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SS1: FINANCIAL ACCOUNTING - 1ST TERM

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  1. Introduction to Booking Keeping and Accounting | Week 1
    9 Topics
    |
    1 Quiz
  2. Introduction to Books of Account | Week 2
    5 Topics
    |
    1 Quiz
  3. Subsidiary Books of Account I | Week 3
    4 Topics
    |
    1 Quiz
  4. Subsidiary Books of Account II | Week 4
    4 Topics
    |
    1 Quiz
  5. Principles of Double Entry Book Keeping | Week 5
    1 Topic
    |
    1 Quiz
  6. Cash Book | Week 6
    6 Topics
    |
    1 Quiz
  7. Petty Cash Book | Week 7
    1 Topic
    |
    1 Quiz



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Accounting is the process of recording, classifying, selecting, measuring, interpreting, identifying, and communicating financial data of an organization to enable users to make decisions.

Book Keeping is the systematic recording of transactions on daily basis in the appropriate books of account. It is the process of recording data relating to accounting transactions in the accounting books.

Importance of Accounting:

1. Accounting Information can be used for decision-making.
2. It provides permanent records for all transactions.
3. It helps to determine the profitability Index of a business concern.
4. Accounting Information is used for tax assessment.
5. It helps to prevent fraudulent practices.
6. The record shows the income and expenditure.
7. Properly Kept records will assist management in business planning.
8. It shows the total assets and liabilities of the business concerned.

Users of Accounting Information:

There are two (2) users of Accounting Information:

1. Internal users
2. External users

1. Internal Users:

These are those individuals or groups who are within the organization. They are:

(i) Owners
(ii) Managers
(iii) Management
(iv) Trade Union
(v) Employees

2. External Users:

These are those individuals or groups who use accounting information outside the organization. They are:

(i) The Public
(ii) Tax authorities
(iii) Government
(iv) Creditors and other financial institutions
(v) Competitors
(vi) Shareholders
(vii) Potential Investors

Qualities of Accounting Information:

A piece of good accounting information must have the following qualities in order to satisfy the user’s needs.

i. Reliable
ii. Verifiable
iii. Timeliness
iv. Relevance
v. Comprehensiveness
vi. Comparability

Limitations of Accounting:

1. Transactions are recorded in monetary terms, so no information as to the usefulness, size, or quantity of transactions
2. It is historical in nature i.e. the recording is after the event.
3. It rigidly follows unrealistic concepts and conventions.

Differences between Book Keeping and Accounting:

1. Book Keeping refers to the systematic aspect of recording and classifying transactions whereas Accounting includes recording, classifying, summarizing, analyzing, and interpreting financial data.

2. Book Keeping involves the routine recording of transactions in the simplest aspect whereas Accounting is more complex.

3. Book Keeping is only a small part of the field of accounting and is limited in scope whereas Accounting has a wider scope and goes beyond the recording of transactions.

4. In Book Keeping, one can be a proficient bookkeeper in a few weeks or months whereas to become a professional Accountant requires several years of study and experience.

5. Bookkeeping cannot help for decision making whereas accounting information helps for decision making.

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