Week Introduction To Accounting
Week Introduction To Accounting
Week Introduction To Accounting
Learning Objectives:
After studying this chapter, you should be able to:
Define What is Accounting and Users of Accounting Describe Types and Form of Business Describe the Accounting Cycle/ Process Identify Accounting Principles and Ethical Rules
Management Accounting
Audit
Taxation
Investors, employees, managers, suppliers, financiers, customers, bankers, government sectors, etc.
Managers planning, control & running of the business. Directors and owners how effective the managers are and to make judgments about risks and return in future. Employees stability & prospects of their jobs Identify Internal users and external users.
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each unit of product? Can we afford to give employee pay raises this year? What product line is most profitable?
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income? How does the company compare in size and profitability with competitors? Will the company be able to pay its debts when they become due?
Purpose of a Business
Objective of Business
Everyone involved in business needs a good The objective of of accounting, including where understandingmost businesses is to earn a profit. Profit is the difference between the amounts received the numbers come from, whatprovided and the from customers for goods or services the numbers amounts paid for involved in business needs a mea Everyonethe inputs used to provide those goods or services. good understanding of accounting, including, what the numbers mean, what accounting reports can be used for. n, what involved in business needs a good understanding of accounting, including where the numbers come from, what the numbers mean, what accounting reports can be used for.
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Exh. 1.5
Activities in Organizations
Operating activities Aimed at selling products and
Investing
Financing
Operating
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Types of Business
Service Businesses provide service rather than product to customers. Example? Merchandising business sell products they purchase from other businesses to customers Examples? Manufacturing Business change basic inputs into products that are sold to customers Examples?
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Form of business
Sole proprietorship is a one-man business, owned and managed by one person. Partnership is a business formed by two people but having not more than 20 partners. Professional partnership can have a maximum of 50 members. A company is an enterprise formed by two or more persons with a maximum of 50 people for a private limited company and no maximum limit for a public limited company.
Transactions or events
Documents
Journalize Transaction
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7.Adjusting entries are made at the end of an accounting period to bring all accounts up to date on an accrual basis.
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Accounting standards
At one time, there used to be quite wide differences in the ways that accountant calculated profits. In the late 1960s, a number of cases led to widespread outcry against this lack of uniformity in accounting practice. In response, the accounting bodies formed the Accounting Standards Committee. Accounting Standards are drafted to ensure that there is no conflict between the law and accounting standards. Starting 1/1/2006 public listed companies in Malaysia were required to adopt all the Financial Reporting Standards issued by Malaysian Accounting Standard Board.
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Accounting principles and conventions Accounting period: the life of a business is divided into specified periods of time for the purpose of preparing financial reports. Objectivity: there must always be objective verifiable evidence for reporting any accounting information. Consistency: the same accounting method should be applied in each accounting period when preparing financial reports.
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Accounting principles and conventions Prudence: Accounting concept that requires recording (recognizing) the expenses and liabilities as soon as possible, but the revenues only when they are realized or assured. It implies that only that method of determining asset value or net income which yields the lesser amount should be used. Accrual concept: revenue is recognised when it is earned and expenses when they are incurred. Matching principle: revenue earned during an accounting period has to be matched with the expenses associated with earning that revenue.
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Grading
Grades are what you make of them. Not what they make of you, unless YOU made it that way!
REFERENCE (Main)
Wan Ibrahim, W., Bijoy, K., Kasim, K. (2008). Fundamentals of Business Accounting, Oxford University Press You should buy at RM39.90.