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FABM1 Q1 W1.1 IntroductionToAccounting

This document provides an introduction to accounting. It defines accounting as the process of identifying, recording, and communicating economic events of an organization to interested users. It discusses the key natures of accounting, including that it is a service activity, a process, deals with financial information and transactions, and is an information system and a means to an end. The document then briefly narrates the history of accounting from Luca Pacioli in 1494 to the modern development of the profession and increasing role of technology.

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0% found this document useful (0 votes)
65 views35 pages

FABM1 Q1 W1.1 IntroductionToAccounting

This document provides an introduction to accounting. It defines accounting as the process of identifying, recording, and communicating economic events of an organization to interested users. It discusses the key natures of accounting, including that it is a service activity, a process, deals with financial information and transactions, and is an information system and a means to an end. The document then briefly narrates the history of accounting from Luca Pacioli in 1494 to the modern development of the profession and increasing role of technology.

Uploaded by

Lovely Taupo
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FUNDAMENTALS OF

ACCOUNTANCY,
BUSINESS AND
MANAGEMENT 1
(FABM 1)
INTRODUCTION 01
TO
ACCOUNTING
OBJECTIVES

At the end of the lesson, you will be able


to:

● Define accounting;
● Identify the natures of accounting; and
● Narrate the history of accounting
DEFINITION
Accounting is the art of recording, classifying, and summarising in a
significant manner and in terms of money, transactions and events
which are, in part at least, of financial character, and interpreting the
results thereof’. -The American Institute of Certified Public
Accountants (AICPA)

Accounting is a service activity. Its function is to provide


quantitative information, primarily financial in natue, about
economic entities that is intended to be useful in making
economic decisions, and in making reasoned choices among
alternative courses of action. –Accounting Standard Council
DEFINITION
Accounting is the process of identifying,
recording, and communicating economic events
of an organization to interested users.
(Weygandt, J. et. al)
IDENTIFYING
- this involves selecting economic
events that are relevant to a
particular business transaction.
Economic Events
- These are events which can be
measured in terms of money.
Examples of economic events or transactions in a bakery:
● sales of bread and other bakery products
● purchases of flour that will be used for baking
● purchases of trucks needed to deliver the products
RECORDING
- this involves keeping a
chronological diary of events that are
measured in pesos.
COMMUNICATING
- occurs through the preparation and
distribution of financial and other
accounting reports.
DEFINITION
Accounting is the process of identifying,
recording, and communicating economic events
of an organization to interested users.
(Weygandt, J. et. al)
1.2
Natures of
Accounting
Accounting is a
SERVICE ACITIVITY

Accounting provides
assistance to decision-makers
Accounting is a
PROCESS

It performs the specific task of


collecting, processing and
communicating financial
information.
Accounting is both
ACCOUNTING AN ART AND A
DISCIPLINE
It is behavioral knowledge
involving a certain creativity and
skill to help us attain some
specific objectives. It consists of
definite techniques and its proper
application requires skill and
expertise.
This Photo by Unknown Author is licensed under CC BY-NC
This Photo by Unknown Author is licensed under CC BY
Accounting DEALS
WITH FINANCIAL
INFORMATION AND
TRANSACTIONS
Accounting records financial
transactions and data, classifies
these and finalizes their results
given for a specified period of
time, as needed by their users.
Accounting is AN
INFORMATION
SYSTEM

Accounting is recognized and


characterized as a storehouse of
information.

This Photo by Unknown Author is licensed under CC BY-SA


Accounting is A
MEANS AND NOT AN
END

Accounting is a tool to
achieve specific objectives. It is
not the objective itself.

This Photo by Unknown Author is licensed under CC BY-SA-NC


Fra Luca Bartolomeo
de Pacioli
Luca Pacioli wrote Summa de Arithmetica, the first book
published that contained a detailed chapter on double-entry
bookkeeping, Summa de Arithmetica, Geometria,
Proportioni, et Proportionalita (Everything about
Arithmetic, Geometry, Proportions, and Proportionality)
The thorough study of accounting and
development of accounting theory began during
this period. Social upheavals affecting
government, finances, laws, customs and
business had greatly influenced the development
of accounting.
The expanded business operations initiated
by the Industrial Revolution required
increasingly large amount of funds to build
factories and purchase machinery.
Corporate owners, the stockholders, were no
longer the managers of their business. Managers had
to create accounting systems to report to the owners
the results of their stewardship of the business.
This situation created a need for an independent
report to provide assurance that management’s
financial representations are reliable.
The modern, formal accounting profession
emerged in Scotland in 1854 when Queen
Victoria granted a Royal Charter to the Institute
of Accountants in Glasgow, creating the
profession of the Chartered Accountant (CA).
In the late 1800s, chartered accountants from
Scotland and Britain came to the U.S. to audit British
investments. Some of these accountants stayed in the U.S.,
setting up accounting practices and becoming the origins of
several U.S. accounting firms. The first national U.S.
accounting society was set up in 1887. The American
Association of Public Accountants was the forerunner to the
current American Institute of Certified Public Accountants
(AICPA).
In this period rapid changes in accounting practice and
reports were made. Accounting standards to be observed by
accounting professionals were promulgated. Notable
practices such as mergers, acquisitions and growth of
multinational corporations were developed. Businesses
expanded by acquiring other companies. These types of
transactions have challenged accounting professionals to
develop new standards that will address accounting issues
related to these business combinations.
The accounting profession in the 20th century developed
around state requirements for financial statement audits. Beyond
the industry's self-regulation, the government also sets
accounting standards, through laws and agencies such as the
Securities and Exchange Commission (SEC). As economies
worldwide continued to globalize, accounting regulatory bodies
required accounting practitioners to observe International
Accounting Standards. This is to assure transparency and
reliability, and to obtain greater confidence on accounting
information used by global investors.
Nowadays, investors seek investment opportunities
all over the world. To remain competitive,
businesses everywhere feel the need to operate
globally. The trend now for accounting
professionals is to observe one single set of global
accounting standards in order to have greater
transparency and comparability of financial data
across borders.
Tremendous advances in information technology have
revolutionized accounting in recent years. Tasks that are
time-consuming when done manually can now be done with
speed, consistency, precision and reliability by computers.
There is an abundance of accounting applications and
modules to suite the businesses’ various needs. The advent
of Internet along with its promising prospects of doing
business online or E-commerce will surely bring about
another metamorphosis in the field of accounting.
THANKS
Do you have any questions?

You can contact me at:


facebook.com/annedrea.samontan.7
[email protected]
0917-506-4007
CREDITS: This presentation template was
created by Slidesgo, including icons by
Flaticon, infographics & images by Freepik

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