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Chapter 1 : Basic Concepts of Accounting and Recording Process

What is Accounting?
Identifying, recording, classifying, reporting and interprate financial data
Useful for planning process, operation control & decision making.

Purpose of Accounting
provide evidence for buss transaction
recording, classifying and interprate all the basis transaction on money
value ( RM) systematically.
provide asset info, or liabilities to show the company financial status.
provide info of total income & the types
total expenses & the types
debtors & total debtors
creditors & total creditors

Users of Accounting Infromation

Internal Users
External Users

Basic Accounting Principles

Underlying accounting concepts
1 Historical
2 Money Measurement
3 Bussiness entity concept
4 Dual Aspect concept
5 Time Internal concept

Fundamental accountig concepts

1 Going Concern
2 Cosistency
3 Prudence
4 Accrual concept
5 Separate Determination
6 Substance Over Form

Cash Basis Vs Accrual Basis

Cash Basis Revenues are recognized when cash is received and expenses recorded
when cash is paid.
Accrual Basis Revenues are recognized when earned and expenses are recognized when incurred.
Accounting Cycle

Identification and Measurement

of Transactions and Other Events

Reversing Entries General Journal
(Optional) Cash Receipts Journal
Cash Disbursements Journal
Purchases Journal
Sales Journal
Other Special Journals

Post -closing Posting

trail balance General Ledger (usually monthly)
(optional) Subsidiary Ledgers (usually daily)

Closing Trial Balance

(nominal accounts) Preparation

Statement preparation Adjustments

Income Statement Accruals
Retained Earnings Prepayments
Balance Sheet Estimated items
Cash Flows

Adjusted trial balance