ACC111 - PRINCIPLES OF ACCOUNTING I.pptx -...

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Raising a new Generation of Leaders.ACC111 - PRINCIPLES OFACCOUNTING IDEFINITION, SCOPE ANDPROCESS OF ACCOUNTING
2LEARNING OBJECTIVESAt the end of this lecture students should beable to :Define financial accountingExplain the nature and scope Accounting.Identify the branches of accounting.Enumeratetheusesofaccountinginformation.
3IntroductionOver the years, accounting has beenin rapid transition and this seems tobe accelerating in change for thefuture. The theories and practice ofaccounting in the past few yearshave changed significantly and onewouldexpectthatitadaptstopresent day realities.
4Introduction cont’dThechangingatmospherehastherefore,increasedthescopeofaccounting.Resultingfromtheknowledge of the increasing scope andboundaries of the subject.
5DefinitionThe Committee on Terminology of the AmericanInstituteofCertifiedPublicAccountantformulated the following definition in 1961:Accounting is the art of recording, classifyingand summarizingin a significant manner andin terms of money, transactions and events whichare, in part at least, of a financial character, andinterpreting the result thereof. (AICPA 1961).
6Definition cont’dAnother definition which is obviously lessrestrictive, interprets accounting asthe process of identifying, measuring andcommunicating economic information to permitinformed judgments and decisions by users of theinformation (AAA, 1966).
7Nature of AccountingIt has been understood in time past thataccounting deals with only financial or moneyrelated activities in the company, but in recenttimes, the development in the profession,transcends just financial because accountantsnow deal with issues such as investigations,internal control system development, humanresource accounting, advisory services etc.
8Nature of Accounting Cont’dThese functions, supersedes just therecording and analyses of financialinformation.Other kinds of information which arenon financial will be needed to performthese roles.
9Nature of Accounting Cont’dFurthermore, It is a logical process of identifying,recording,measuring,classifying,verifying,summarizing, interpreting and communicatingfinancial information. Also, it shows the financialperformance(in terms of profit or loss) andposition (in terms of assets, liabilities and owners’equity) of business for a given period.
10Nature of AccountingCont’dAccounting provides informationon the resources available to afirm, the means employed tofinance those resources, andthe results achieved throughtheir use.

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