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To Accounting: Prepared By: Nurul Hassanah Binti Hamzah Room: Blok I Email: Hassanahhamzah@uitm - Edu.my

This document provides an introduction and overview of accounting. It defines accounting as classifying, recording, and summarizing financial transactions and events in monetary terms to provide useful information to decision makers. The objectives of financial statements are to help assess a business's future prospects and provide easier reference while avoiding misleading information. The document also describes different types of business organizations like sole proprietorships, partnerships, and limited companies. It concludes by discussing the differences between bookkeeping and accounting, and outlining the steps in the accounting cycle.

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Nur Amira Nadia
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84 views10 pages

To Accounting: Prepared By: Nurul Hassanah Binti Hamzah Room: Blok I Email: Hassanahhamzah@uitm - Edu.my

This document provides an introduction and overview of accounting. It defines accounting as classifying, recording, and summarizing financial transactions and events in monetary terms to provide useful information to decision makers. The objectives of financial statements are to help assess a business's future prospects and provide easier reference while avoiding misleading information. The document also describes different types of business organizations like sole proprietorships, partnerships, and limited companies. It concludes by discussing the differences between bookkeeping and accounting, and outlining the steps in the accounting cycle.

Uploaded by

Nur Amira Nadia
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHAPTER 1:

INTRODUCTION
TO ACCOUNTING

Prepared by: Nurul Hassanah Binti Hamzah

Room: Blok I

Email: [email protected]
2 Definition of Accounting

– The art of classifying, recording and summarizing


transactions and business events in monetary terms and
interpreting the results to interested parties to enable
them to make decision.

C R S I
3 Objectives/Purpose of Financial
Statements
– To provide financial information about an organization that is useful to
various users in making decision.
– To help users assess the future prospects of a business organization.
– For easier reference, as humans have limitations in memorising large
information.
– To avoid misleading financial statements if they are no proper records.
4 Types of Business Organizations

Sole Partnership Limited


proprietorship “LLP” (Limited company “SDN
“ENTERPRISE” Liabilities BHD” “BHD”,
Partnership) “Inc” & “LLC”
eg: Ali“&”Abu
5 Sole Proprietorship

Registration Registered with the business registrar


under the Business Registration Act 1957.
Capital Contributed by the owner.
Ownership Owned by one person.
Management & Managed and controlled by the owner.
Control
Liability Unlimited liability.
Profit or Loss Profit belongs to the owner and any losses
incurred will be borne by the owner.
Books & Accounts No legal obligations.
Partnership
6 Registration Registered with the CCM under the Business
Registration Act 1956 & 1957.
Capital Contributed by partners according to agreement.
(Partnership Act 1961/Partnership Agreement)

Ownership Owned by 2-20 partners (professional partnership


2-50 partners)
Management & Managed and controlled by partners or by a board
Control consists of partners.
Liability Unlimited liability. (Partnership Act 1961)
Limited liability (Limited liability partnership, LLP)
Profit or Loss Shared by partners according to Profit-sharing
ratio.(agreement)
Books & Accounts No legal obligations.
7 Limited companies

Registration Registered with the CCM under the Companies Act


2016.
Capital Contributed by shareholders through purchase of shares.
Ownership Private co: 1-50 shareholders.
Public co: min 1 shareholders & the max number
depends on the amount of AC.
Management & Control Managed and controlled by a BOD.
Liability Limited liability
Profit or Loss Paid to the shareholders in the form of dividend.
Books & Accounts Must be kept & sent to the CCM.
8

Users of Financial Statements


Internal External

Managers -
Needs Consumers -
Owners - Current &
information as Creditors/ Interested in
Interested in Employees Potential
guidance in Bankers Government the
the profits -Interested in Investors -
planning, -Interested to -Interested in establishment
earned from the business Require
organizing know the the financial of good
their ability to information
and ability of the statements accounting
investments progress and regarding the
controlling business in and reports of controls as a
and the expand. They solvency and
the repaying the a business for means of
financial look for financial
organization amount owing tax purposes. reduction of
stability & steady strength of
and analyzing to them. the prices of
growth of employment the business
the the goods.
their business.
operations of
the business.
9 Book Keeping Vs Accounting

– Accounting involves 4 steps :


1. Classifying
2. Recording Book keeping
3. Summarising
4. Interpreting
10 Accounting Cycle
Source
Document

Financial Journal
Statements Entries

Trial Posting into


Balance ledger

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