CHAPTER I1 Introduction to Accounting

Apuntes

ACCOUNTING GUIDE CHAPTER I: Introduction to Accounting 1.1 Definition and Applications of Accounting Accounting is an information system that collects, processes, and communicates economic data. It translates business activities (sales, purchases, expenses) into useful reports for decision-makers. Applies to all economic entities: businesses, hospitals, governments. Input: raw financial events → Processing: via bookkeeping → Output: financial reports. Links business activities with decisions. 1.2 Types of Accounting Systems Type of Accounting For Who? Purpose Follows Rules Of Management Accounting Internal Managers Planning and control Internal requirements Financial Accounting External investors Evaluate performance GAAP (Generally Accepted Accounting Principles) Tax Accounting Tax authorities Tax calculation National tax laws Governmental Accounting Public authorities Ensure accountability Governmental regulations 1.3 Accounting Events External events: involve exchanges (e.g., buying, selling, borrowing). Internal events: like depreciation or inventory use. Must be measurable in monetary terms. Principle of separate entity: business records are distinct from personal own...