Introduction to Acccounting

Introduction to Acccounting

Introduction to Accounting

• Accounting entails recording, classifying and summarizing of business transactions.

• Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business and other organisations.

• The primary purpose of accounting is to provide the information that is needed for sound decision making.

Multiple Choice

The process of identify, classify, recording and communicating business transaction is called as book-keeping.

• True

• False

Multiple Choice

Book keeping is mainly concerned with

• Recording of financial data

• Designing the systems in recording, classifying, and summarizing the recorded data

• Interpreting the data for internal and external users

• None of the above

USERS OF ACCOUNTING INFORMATION

• The accounting process provides financial data for a broad range of individuals whose reason for studying the data varies. 

• The two primary users of accounting information are internal users and External users. 

• Each group uses accounting information differently, and requires the information to be presented differently.

Internal Users

• Internal users are people within a business organization who use financial information.

• Owners

• Management

• Employees

External Users

• External users are people outside the business entity (organization) who use accounting information.

• Creditors or Suppliers

•  Investors 

• Banks and Other Lenders 

• Tax Authorities 

• Customers

Multiple Choice

Which of the following is the example of internal users

• Tax Authorities

• Investors

• Creditors

• Employees

Multiple Choice

Users of accounting information include

• Creditors

• Lenders

• Customers

• All of the above

Multiple Choice

Owners of business firms are the only people who need accounting information.

• True

• False