The Role of Accounting

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Accounting principles and concepts Lectured by HONG Duong Son 1 Chapter 1 The role of accounting 2 Learning objectives 1. Define the need for accounting information for a wide variety of users 2. Identify the users of financial information and their information needs 3. Define and explain the purpose and scope of financial reporting 4. Explain the need for financial accounting systems that enable entities to record and report financial transactions 5. Describe the main types of systems used in an organisation to provide information to users 6. Identify and explain how financial accounting systems can assist in providing information to users 3 The purpose of accounting information 1. What is accounting? 2. The need for accounts 3. What is financial reporting? 4. What is a business? 5. Types of business entity 4 The purpose of accounting information What is Accounting Recording Measuring Users Communicating Identifying Examples ? Economic information 5 Factors which affect the Size Type of organisation accounting system Organisation structure 6 …The purpose of accounting… The need for accounts Every transaction has a dual effect that balances to zero. Double-entry bookkeeping involves entering every transaction as a debit in one account and a corresponding credit in another account, and ensuring that they 'balance' Luca Pacioli (1494) , John Gouge (1543) 7 …The purpose of accounting… Financial reporting Financial reporting (sometimes called financial accounting) is the process of classifying, recording and presenting financial data in accordance with generally established concepts and principles. Financial data Financial data is the name given to the actual transactions carried out by a business e.g. sales of goods, purchases of goods, payment of expenses. Examples ?

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