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Introduction To Accounting Notes

Accounting is the process of identifying, recording, classifying, summarizing, and interpreting financial information to aid decision-making. It encompasses various functions such as recording transactions, classifying data, summarizing financial statements, and interpreting results, with branches including financial, managerial, cost, auditing, and tax accounting. The importance of accounting lies in its ability to assist management, provide legal evidence, and build trust with stakeholders.

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20 views1 page

Introduction To Accounting Notes

Accounting is the process of identifying, recording, classifying, summarizing, and interpreting financial information to aid decision-making. It encompasses various functions such as recording transactions, classifying data, summarizing financial statements, and interpreting results, with branches including financial, managerial, cost, auditing, and tax accounting. The importance of accounting lies in its ability to assist management, provide legal evidence, and build trust with stakeholders.

Uploaded by

Aira Pearl Nicolas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Document 1: Class Notes - Introduction to Accounting

Definition of Accounting: Accounting is the process of identifying, recording, classifying, summarizing,


and interpreting financial information to assist stakeholders in decision-making.

Functions of Accounting: 1. Recording Transactions – Ensures all business activities are documented
systematically. 2. Classifying – Organizes data into categories like assets, liabilities, income, and expenses.
3. Summarizing – Prepares financial statements such as the income statement, balance sheet, and cash
flow statement. 4. Interpreting – Helps users analyze and make decisions based on financial results.

Branches of Accounting: 1. Financial Accounting – Focused on external reporting through financial


statements. 2. Managerial Accounting – Provides information for internal management decisions. 3. Cost
Accounting – Deals with the recording and control of costs. 4. Auditing – Involves independent verification
of financial records. 5. Tax Accounting – Focuses on preparation and filing of tax returns in compliance with
laws.

Basic Concepts of Accounting: - Business Entity Concept: Business is separate from its owners. - Going
Concern Concept: Business is assumed to continue indefinitely. - Monetary Unit Concept: Transactions
are measured in monetary terms. - Accrual Concept: Revenues and expenses are recognized when earned
or incurred, not necessarily when cash is exchanged.

Accounting Equation: Assets = Liabilities + Equity

Importance of Accounting: - Helps management plan, control, and make decisions. - Provides evidence in
legal matters. - Builds trust with investors, creditors, and other stakeholders.

Key Takeaway: Accounting is not just about numbers; it is the language of business that translates
activities into meaningful financial information.

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