to achieve specific objectives, not the objective itself
• Accounting as an information system


  Accounting collects, processes, and communicates financial information to meet the needs of different interested groups
• Functions of accounting


  1. Keeping systematic record of business transactions
  2. Protecting properties of the business
  3. Communicating results to various parties
  4. Meeting legal requirements
• The history of accounting can be traced back to ancient civilizations like Mesopotamia and the Roman Empire
• The double-entry bookkeeping system introduced by Luca Pacioli in the 14th century is considered the most important event in accounting history
• The modern profession of chartered accountant originated in Scotland in the 19th century
• Accounting standards like PFRS and PAS guide accountants in their practice of the profession