O God, give me power to understand accounting, give me

super-power to use it and give me deep knowledge of

accounting !
Save me from anger, if balance sheet will not match,
Save me from ego when I will become perfect in
accounting!
Make me Positive when I will feel negativity in my
accounting lessons,
Make me solitaire what I have when I will share my
accounting knowledge !
Save me from sorrow of any accounting mistakes,
Make me confident for accounting analysis !
Make me cheerful for taking accounting challenges,
Make me the rock for facing accounting problems !
INTRODUCTION TO ACCOUNTING
Communicating learning objectives
A. Learning objectives:

1. I will be able to define accounting.

2. I will be able to describe the nature of accounting.
3. I will be able to explain the functions of accounting in
business.
4. I will be able to narrate the history/origin of
accounting.
INTRODUCTION TO ACCOUNTING

B. Let’s Talk

a. Do your parents ask how you spend your allowance

every day?

b.When deciding between buying a bottle of soft drinks or

fruit juice, what is the basis of your decision? Do you
compare the prices of both and then decide?

c.When going home, do you sometimes choose to walk

from school rather than riding a jeepney because you
want to save?
INTRODUCTION TO ACCOUNTING

Is accounting important to
you?
INTRODUCTION TO ACCOUNTING
Define accounting

“Accounting is the process of IDENTIFYING, RECORDING,

and COMMUNICATING economic events of an organization to
interested users.” (Weygandt, J. et. al) (AAA)

IDENTIFYING – this involves selecting economic events that

are relevant to a particular business transaction The
economic events of an organization are referred to as
transactions.
INTRODUCTION TO ACCOUNTING

Define accounting

RECORDING – this involves keeping a chronological diary

of events that are measured in pesos. The diary referred to
in the definition are the journals and ledgers which will
be discussed in future chapters.

COMMUNICATING – occurs through the preparation and

distribution of financial and other accounting report.
INTRODUCTION TO ACCOUNTING
Discuss the nature of accounting
According to Accounting Theory
(http://accountingtheory.weebly.com/nature-and-scope-
of-accounting.html):
“Accounting is a systematic recording of financial
transactions and the presentation of the related
information to appropriate persons.”

Basic features of accounting:

1. Accounting is a service activity. Accounting provides
assistance to decision makers by providing them financial
reports that will guide them in coming up with sound
decisions.
INTRODUCTION TO ACCOUNTING
Discuss the nature of accounting

Basic features of accounting:

2. Accounting is a process: A process refers to the method
of performing any specific job step by step according to
the objectives or targets. Accounting is identified as a
process, as it performs the specific task of collecting,
processing and communicating financial information. In
doing so, it follows some definite steps like the collection,
recording, classification, summarization, finalization, and
reporting of financial data.
INTRODUCTION TO ACCOUNTING
Discuss the nature of accounting

Basic features of accounting:

3. Accounting is both an art and a discipline. Accounting
is the art of recording, classifying, summarizing and
finalizing financial data. The word ‘art’ refers to the way
something is performed. It is behavioral knowledge
involving a certain creativity and skill to help us attain
some specific objectives. Accounting is a systematic
method consisting of definite techniques and its proper
application requires skill and expertise. So by nature,
accounting is an art. And because it follows certain
standards and professional ethics, it is also a discipline.
INTRODUCTION TO ACCOUNTING
Discuss the nature of accounting

Basic features of accounting:

4. Accounting deals with financial information and
transactions: Accounting records financial transactions
and data, classifies these and finalizes their results given
for a specified period of time, as needed by their users. At
every stage, from start to finish, accounting deals with
financial information and financial information only. It
does not deal with non-monetary or non-financial aspects
of such information.
INTRODUCTION TO ACCOUNTING
Discuss the nature of accounting

Basic features of accounting:

5. Accounting is an information system: Accounting is
recognized and characterized as a storehouse of
information. As a service function, it collects processes and
communicates financial information of any entity. This
discipline of knowledge has evolved to meet the need for
financial information as required by various interested
groups.
INTRODUCTION TO ACCOUNTING
Discuss the nature of accounting

Basic features of accounting:

1. Accounting is a service activity.
2. Accounting is a process.
3. Accounting is both an art and a discipline.
4. Accounting deals with financial information and
transactions.
5. Accounting is an information system.
INTRODUCTION TO ACCOUNTING
Discuss the function of accounting in business

Accounting is considered as the language of business.

INTRODUCTION TO ACCOUNTING
Discuss the function of accounting in business

Accounting is the means by which business information is

communicated to business owners and stakeholders.

• The role of accounting in business is to provide

information for managers and owners to use in
operating the business.
• Allows business owners to assess the efficiency and
effectiveness of their business operations.
• Prepared accounting reports can be compared with
industry standards or to a leading competitor to
determine how the business is doing.
• Business owners may also use historical financial
accounting statements to create trends for analyzing
and forecasting future sales.
• Accounting helps the users of these financial reports to
see the true picture of the business in financial terms.
In order for a business to survive, it is important that a
business owner or manager be well-informed
INTRODUCTION TO ACCOUNTING
Let us now discuss the function of accounting in business.
Mr. Juan is a retired government employee who is good at
baking. One day he decides to put up a bakery shop in
your barangay. He renovates a portion of his house to
serve as the area for the production of bread. He
purchases baking equipment and raw materials to
produce five different types of bread. Mr. Juan also hires
Jose to help him with the baking and, at the same time, to
be in-charge of sales. Mr. Juan pays Jose on a weekly
basis. Every day, Mr. Juan’s wife deposits the daily cash
sales in their bank account at XY Savings Bank. With the
help of accounting, what possible decisions or questions of
Mr. Juan can accounting provide an answer to?
INTRODUCTION TO ACCOUNTING
Discuss the function of accounting in business.

Possible Answers:
•Is my business earning? (profitability)
•How much daily or monthly sales do I need in order to
recover my fixed cost? (break-even)
•Do I need to hire additional workers to help me with my
production?
•Can I afford to set up a new store in another place?
Where do I get the funds?
•Can I afford to pay a bank loan?
INTRODUCTION TO ACCOUNTING
Discuss the history of accounting

Accounting is as old as civilization itself. It has evolved in

response to various social and economic needs of men.
Accounting started as a simple recording of repetitive
exchanges. The history of accounting is often seen as
indistinguishable from the history of finance and business.
INTRODUCTION TO ACCOUNTING
Discuss the history of accounting

Following is the evolution of accounting: •

A. The Cradle of Civilization

Around 3600 B.C., record-keeping was already common
from Mesopotamia, China and India to Central and South
America. The oldest evidence of this practice was the
“clay tablet” of Mesopotamia which dealt with
commercial transactions at the time such as listing of
accounts receivable and accounts payable.
B. 14th Century - Double-Entry Bookkeeping
The most important event in accounting history is
generally considered to be the dissemination of double
entry bookkeeping by Luca Pacioli (‘The Father of
Accounting’) in 14th century Italy. Pacioli was much
revered in his day, and was a friend and contemporary of
Leonardo da Vinci. The Italians of the 14th to 16th
centuries are widely acknowledged as the fathers of
modern accounting and were the first to commonly use
Arabic numerals, rather than Roman, for tracking
business accounts. Luca Pacioli wrote Summa de
Arithmetica, the first book published that contained a
detailed chapter on double-entry bookkeeping
C. French Revolution (1700s)
The thorough study of accounting and development of
accounting theory began during this period. Social
upheavals affecting government, finances, laws, customs
and business had greatly influenced the development of
accounting.

D. The Industrial Revolution (1760-1830)

Mass production and the great importance of fixed assets
were given attention during this period.
E. 19th Century – The Beginnings of Modern Accounting in
Europe and America
The modern, formal accounting profession emerged in
Scotland in 1854 when Queen Victoria granted a Royal
Charter to the Institute of Accountants in Glasgow, creating
the profession of the Chartered Accountant (CA). In the late
1800s, chartered accountants from Scotland and Britain
came to the U.S. to audit British investments. Some of
these accountants stayed in the U.S., setting up accounting
practices and becoming the origins of several U.S.
accounting firms. The first national U.S. accounting
society was set up in 1887. The American Association of
Public Accountants was the forerunner to the current
American Institute of Certified Public Accountants (AICPA).
F. The Present - The Development of Modern Accounting
Standards and Commerce The accounting profession in the
20th century developed around state requirements for
financial statement audits. Beyond the industry's self-
regulation, the government also sets accounting
standards, through laws and agencies such as the
Securities and Exchange Commission (SEC). To remain
competitive, businesses everywhere feel the need to
operate globally. The trend now for accounting
professionals is to observe one single set of global
accounting standards in order to have greater
transparency and comparability of financial data across
borders
PRACTICE (10 MINS)
Divide the class into 2 groups. The first group will act out
the definition of accounting while the second group will
act out the evolution/history of accounting.
ENRICHMENT (5 MINS) Go back to the unanswered question
during your introduction of this topic. Ask the learners the
following questions: Is accounting important to you? Does
it affect your daily activities?
How? EVALUATION (10 MINS) Give a short quiz. Ask the
following questions:
1.Define accounting
2.Give examples of decisions or questions that can be
supported by accounting information
How? EVALUATION (10 MINS) Give a short quiz. Ask the
following questions:
1.Define accounting
Answer: Accounting is the process of IDENTIFYING,
RECORDING and COMMUNICATING economic events of an
organization for interested users.
2.Give examples of decisions or questions that can be
supported by accounting information
.Suggested Answers:•Is my business earning? (profitability)
•How much daily or monthly sales do I need in order to