TOPIC: INTRODUCTION TO ACCOUNTING AND BOOK-KEEPING

A business is an organisation that provides goods / services for money.

Accounting is an information system based on generally accepted accounting principles. It involves the recording

and processing of business transactions, and communicating the information to stakeholders (users of financial
information). The accounting information is used to evaluate business performance and facilitate decision-
making.

Differences between Accounting and Bookkeeping

 Accounting is the process of recording, summarising, analysing, interpreting and reporting the financial
information of an organisation. [Note the order : RSAIR]
 Bookkeeping involves only the recording of business transactions.

Why is accounting important?

 Stewardship = responsibility to manage the resources of the business effectively and efficiently
 Decision-making by business owners and other stakeholders (people who are interested in the business)

Stakeholders of Accounting Information

Stakeholders require accounting and non-accounting information on business activities for decision-making,
which in turn affects the business and its activities.

Q) Explain the roles of accountants.

 Through providing accounting information for stakeholders’ decision-making, accountants act as
stewards of businesses

 They set up the accounting information system to collate, record, organise and report accounting
information so that owners and other stakeholders can make decisions regarding the management
of resources and the performance of businesses.

 They think critically, solve problems, adapt and meet the need for sophisticated accounting and
business information.