week 1 intro to accounting

8/3/2019 Week 1 Intro to Accounting

1/19

Week 1Introduction to

Accounting


2/19

Outline:

Meaning and functionsof accounting

Users andusesof accounting

Accounting process Accounting profession and

accounting bodies

Introductionof financialstatements


3/19

Whatis Accounting?

artof recording,classifying and

summarising of businesstransactions

and business eventsin monetaryterms andinterpreting the resultsso

obtained.


4/19

Whatis Accounting?

Recording: where transactions are recordedinthe booksofthe business

Classifying: which involvessortingoutthe mass

of accountingdata intoorderly and meaningfulcategories

Summarising: where periodically the accountingdata are summarised.

Interpreting: where the financialdata areanalysed andusedto assistin more effectivedecision making.


5/19

Statementof Accounting

Principles Board No.4Accountingis a service activity. Its

functionisto provide quantitative

information, primarily financial innature, about economic entities,that

isintendedto be usefulin making

economicdecisions


6/19

TYPESOF INFORMATION

Quantitative information: Any information,

which relatestosomething, which can be

calculated,countedor measured

Financialinformation: Any information

which can be calculatedin monetary

denominationorterms

Accountinginformation: Any informationwhich is producedthrough the accounting

process


7/19

ECONOMIC ENTITY

Bodiesthat existseparately andin

varyingsizes forthe sole purpose of

servingthe needsofcommunities


8/19

Economic Entity

ECONOMIC ENTITY

LIMI

TED COMPANIE

S

PARTNERSHIPS

SOLE

PROPRIETERSHIPS

NON-PROFIT BUSINESS


9/19

Economic Entity

ECONOMIC ENTITY

NON-PROFIT BUSINESS

SERVICE

MERCHANDISING

MANUFACTURING


10/19

Usersof Accounting

External parties:

Potentialinvestors

Shareholders

Banks and financialinstitutions(creditors/lendors)

Academicians

T

ax authorities Othercompanies (competitors)

Public


11/19

Usersof Accounting

Internal parties:

Boardofdirectors

Management Employees/Union


12/19

Users andusesof Accounting

Owners Managers Employees

To evaluate the

financialstatusof

the business

To evaluate the

financialstatusof

the business

To evaluate the firms

ability to pay wages/

salaries

To be able to

evaluate their

interestinthe

business

To have the information

necessary to make

sound business

decisions

Toget anidea oftheir

employment prospects


13/19

Users andusesof Accounting

Creditors Investors Governments Others

Todetermine the

firms ability to

repay loans.

To evaluate the

financial

positionofthe business

Todetermine the

taxable income of

a business

For academic

purposes

To be able to

evaluate their

interestinthebusiness

To evaluate

whetherthe

businessis agoodinvestment

To make better

financialdecisions

forthe economy


14/19

Accounting process

MEASURING

& RECORDINGIDENTIFYING

REPORTING

(COMMUNICATING)

Choose whatevents

(transactions)

are businessin

nature and

have impacton

an entitys

financial

position

Placingmonetary values

(Ringgit and

Sen)on

transactions

identified as

business

transactions

Provisionofaccounting and

financial

informationto

the various

interestedparties


15/19

BOOKKEEPING VS.

ACCOUNT

ING Bookkeepingisonly a partofthe

accounting process andcoversonly

recordingof transactions

Otherscope of accountinginclude

accountingsystems, auditing,

budgeting,cost analysis, forecasting,

taxation and accountinginformationanalysis


16/19

Accounting profession and

accounting bodies Malaysian Institute of Accountants (MIA),

formedunderthe Accountants Act 1967,is

responsible forthe accounting profession

in Malaysia Malaysian Institute of Certified Public

Accountants (MICPA), formedin 1958,is

another professional body with contribution

instandards formulation, publicationof

guides and articles andconducting

professional examination


17/19


accounting bodies Accountants are in various economicentities companies, accounting firms,not-for-profitorganisations, etc

Accounting firms provide financialstatements preparation, auditing andconsultancy services

Code of Ethics adopted by the professional

bodiesspelloutthe functions, quality ofservice and mannerofconductofaccountants


18/19


accounting bodies Regulatory Bodies (1)

Companies Commissionof Malaysia

(CCM): Establishedunder Companies

Act 1965 andits main functionisto

regulate registrationofcompanies

Securities Commission: Established

underS

ecurities Commission Act 1993andits main functionistocontrol and

supervise securitiestransactions


19/19


accounting bodies Regulatory Bodies (2)

Bursa Malaysia: Main functionisto

regulate listingonthe Malaysian bourse

Foreign Investment Committee (FIC)/

Ministry Of InternationalTrade and

Industry

week 1 intro to accounting

Documents