Program Matrikulasi Satu Tahun Perakaunan

TOPIC 1
INTRODUCTION TO
ACCOUNTING
 CONTENTS
1.1 Definition of accounting

1.2 Users of accounting information

1.3 Differences between bookkeeping and accounting

1.4 Categories of accounting

1.5 Forms of business entities

1.6 Types of business activities

1.7 Components of financial statements

1.8 Professional accounting bodies in Malaysia

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 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.

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 1.1 Definition of Accounting

 a process of identifying, recording and

communicating the economic events (business
transactions) of a business to interested users of
information.

 It also involves analyzing and interpreting the

reported information, designing and
implementing system to produce useful reports
and to control operation of the business.

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 1.1 Definition of Accounting

Identifying:

 selecting the economic events

(transactions) from the source
documents as evidence of
economic activities

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 1.1 Definition of Accounting

Recording:
 keeping a chronological diary of
activities (business transactions in
an orderly and systematic manner.
It also includes classifying and
summarizing the transactions (or
economics events).

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 1.1 Definition of Accounting

Communicating:

 the information is communicated to

the interested parties (users) through
the preparation and distribution of
accounting reports (financial
statements).

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1.2 Users of Accounting Information

Internal Users Directors of companies

need the information to Managers

plan, organize and run a
business Internal auditors

External Users Investors

Creditors/bank
use the information about the
company’s performance and
financial strength to help them Government Agencies
make decision

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1.2 Users of Accounting Information

Internal users
1.Managers such as co’s director, marketing
managers, production managers, supervisors,
finance directors and other officers who need
the information to plan, organize and run the
business.
2.Accountants (internal auditors) need the
information in order to ensure the
accounting process follows the business
acts and standards.

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1.2 Users of Accounting Information
External users.
1.Investors or owners are not actively involved in
managing the business. They can use the
information about the company’s performance and
financial strength to help them determine
whether to buy, hold or sell their
investments.
2.Creditors (suppliers and bankers) need
information to decide whether the company has
enough strength and profits to pay its debts
or loan and interest.

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1.2 Users of Accounting Information

1.Company’s employees have

special interest in knowing
whether the company represents
a stable source of employment.
2.Inland Revenue needs financial
information to carry out the
responsibility for determining
and collecting income taxes.

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1.3 Differences Between Book-keeping
and Accounting
Bookkeeping Accounting
Definition usually involves involves identifying,
only the recording of recording transactions,
economic events analyzing, interpreting
(transactions) either and communicating the
manually or with reported information to
computers. interested users.

Bookkeeping is a It also involves

part of accounting. designing and
implementing systems to
produce useful reports

performed by performed by
individuals with individuals who have
limited skills in professional skills and
accounting knowledge in accounting.
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 1.4 Categories of Accounting
Financial Accounting Auditing
involves recording and the examination of financial
classifying business statements by an independent
transactions, and preparing and party with the purpose of
presenting financial statements expressing an opinion as to
to be used by internal and fairness of presentation and
external users. compliance with GAAP

Managerial Accounting Cost Accounting

focuses on providing refers to the recording,
information for use by internal presentation, and analysis
users, the management of manufacturing costs.

Public Sector Accounting Tax Accounting

an accounting method applied helps clients follow rules set by
to non-profit pursuing entities tax authorities
in the public sector
1.5 Forms of Business Entities

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 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

Regulation 1956 1961 1965
6. Distribution of Wholly owned Among partners according to
profits/losses by proprietor shares of
capital/ equity
ratio
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1.6 Types of Business Activities

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1.6 Types of Business Activities

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 1.7 Types of Financial Statements

 a statement of comprehensive income

Reports the financial performance (profit/loss) of an entity over a
specific accounting period

 a statement of financial position

Reports the financial position (asset, liability and equity) of a
business entity.

 a statement of owner’s equity

Reports how the changes in equity over the reporting period.

 a statement of cash flows

Reports on how cash is generated and used in operating, investing
and financing activities over a certain period

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 A Statement Of Cash Flows

A Statement Of Cash Flows

 Also known as cash flow statement, presents the
movement in cash flows over the period.
 It show the in-flow and out-flow of cash of an
organisation according to three main activities which
are operating, investing and financing.

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1.8 Professional Accounting Bodies
in Malaysia

Malaysian Accounting Malaysian Institute of

Standards Board Accountants
(MASB) (MIA)

Malaysian Institute of
Certified Public Accountants
(MICPA)

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 Malaysian Accounting Standards
Board (MASB)
Established under the Financial Reporting Act 1997
The main functions and authority :
1)Issue new accounting standards [Financial Reporting
Standards (FRS)
2)Review, revise or adopt existing accounting standards.
3)Issue statements of principles for financial reporting.
4)Sponsor or undertake development of possible
accounting standards.
5)Develop a conceptual framework for the purpose of
evaluating proposed accounting standards.

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 Malaysian Institute of Accountants
(MIA)

Established under the Accountants Act (1967)

The main functions of MIA are to:

1)Determine the qualifications for members.

2)Provide training and continuing professional education to
existing and potential practitioners.
3)Control the accounting practice in Malaysia.

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Malaysian Institute of Certified Public
Accountants (MICPA)
The Malaysian Institute of Certified Public
Accountants (MICPA) was formed as a professional
body in 1958.
The main functions of MICPA are to :
1)Advance the theory and practice of accountancy in all its
aspects.
2)Recruit, educate, train and assess a body of members
skilled in these areas.
3)Maintain high standards of practice and professional
conduct by all its members.
4)Develop the accounting profession.

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1.9 Potential Career In Accounting

 Please google now

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Program Matrikulasi Satu Tahun Perakaunan

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