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Summary Introduction to Accounting
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  • ABM
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In this document I summarized what I've learned during my first class this year in FABM( Fundamentals of ABM). Here, I have wrote the definition, the nature, and the necessary and essentials of accounting.

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Document information

  • April 17, 2022
  • 3
  • 2021/2022
  • Summary

Subjects

  • definition of accounting
  • elements of accounting
  • identifying
  • recording
  • communicating
  • nature of accounting
  • types of informati
  • introduction to accounting
  • essential elements of the definition of accouting

Written for

  • Secondary school
  • ABM
  • 5
All documents for this subject (1)

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charmagnejoymanuel

Available practice questions

Branches of Accounting, Financial statements and Financial Reports

Flashcards 10 Flashcards
$3.48 0 sales
Flashcards 10 Flashcards
$3.48 0 sales

Some examples from this set of practice questions

1.

It refers to the process of recording the accounts or transactions of an entity.

Answer: Bookkeeping

2.

It covers the whole process of identifying, recording, and communicating information to interested users.

Answer: Accounting

3.

These are the structured representation of an entity\'s financial position and results of its operations.

Answer: Financial statements

4.

This include the financial statements plus other information provided outside the financial statements that assists in the interpretation of a complete set of financial statements or improves users\' ability to make efficient economic decisions.

Answer: Financial reports

5.

What common branch of accounting involves the accumulation and communication of information for use by internal users?

Answer: Management accounting

Content preview

Introduction to Accounting

Definition of Accounting
Accounting is a process of identifying, recording, and communicating economic information that is useful in
making economic decisions.


Essential elements of the definition of accounting
1. Identifying - The accountant analyzes each business transaction and identifies whether the transaction is an
“accountable event” or “non accountable event”. This is because only “accountable events” are recorded in
the books of accounts. “Non accountable events” are not recorded in the book of accounts.
“Accountable events” (or economic events) are those that affect the assets, liabilities, equity, income, or
expenses of a business. Sociological and psychological matters are outside the scope of accounting.
2. Recording - The accountant recognizes(i,e., records) the identified ‘accountable events”. This process is
called “journalizing”.
After journalizing, the accountant then classifies the effect of the event on the “accounts”. This process is
called “posting”
3. Communicating - At the end of each accounting period, the accountant summarizes the information
processed in the accounting system in order to produce meaningful reports. This is important because
information processed in the accounting system is useless unless it is communicated to interested users.
Accounting information is communicated to interested users through accounting reports, the most common
form of which is financial statements.


Nature of Accounting
Accounting is a process with the basic purpose of providing information about economic activities that is
intended to be useful in making economic decisions.


Types of information provided by accounting
1. Quantitative information - information expressed in numbers, quantities, or units.
2. Qualitative information - information expressed in words or descriptive form. Qualitative information is
found in the notes to financial statements as well as on the face of the other components of financial
statements.
3. Financial information - information expressed in money. Financial information is also quantitative
information because monetary amounts are normally expressed in numbers.

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