Chapter 1

Introduction to Accounting and Business

WHAT IS ACCOUNTING?

Accounting can be defined as the process of identifying relevant economic events in a company,
recording and communication the information to interested users.

Therefore from the above definition, the basic activities in accounting are:

 Identifying
A company selects business transactions that are relevant to its company..
 Recording
Business transactions are recorded, classified and summarized in systematic techniques and
processes.
 Communicating
Finally the accounting process involves communicating the financial information about the
company to parties inside as well as outside the company in the form of financial statements.

The information on business transactions that are recorded and communicated varies according to the
following aspects:

1. The nature of the business

2. The legal form of the business organization
3. The business management requirements
4. The requirements of the business owners and other interested parties
5. The relevant legal requirements
6. The factors affecting the business success
7. The business policies

References:

1. Introductory Accounting: Principles and Practice, Leo Duffy and Ian Monroe, 2 nd Edition,
Longman Chesire
2. Accounting, A Malaysian Perspective, 3rd Edition, Rosli Mohamad, Junaidah Hanim Ahmad,
Mudzamir Mohamed, Muzainah Mansor, Natrah Saad, Noor Asma Jamaluddin, Nor Asma
Lode, Norazita Marina Abdul Aziz, Robiah Abu Bakar, Rohana @ Norliza Yusof, Rokiah
Ishak