Chapter 1

Introduction to
Bookkeeping
1.1 Evolution and Development of
Accounting
Luca Pacioli
• 意大利传教士、数学家
• 1494 年，发明复式记账法
(Double-entry system)

every business transaction,

amounts must be recorded in
a minimum of two accounts
(one debit and one credit).
1.2 What is Bookkeeping
• It is a process of recording business transaction
• Every business transaction must in accordance with
accounting principles or rules.

occurrence of business can be

expressed in monetary term
 Accounting Principles or Rules
1. Business Entity 7. Consistency
2. Going concern 8. Prudence
3. Money Measurement 9. Accrual
4. Historical cost 10. Matching
5. Accounting period 11. Materiality
6. Objectivity
 1.3 Objectives of Bookkeeping
• To keep the records of a business operations
• To ascertain the profit or loss of a business for particular
period
• To show the financial position of a business at a particular
date to find out what business owns and owes
• To provide useful accounting information for decision making
of a business.
 1.5 Users of Accounting

Internal Users External Users

Prospective Investors
Business owner
Financial advisors
Government and its agencies
Management team
competitors
 1.6 Bookkeeper versus Accountant
• Keeps the source • Reviews and summaries to
document that detect error or omission
flow into business • Presents and interprets
• Makes entries in the financial info to mgmt
the books for the • Explains the differences
transaction of
between actual
business
performance and
• Organises the forecasted results of the
recorded data. business.
• Prepares reports • Assist operations of
at the end of a business and to prevent
period fraud
 1.6 Bookkeeping Versus Accounting
• Recording • Same as
• Classifying Bookkeeping
• Summarising • Analyzing,
Interpreting &
• Preparing Reporting
financial
reports
What do you understand by
“bookkeeping” and “accounting”?
Briefly explain in your own words.
• Bookkeeping is the recording of
transactions and the preparation of
financial reports
• Accounting is the use of the financial
information to analyse and interpret
the reports for business owners,
management and others.
 Accounting Cycle
Business
transaction

~ Income Statement
~ Financial Position
Types of Business Organization 企业组织类型
Business
Organisation

Sole Proprietorship Partnership Limited Company

个人企业 合伙企业 有限公司

-- 业主 1 人 -- 合伙人 2-20 -- 私人有限公司

人 2-50 人
-- 公共有限公司
2- 无限
 Advantages of Sole Proprietorship
• Easy to set up 企业的成立手续简单
• enjoy greatest freedom form regulation
自己管理，自己做决策
• control of the business 拥有企业的主导权和控制权
• all profit to owner 所有盈利归业主一人
 Disadvantages of Sole Proprietorship
• Unlimited Liability 无限债务责任
• Limited source of fund 企业资金有限
• Limited skill 经验与管理技术有限
• Lacks continuity if owner is absent
受业主个人因素影响，故缺乏延续性