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Title: Introduction to Accounting
Description: Understanding of the definition, nature, function, and history of accounting.
Description: Understanding of the definition, nature, function, and history of accounting.
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FUNDAMENTALS OF ABM1 | Introduction to Accounting
Philippine Normal University(PNU)
Understanding of the definition, nature, function, and history of
accounting
...
”
1
...
Examples of economic events or transactions - In a bakery business:
• sales of bread and other bakery products
• purchases of flour that will be used for baking
• purchases of trucks needed to deliver the products
2
...
The diary referred to in the definition are the journals and
ledgers which will be discussed in future chapters
...
COMMUNICATING – occurs through the preparation and distribution of
financial and other accounting reports
...
” Based on this definition we can derive
the following basic features of accounting:
• Accounting is a service activity
...
• Accounting is a process: A process refers to the method of performing any specific job
step by step according to the objectives or targets
...
In doing so, it follows some
definite steps like the collection, recording, classification, summarization, finalization,
and reporting of financial data
...
Accounting is the art of recording,
classifying, summarizing and finalizing financial data
...
It is behavioral knowledge involving a certain creativity and
skill to help us attain some specific objectives
...
So by nature, accounting is an art
...
• Accounting deals with financial information and transactions: Accounting records
financial transactions and data, classifies these and finalizes their results given for a
specified period of time, as needed by their users
...
It does not
deal with non-monetary or non-financial aspects of such information
...
As a service function, it collects processes and communicates
financial information of any entity
...
Function of Accounting in business
Accounting is the means by which business information is communicated to business
owners and stakeholders
...
In addition, accounting
information allows business owners to assess the efficiency and effectiveness of their
business operations
...
Business
owners may also use historical financial accounting statements to create trends for
analyzing and forecasting future sales
...
In order for a business to survive, It is important th
Title: Introduction to Accounting
Description: Understanding of the definition, nature, function, and history of accounting.
Description: Understanding of the definition, nature, function, and history of accounting.