INTRODUCTION TO FINANCIAL ACCOUNTING
This chapter introduces the nature and objectives of financial accounting.Before you learn how to process transactions and eventual preparation of financial statements, itis important that you understand why accounting information is necessary and the assumptionson which it is based. This is because accounting has limitations on the scope and use of accounting information. It is equally important to know the type of business entities that operatein communities from which accounting information is derived.
1.What is financial accounting?2.Types of business entities.3.Description of users of financial accounting information.4.What makes accounting information to be useful?5.The scope and objectives of financial accounting
At the end of this chapter you should be able to:-Explain the need and objectives of financial accounting.-Identify the users of financial accounting information as prepared by different types of business units.-Describe qualities of good accounting information.1
WHAT IS ACCOUNTING?
1.1Accounting is the process of identifying, measuring, recording, summarizingeconomic information and finally communicating it to interested parties (users)
1.2ANALYSIS OF DEFINITION
(a)Process mean accounting has steps and procedures of doing things.(b)Identifying means accounting is only concerned with activities or transactions relating to the business.(c)Measuring means that all activities related to the business should be statedin monetary terms.1