INTRODUCTION TO

ACCOUNTING
Accounting 1

Financial
TOPIC 1 Accounting
 CONTENT
1.1 Definition of accounting

1.2 Users of accounting information

1.3 Differences between bookkeeping and accounting

1.4 branches of accounting

1.5 types of business ownerships

1.6 Types of business activities

1.7 Types of financial statements

1.8 Professional accounting bodies in Malaysia

1.9 Potential Career in accounting

1.1 Definition of Accounting

Process of
1 Identifying
2 Recording
3
Classifying
4
Summarising
5
Communicating
6 interpreting
The results of business or economic
transactions to users in order for them to make
a better decisions.
 01
Explain the
process of
summarising
1.2 Users of
Accounting
Information
INTERNAL USERS
Manager
Overview Internal auditor
Marketing manager
Two broad groups of users of Production supervisor
financial information Finance director

EXTERNAL USERS
Topic Features Potential investors
existing investors
Internal users creditor; supplier, banker
Extenal users Taxing authorities; LHDN
Labor unions; NSTP
 External Users
Investors  To know the company’s
profitability and the amount of
dividends paid out to shareholders.
 To decide whether to buy more
shares or dispose the shares they
have.
Creditors Assess the ability of the business to
(Suppliers & repay the loan.
bankers)
Lembaga Hasil  To determine the amount of tax to be
Dalam Negeri collected by them.
 02
Which of the following users
is not external users
A. Creditor
B. Banker
C. Labor unions
D. marketing manager
 1.3 Differences Between Bookkeeping and
Accounting
Definition

Bookkeeping Accounting
 Bookkeeping is a Accounting is an
part of accounting. information system.

 Process of Process of recording,

recording, in classifying, summarizing,
chronological order, reporting, analyzing and
the daily transactions interpreting the financial
of a business entity. condition and
performance of a
business.
 1.3 Differences Between Bookkeeping and
Accounting
Bookkeeping Accounting
The process involved Accounting is more
Scope is preliminary work in extensive and thorough
the accounting. work beyond
bookkeeping.
Accounting Clerk Accountant
Person in
charge
 03
Accountant prepare, but do
not interpret financial reports
A. True
B. False
1.4 Branches ● Branches of accounting such as
of Accounting financial accounting,
management accounting, cost
accounting, auditing, public
sector accounting and taxation

Financial Management
Accounting Accounting
Financial
accounting is the Managerial
field of accounting accounting
that provides provides
economic and economic and
financial for financial for
external users. internal users.
Accounting just like a
tree
1.5 Types of
Business
Ownerships Partnership

Sole
Proprietorship

Company
 1.5 Forms of Business Entities
Differences Sole Partnership Company
Proprietorship

1. Number of owner 1 2 – 20 2 – unlimited

2. Capital source Proprietor Partners Shareholders
3. Life of Limited Limited Indefinite
organization
4. Liabilities Unlimited Unlimited Limited

5. Laws of Businesses Act Partnership Act Companies Act 1965

Regulation 1956 1961
6. Distribution of Wholly owned by Among partners Allocated according
profits/losses proprietor to shares of capital/
equity ratio
 04
Which type of business organisation has
the following characteristics?
- conducts business separate from its
owners
- the owners have limited liability
- the organisation is a taxable entity

A. Sole proprietorship
B. Partnership
C. company
1.6 Types of Merchandisi
Business Activities ng

Service
Manufacturi
ng
 1.6 Types of Business Activities
Manufacturing Merchandising

Provide services Change basic inputs Purchase

rather than products into products that are inventories from other
to customers. sold to individual businesses (such as
customers. manufacturers) and
Example : MAS, resell the inventories
Maraliner, Keretapi Example: Gardenia, to individual
Tanah Melayu. Intel customers.

Example: Giant,
Tesco, Econsave.
1.7 Types of  a statement of
Financial comprehensive income for
Statements the period.

 a statement of financial
position as at the end of the
The components of period.
financial statements
as  a statement of changes in
stated in FRS 1 are; equity for the period.

 a statement of cash flows

for the period.
Statement of Comprehensive
Income

There are several formats in

Reports the financial reporting the revenue and expenses
performance of an entity over a depending on the nature of business
specific accounting period. run by the entity

Contains information on revenues

and expenses including the net
profit or loss of the business entity.
 Rahayu Baju Kurung Enterprise
Statement of Comprehensive Income Syarikat Dobi Cuci Berseri
For the year ended 30 December 2015 Statement of Comprehensive Income
For the year ended 31st December 2015
RM RM RM
Sales 100,000
Revenues:
(-) Cost of good sold (60,000)
Gross profit 40,000 Laundry fees 140,000
(-) Expenses:
(-) Operating expenses : Rental expenses (40,000)
Depreciation expenses 3,000 Utilities expenses (20,000) (60,000)
Salaries expenses 10,000 (13,000)
Net profit 80,000
Net Profit 27,000
2) A Statement of Changes
in Equity Rahayu Baju Kurung Enterprise
Statement of Changes in Equity
For the year ended 31 December 2015
Reports how the owner’s
Opening Capital (1 Jan. 2015) 40,000
equity has changed over
the reporting period. Net Profit 27,000
(-) Drawings (10,000)
It reports how opening Closing Capital 57,000
capital has increased
through net income, and
how it decreased through
net losses and drawings.
 Pertama Enterprise
Statement Of Financial Position
At June 30, 2014

(3) A Statement of Financial RM RM

Position NON CURRENT ASSET

Vehicle 70,000
- Accumulated Depreciation – Vehicle (21,000)
Total 49,000

Also known as the balance CURRENT ASSETS

Cash 6,500

sheet reports the financial Account Receivable

Inventories
5,300
300

position of a business entity. Prepaid Insurance

Total
1,200
13,300

TOTAL ASSET 62,300

It contains of three main CURRENT LIABILITIES

Account Payable 2,000

components Salaries Payable

Total
300
2,300
(1) Assets OWNER’S EQUITY
37,000
(2) Liabilities Opening Capital
+Net Profit
23,000

(3) Owner’s equity Closing Capital 60,000

TOTAL LIABILITIES AND OWNWE’S

EQUITY 63,200
 Rahayu Baju Kurung Enterprise
A Statement Of Cash Flows Statement of Cash Flows
for the year ended 31 December 2015

Also known as cash flow Cash flow from operating activities RM RM

Cash receipts from customers 25,000
statement, presents the Cash payment to suppliers (8,000)
Cash payment for expenses (5,000)
movement in cash flows over Net cash flow from operating activities : 12,000
the period. Cash flow from investing activities
Purchase of land and building (13,000)
Net cash flow used for investing activities (13,000)
It show the in-flow and out-
Cash flow from financing activities
flow of cash of an Owner investment 6,000
Drawings (3,000)
organisation according to Net cash flow from financing activities 3,000
three main activities which are Net cash inflow
Add opening cash balance - 1 Jan 2015
2,000
500
operating, investing and Closing cash – 31 Dec 2015 2,500

financing.
 05
List 2 types of financial
statement
1.8 Professional Malaysian Accounting
Accounting Standards Board (MASB)
Bodies in Established under the Financial Reporting
Malaysia
Malaysian Accounting
Act 1997
The main functions and authority :
Standards Board 1) Issue new accounting standards
(MASB) [Financial Reporting Standards (FRS)
2) Review, revise or adopt existing
Malaysian Institute of accounting standards.
Accountants 3) Issue statements of principles for
(MIA) financial reporting.
4) Sponsor or undertake development of
Malaysian Institute of possible accounting standards.
Certified Public 5) Develop a conceptual framework for
Accountants the purpose of evaluating proposed
(MICPA) accounting standards.
 Malaysian Institute of
Malaysian Institute of
Certified Public Accountants
Accountants (MIA)
(MICPA)
Established under the Accountants Act The Malaysian Institute of Certified
(1967) Public Accountants (MICPA) was formed
The main functions of MIA are to: as a professional body in 1958.
The main functions of MICPA are to :
1) Determine the qualifications for 1) Advance the theory and practice of
members. accountancy in all its aspects.
2) Provide training and continuing 2) Recruit, educate, train and assess a
professional education to existing body of members skilled in these
and potential practitioners. areas.
3) Control the accounting practice in 3) Maintain high standards of practice
Malaysia. and professional conduct by all its
members.
4) Develop the accounting profession.
1.9 Potential career oppurtunities in
accounting
PUBLIC ACCOUNTING PRIVATE ACCOUNTING

Career in auditing, taxation, and Careers in industry working in cost

management consulting serving accounting, budgeting, accounting
the general public information systems and taxation

GOVERMENTAL ACCOUNTING FORENSIC ACCOUNTING

Careers with the IRS (Internal Uses accounting, auditing and

Revenue Service), the FBI, the investigative skills to conduct
SEC, public collages and investigations into theft and froud
universities and in state and local
goverments.
Thank You
Exercise 1A05 & 2A09
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2A11 & 3A13

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3A16 & 3A17

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