Chapter-1-General-View-of-Accounting.ppt

Click to edit Master title style,Click to edit Master text styles,Second Level,Third Level,1-,*,General View of Accounting,CHAPTER 1,Learning objectives,Have a general idea of accounting history.,Define accounting and describe its role in modern business.,Identify the main users of accounting information in society.,Introduction of accounting,*Second oldest profession,*Participated in the development of,nations,trade,finance,money and banking,*,Double-entry,bookkeeping,fueled the,Renaissance,Introduction of accounting,Luca,Pacioli,(1445-1517),Summa,di,Arithmetica,treatise on,book-keeping,People have understood,accounting on a scientific,principle in Italy,Introduction of accounting,John Gouge,1543,The first known English book on accounting,A Profitable,Treatyce,called the Instrument or,Boke,to learn to know the good order of the,kepying,of the,famouse,reconynge,called in,Latyn,Dare and,Habdare,and,in,Englysh,Debitor,and Creditor,.,Introduction of accounting,The first public recognition of accountants,A Bankruptcy Act,In 1831,It mentions accountants alongside merchants and,bankers as properly skilled to conduct audits.,Introduction of accounting,Management accounting,World War One(1914-1918),Accountants assist in the control of costs in relation,to the production of ammunitions:bullets,bombs,explosives,etc.,Introduction of accounting,After the Second World War,Development of accounting,Enron,financial scandal,In August 2002,the,Sarbanes-Oxley Act,is passed in the United StatesAccounting Definition,Accounting,Bookkeeping,It is the means of recording transactions and keeping records.,Accounting,Bookkeeping,Bookkeeping is the day-to-day record-keeping involved in,the process of accounting.,Accounting Definition,Accounting,Accurate financial reports,Useful to managers,regulators,and,shareholders,creditors or owners,Accounting Definition,Major goal of,accounting,Analysis,Interpretation,Use of information,Accounting Definition,The American Institute of Certified Public Accountants,“,The art of recording,classifying,and summarizing,in a significant manner and in terms of money,transactions and events which are,in part at least,of a financial character,and interpreting the results,thereof.”,(AICPA),Early definitions of accounting focused on the,traditional record-keeping functions,of the accountant.,Accounting Definition,The modern definition of accounting,It is defined as an information system that measures,processes,and communicates financial information,about an identifiable economic entity.,Encyclopedia,Accounting is defined as the process of maintaining,auditing,and processing financial information for,business purposes.,Accounting Definition,The modern accountant,record-keeping,Planning and problem solving,Control and attention directing,Evaluation,Review,Auditing,Accounting Definition,Business activities,Accounting,Data,Useful information,Decision maker,The Users of,Accounting Information,Users,those who have a direct interest in the,business including management;,2.,those who have indirect interest in the,business.,Users with,Direct Financial Interest,Present and Potential Investors,Present and Potential Creditors,Management,Management,Management,Management is the group in a business who has,overall responsibility for operating the business,and for achieving the business goals.,Owners of the business,Hired managers,Major function of accounting,To provide management with relevant and useful,information,Such as:,what was the companys net income during the past year?,What products are most profitable?,What is the cost of manufacturing each product?,Management,Present and Potential Investors,They are interested in the past success of the business,and its potential earnings in the future.,Operating results of business,Profit sharing policy,Make decisions,Whether to increase,or decrease investments,Present and Potential Creditors,They are interested in whether the company will,have the cash to pay the interest and repay the,debt at fixed time.,Banks,Finance companies,Mortgage companies,Securities firms,Insurance firms,Suppliers,Individuals,Users with,Indirect Financial Interest,Tax Authorities,Other Groups,Tax Authorities,Tax authorities dont have direct,financial interest in the company,but they usually analyze the tax,status undertaken by a business,to establish tax policy.,Governments,Income taxes,Social security,Payroll taxes,Excised taxes,Sales taxes,Each tax requires special tax returns and often a complex set of records as well.,Other Groups,They advise investors and creditors and have an,Indirect interest in the financial performance of,a business.,Financial analysts and advisers,brokers,lawyers,economists,the financial press,Other Groups,Customers,The general public,They are concerned about the operating results,the,effects that corporations have on inflation,the,environment,social problems,and the quality of life.,Other Group,Accounting Profession,Public Accounting,Government,Accounting,Internal,Auditing,Management,Accounting,Public Accountants,Certified,Public,Accountants,The Work of Public Accountants,Work for their own,compay,Work for other,accouting,companies,provide accounting services to,individuals,businesses,and,governments,Concentrate on tax matters,Specialize in forensic accounting,Government Accountants,work for the local,or state level,The Work of Government Accountants,Keep and examine the records of government units,administer and formulate budgets,to track costs and to analyze programs,They must follow special procedures and regulations and reports for government officials,Management Accountants,work in,companies,and help the,Management,make decisions,Work of Management,Accoutants,Provide the management advice about capital budgeting and business analysis,Record and analyze the financial accounting information,market share,competition,and expansion opportunities of the company,Internal Auditors,check accounting,ledgers and financial,statements,within companies,Work of Internal Auditors,Take training to keep skills up to date.,Create and develop auditing systems for companies or agencies.,Conduct research to learn auditing needs for companies or individuals.,Determine and record the value of real property.,Analyze the financial data and records to ensure that they comply with legal and financial standards.,WE ARE SAILING RIGHT ALONG!,