Introduction to

Accounting
Accounting 11
Ms. Stewart
What is Accounting?
 Accounting can be defined simply as the
recording, summarising and interpretation of
financial information.
 The origins of accounting can be traced back to
ancient times, with the need for accurate records of
trading transactions. A logical system of recording
financial information, known as double-entry
bookkeeping, was in use in medieval Italy, and the
first published accounting work was written in 1494
by a Venetian monk, Luca Pacioli.
Key Aspects of Accounting
 The key aspects of accounting are identifying,
recording and communicating:
1) First, economic events are identified. A sale at a
clothing store, payment of employee benefits by a
business, or purchase of equipment are all examples of
economic events.
2) All economic events are recorded. Recording
provides a history of a company's financial activities. In
this step, economic events are also classified and
summarized.
3) Finally, information about classified and summarized
economic events is communicated to interested
parties. Such communication may take several forms,
one such form is a financial statement which you will
learn about later in this course.
Types of Accounting

 Financial Accounting provides

information to satisfy the needs of
external users.
 Managerial Accounting provides
information that is useful in running a
company by internal users.
 Who uses Accounting
Information?
 External users are  Internal users are
parties outside the parties inside the
reporting entity or reporting entity or
company who are company who are
interested in the interested in
accounting accounting
information. information.
 Examples?  Examples?
 Investors,  Management,
lenders/suppliers, employees
government,
public/customers
Link to clip
Why do businesses need
to do accounting?
 Businesses must establish accounting
systems in order to keep accurate
records of their financial standing and to
monitor profits and losses.
 Both businesses organized for profit and
non-profit organizations must keep
accounting records.
How do we keep
accounting consistent?
 People and organizations make decisions
based on financial information prepared by
accountants. That is why it is important for
people and organizations to understand the
ways in which accounting information is
measured.
 To ensure consistency, rules are established
that business people can use to make sure
they are comparing oranges to oranges.
Generally Accepted
Accounting Principles
(GAAPS)
 Generally Accepted Accounting
Principles (GAAP) are common
standards that guide accountants in
reporting economic events.
 GAAP places all companies on a level
playing field by ensuring that any
financial information presented is
uniformly consistent, relevant, feasible
and objective.