Acc0101
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Accounting is defined as the art of recording, classifying, summarizing, analyzing, interpreting and communicating the results of financial transactions and events. It involves generating financial information through recording transactions, classifying accounts, preparing documents like the trial balance, income statement, balance sheet, and cash flow statement. The resulting financial information is used by internal parties like managers and directors, as well as external parties like investors, lenders, and government agencies.
Acc0101
- 1. Chapter 1. Accounting an IntroductionUnit 1: Meaning and Scope of AccountingTransaction denotes “a business, performance of an act, an agreement”, while Event is used to mean “a happening, as a consequence of a transaction, a result”. Events are the end results of transactionsAccounting is defined as the art of recording, classifying, summarizing, analyzing, interpreting and communicating the results of transactions and events which are of financial character. Hence, it includes preparation of final accounts, ascertainment of profit or loss and its communication to users. Revision Notes - Fundamentals of Accounting©www.cptsuccess.com
- 2. Chapter 1. Accounting an IntroductionUnit 1: Meaning and Scope of AccountingProcedure of accounting includes:Generating financial information
- 3. Recording – i.e. making journal entries
- 4. Classifying – i.e. under different accounts in Ledger
- 5. Summarizing – preparation of trial balance, P&L account, Balance sheet and Cash flow statement
- 6. Analyzing
- 7. Interpreting
- 9. Using the financial information
- 10. Internal users – Board of directors, Partners, Managers, Officers
- 11. External users – Investors, Lenders, Suppliers, Government agencies, Employees and CustomersRevision Notes - Fundamentals of Accounting©www.cptsuccess.com
- 12. Chapter 1. Accounting an IntroductionUnit 1: Meaning and Scope of AccountingAccounting cycle consists of Recording the transactions in the books of original entry
- 14. Preparation of trial balance
- 15. Preparation of final accountsManagement accounting is concerned with internal reporting to the managers of a business unit. The different ways of grouping information and preparing reports as desired by managers for discharging their functions are referred to as management accounting. It is not a clerical work or accounting for future, although it is based on historical dataRevision Notes - Fundamentals of Accounting©www.cptsuccess.com
- 16. Chapter 1. Accounting an IntroductionUnit 1: Meaning and Scope of AccountingAccounting cycle consists of Recording the transactions in the books of original entry
- 18. Preparation of trial balance
- 19. Preparation of final accountsManagement accounting is concerned with internal reporting to the managers of a business unit. The different ways of grouping information and preparing reports as desired by managers for discharging their functions are referred to as management accounting. It is not a clerical work or accounting for future, although it is based on historical dataRevision Notes - Fundamentals of Accounting©www.cptsuccess.com