Scribd Logo
Upload

Welcome to Scribd!

  • 7 views

    Chapter 1 (Theoretical)

    Uploaded by

    Sabbir Hossain
    Accounting involves identifying, recording, and communicating a company's economic events to interested users. It identifies transactions as financial or non-financial, records them chronologically, and communicates the information through financial statements. The main financial statements are the income statement, balance sheet, owner's equity statement, and statement of cash flows. The basic accounting equation is Assets = Liabilities + Owner's Equity, showing how assets are claimed by creditors or owners.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Chapter 1 (Theoretical)

    Uploaded by

    Sabbir Hossain
    7 views16 pages
    Accounting involves identifying, recording, and communicating a company's economic events to interested users. It identifies transactions as financial or non-financial, records them chronologically, and communicates the information through financial statements. The main financial statements are the income statement, balance sheet, owner's equity statement, and statement of cash flows. The basic accounting equation is Assets = Liabilities + Owner's Equity, showing how assets are claimed by creditors or owners.

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Accounting involves identifying, recording, and communicating a company's economic events to interested users. It identifies transactions as financial or non-financial, records them chronologically, and communicates the information through financial statements. The main financial statements are the income statement, balance sheet, owner's equity statement, and statement of cash flows. The basic accounting equation is Assets = Liabilities + Owner's Equity, showing how assets are claimed by creditors or owners.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    7 views16 pages

    Chapter 1 (Theoretical)

    Uploaded by

    Sabbir Hossain
    Accounting involves identifying, recording, and communicating a company's economic events to interested users. It identifies transactions as financial or non-financial, records them chronologically, and communicates the information through financial statements. The main financial statements are the income statement, balance sheet, owner's equity statement, and statement of cash flows. The basic accounting equation is Assets = Liabilities + Owner's Equity, showing how assets are claimed by creditors or owners.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 16

    :: CHAPTER 1 ::

    ACCOUNTING IN ACTION
    --- LAMIA ALAM
    TOPICS TO BE DISCUSSED

    1. What is Accounting?
    2. Basic Activities of Accounting
    3. Users of Accounting
    4. Accounting Vs. Bookkeeping
    5. Basic and Expanded Accounting Equation
    6. Different types of Financial Statements
    WHAT IS ACCOUNTING?

    Accounting is a process that identifies, records and


    communicates the economic events of an
    organization to its interested users.
    IDENTIFICATION OF TRANSACTION

    Financial
    Transaction Non-Financial
    Transaction
    Transactions that involve
    money or payment. Transactions that do not
    involve money or payment.
    Is it a Financial
    Transaction?

    YES NO

    Next Step:
    Recording End
    RECORDING THE TRANSACTION

    Recording consists of keeping a systematic and chronological


    diary of events, classify those events and then finally summarize it.

    Record Classify Summarize


    COMMUNICATING THE INFORMATION

    Communicating means communicating the collected information


    to interested users by means of accounting reports. The most
    common of these reports are called financial statements.

    Communicate Analyze Interpret


    USERS OF ACCOUNTING

    Internal External
    Users Users

    Users inside the Users outside of the


    organization organization
    ACCOUNTING VS. BOOKKEEPING

    Accounting
     Where Accounting is the
    entire process, Bookkeeping
    Communicating is just a part of it.
     Bookkeeping only deals with
    Recording recording.

    Bookkeeping

    Identifying
    BASIC ACCOUNTING EQUATION

    Owner’s
    Asset Liabilities
    Equity
    ASSET

     Assets are resources owned by a


    business.
     It is used in carrying out business
    activities such as production and sales.
     It must have the capacity to provide
    future services or economic benefits.
    LIABILITIES

     Liabilities are claims against assets.


     These are existing debts and
    obligations.
     Businesses of all sizes usually borrow
    money and purchase merchandise on
    credit. It results in liabilities.
    OWNER’S EQUITY
     The ownership claim on total assets is owner’s
    equity.
     It is equal to total assets minus total liabilities.
     The assets of a business are claimed by either
    creditors or owners. To find out what belongs to
    owners, we subtract the creditors’ claims (the
    liabilities) from assets. The remainder is the
    owner’s claim on the assets—the owner’s equity.
     The claims of creditors must be paid before
    ownership claims, this’s why owner’s equity is
    often referred to as residual equity.
    EXPANDED ACCOUNTING EQUATION

    Owner’s Equity

    Owner’s Owner’s
    Asset Liabilities Revenues Expenses
    Capital Drawing
    TYPES OF FINANCIAL STATEMENTS
    Income Statement

    Owner’s Equity Statement

    Classified Balance Sheet

    Statement of Cashflow
    Thank You
    Stay In, Stay Safe!

    You might also like