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Accounting An Introduction
Principles of Accounting
Nguyen Hoang My Phuong
[email protected]
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Maincontent
What is accounting?
Difference between a bookkeeper and an accountant
What is the purpose of bookkeeping and accounting?
Who are the users of accounting information?
The conflicting interests of users
Branches of Accounting
Accounting and Finance
Accounting as an information system
Why do I need to know anything about accounting and finance?
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What is accounting?
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From the outside, accounting can appear to be apurely practical
subject. It would be very easy to
focus on just the application of techniques andprocedures. BUT
accounting is more than just a setof calculations; unless we can
understand andinterpret the figures we produce, the
calculations
are pointless!
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What is accounting?
Accounting is termed as the analysis, classification
andrecording of financial transactions, and theascertainment of how
such transactions affect theperformance and financial position of a
business.
Accounting is therefore concerned with:
recording of data classification and summary of data
communicating what has been learned from the data
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Difference between
a bookkeeper and an accountant
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Difference between
a bookkeeper and an accountant
Bookkeeper Accountant
Recording the detailed financial
activities of a business.
The bookkeepings end product, as
following certain procedures,
becomes the raw material for the
production of the final statements of
the business.
Classifying and summarizing
business transactions and
interpreting their effects.
Concerned with techniques
involving the recording transactions.
Concerned with the use of data for
interpretation.
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What is the purpose of bookkeeping and
accounting?
To provide information concerning the financial
affairs of a business.
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Who are the users of accounting
information?
Internal users Owners
Employees
External users
Bank and other financial institutions Potential
investors/Prospective buyers
The government
Customers and suppliers
The local community Business competitors
Economic analysts
Members of general public
Future partners
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Who are the users of accounting
information? - Example
Activity 1.1, page 4Eddie McLaney and Peter Atrill (2008),
Accounting An Introduction,
4thedition, Pearson Education Limited.
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The conflicting interests of users
Conflict between user groups is most likely to occur
over the way in which the wealth of the business is
generated and/or distributed.
For example, conflict between the managers and
the owners of a business, or lenders and owners.
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Branches of Accounting
Cost and management accounting
Financial accountingAuditing
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Branches of Accounting
Financial accounting Management Accounting
External users Internal users
Prepared on a periodic basis (most
companies publish their financial statements
only once a year, in their annual report)
Prepared frequently, as and when it is
needed (most large businesses will prepare
some information on a monthly basis andmany use daily accounting
information)
Based on past events and historic data More likely to contain
forward-looking
information (such as forecasts and budgets)
Comprised solely of financial information More likely to
incorporate non-financial
information (such as quantities of productssold or numbers of
customer complaints)
Governed by rules and regulation Not regulated (managers are
free to produce
whatever information they need in whatever
format is most helpful to them, subject to
available data and technology)
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Branches of Accounting
Auditing: determines whether recorded information
is true reflection of the business transactions that
took place during an accounting period.
Auditing is done in 2 ways internal or external,
or both.
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Accounting & Finance
Finance, like accounting, exists to help decisionmarkers. It is
concerned with the ways in which
funds for a business are raised and invested.
In essence, a business exists to raise fund from
investors (owners and lenders) and then to use
those funds to make investments (equipment,
premises, inventories and so on) in an attempt to
make the business, and its owners, wealthier.
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Accounting as an information system
page 11
Eddie McLaney and Peter Atrill (2008), Accounting An
Introduction,
4thedition, Pearson Education Limited.
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Countries around the world organize their economic
and financial activities in different ways so, inevitably,legal
requirements, regulation and administrativeprocedures also vary
across countries.
However, accounting rules and guidelines around theworld are
becoming more similar (converging).
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Why do I need to know anything about
accounting and finance?
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Maincontent
What is accounting?
Difference between a bookkeeper and an accountant
What is the purpose of bookkeeping and accounting?
Who are the users of accounting information?
The conflicting interests of users
Branches of Accounting
Accounting and Finance
Accounting as an information system
Why do I need to know anything about accounting and finance?
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Reference
Joel J. Lerner, M.S., Ph.D. (2004), Bookkeepingand Accounting,
The McGraw-Hill.
Jennifer Ireland (2005), Principles of accounting,
London School of Economics and Political
Science (LSE)
Eddie McLaney and Peter Atrill (2008),
Accounting An Introduction, 4th edition, Pearson
Education Limited.
Cambridge University Press, Unit 1 Basic
Principles of Accounting.
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