ACCOUNTING In

ENGLISH LANGUAGE

Theory And Application

–Accounting concepts and

–principles

Chapter(1)

Chapter(1)

After reading this chapter, you should be able :

(1) Define Accounting .(2) Name And Explain Accounting

Concept And Accounting Principles

(3) Eeplain The Main Basics Of Accounting

Definition Of Accounting

What is accounting ?

(1)Accounting is a service activity the function

of which is to provide quantitative information about economic entities

The information is primarily financial in nature and is intended to be useful in making rational economic decisions.

(2 (Accounting is the art of recording ,classifying,reporting,and interpreting the financial data of an

organization.

•(3)Accounting is asocial science has its concepts and principles that used in applying the accounting cycle to achieve accounting functions and objectives

Accounting cycle

• Consists the steps involved in handling business transaction completed in an accounting period ,-------starting with analyzing and recording the transactions in a journal and ending preparing trail balance.

• Journalizing……….. Recording transactions in a journal.

• Posting ………….. From journal to a ledger.• Summarizing……. Trail balance .

Accounting cycle

No entry

Is thisAccounting transaction

Accumulation and

Summarizing(posting &preparing trail balance)

Preparing Financialstatements

RecordingIn

a journal

Analysis the transaction

BusinessTransaction

No

Yes

ACCOUNTING CONCEPTS

Accounting concepts refer to the nature of the economic environment in which accounting operates .

The most significant of these concepts(assumptions)are:

–(1 (The entity concept)2 (The going-concern

concept .

)3 (The unit of measurement concept .

)4 (The periodicity concept.

PRINCIPLES OF ACCOUNTING

– Accounting principles are

• broad rules adopted by the accounting profession as guides for

• use in recording and reporting the financial affairs and activities of a business to its

• owners ,investors,creditors,and other outsiders

(

Accounting principles are:

(1 )COST PRINCIPLE(2 )OBJECTIVITY PRINCIPLE(3 )REALIZATION PRINCIPLE

(4 )MATCHING PRINCIPLE(5 )PRINCIPLE OFCONSERVATISM

(6 )CONSISTENCY(7 )FULL DISCLOSURE PRINCIPLE

(8 )MATERIALITY PRINCIPLE

Self-study questions(chapter1

1. the principle that dictates يملى that expenses be matched with revenues is the :-

A . Matching principle .B. cost principle .C. revenue recognition principle D. full disclosure .

2. Using the accounting procedures from year to year means :-A. conservatism .B. consistency .C. matching .D. materiality .

3. All material information should be disclosed in the financial statements to make these statements clear and understandable for the readers is :-

a. Materiality b. Matchingc. Full disclosure .d. Consistency .

4. All of the following represents outside party interest in accounting reporting except :-

• Management .• Debtors .• Creditors .• Taxation authorities .

• 5 .Accounting includes :- A. measurement .

B. reporting .

C. verification .

. D. all of the above .• the life of abusiness is divided into periods of equal

length as amonth,three month ,or ayear :• annual accounting periods are the most common .

this is the accounting periods)periodicity concept

Accounting Terminology In

Arabic language

الرقم

المعنىالمصطلح

1accountingالمحاسبة2Accountحساب3Accountancy المحاسبة علم4Accountantالمحاسب5Accounting Principles المبادى

المحاسبية6Accounting cycle الدورة

المحاسبية7Accounting concepts المفاهيم

المحاسبية

المعنىالمصطلحالرقم8Classification of

accountsتصنيف الحسابات

9Indefinite محدد غير10Assetsاالصول11Liabilitiesااللتزامات

12Owner’s equity الملكية حقوق13Capital المال راس

14Winding upالتصفية

Chapter (2(

•RECORDING ACCOUNTING TRANSACTION

Chapter (2(.•After reading this chapter ,you should be

able to-:

•)1(know how to distinguish between accounting and non accounting transaction.

•)2(show how to record accounting transaction in journal using double entry system.

•)3(write the general rules of journal.

what is a business transaction ?

Any business transaction is an accounting transaction if :-

(1) There is real exchange between two parties through arm’s length transaction .

(2) There is an effect for this transaction on any of the elements accounting: assets ,liabilities ,and or owner’s equity.

Double entry-:

Double-entry-accounting is an accounting system in which each transaction affects and is recorded in twoOr more accounts with equal debits and credits .

Classification of accounts---:(1 )Personal accounts are the accounts in

personal names including all types of Economic entities such as corporation ,universities ,cooper active societies,..etc

1-ali”saccount)A/C( 2 -customers of credit sales)debtors ( 3 -suppliers of credit purchases )creditors(

(2 )Real accounts :-are the assets”accounts either tangible or intangible assets

EXAMPLES :- cash , building……, )3 (NOMINAL accounts :-are the accounts of revenues,

gains ,expenses ,losses . EXAMPLES-:

1 -SALES (A/C)2 -PURCHASES (A/C)

UTILITIES (A/C) --------------RENT-------