SESSION 1

Introduction

Accounting

What is accounting? What do you think about when you read or hear the word, "accounting"? What do you believe it represents?

Accounting affects everybody. We use accounting ideas in our everyday life. For example, when we plan what we are going to do with our money, how much of it we will spend or save. We can write it down or keep it in our minds. When people talk about accounting, however, they are referring to the type used in businesses. All the information cannot be kept in the mind so they have to keep records of it.

Accounting is something that affects people in their personal lives just as much as it affects very large business. We all use accounting ideas when we plan what we are going to do with our money. We have to plan how much of it we will spend and how much we will save. We may write down a plan, known as a budget, or we may simply keep it in our minds.

Accounting:

• can be define as the systematic recording, reporting, and analysis of financial transactions of a business.
• is a system of measuring, interpreting and reporting the information from bookkeeping so that owners, managers and other interested persons can make good decisions.

In other words, accounting involves deciding what amounts of money are, were or will be invloved in trasactions, and then orgranasing the information obtained and presented in a way that is useful for decision making.

• is not a branch of mathematics as some people think. So please do away with that misconception. In order to do accounting well, you will need to acquire basic math skills [addition, subtraction etc.]

Purpose of Accounting to Individuals and Organizations

As was said earlier accounting allows for informed decision making for individuals and organisations. Some of the purposes of accounting to individuals and organiztions, include letting them know:

• if they are making a profit
• what their business is worth
• what a transaction was worth
• how much cash they have
• how wealthy they are
• how much they are owed
• how much they owe

Users of Accounting Information

Possible users of information include:

• Managers Managers need to be well aware of the day to day operations of transactions in the businessess that they manage. they need to know whether or not they are making a profit and if not, make plans at changing that position.
• Owner [s] of businesses. There is a difference between a manager and a business owner. Though they can be the same person, a manager is hired to take care of the day to day operations of a business, whereas an owner, owns the business. Owners need to know whether it is still feasible that they remain in business. They want to know whether or not this venture is making them wealthy.
• A prospective buyer
• The Bank
• Tax Inspectors
• Prospective Investors
• Investors/Shareholders

Activity

Complete the activity. Just click onthe link and complete the quiz. You may try as many times as you wish. When you are through click the "SUBMIT" button.

Resources

• Financial Accounting is a programmed textbook from the Quick Notes Learning System
• Accounting Internet Library has material for students, teachers,and professionals.
• Free Business Textbooks Internet Library

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