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Manpreet Kaur, Lovely Professional University Unit 1: Introduction to Accounting

Unit 1: Introduction to Accounting Notes

CONTENTS

Objectives
Introduction
1.1 Need of Financial Accounting
1.2 Objectives of Accounting
1.3 Branches of Accounting

1.4 Functions of Accounting
1.5 Users of Accounting Informations
1.6 Differences between Book-keeping and Accounting
1.7 Basic Accounting Terminology

1.8 Summary
1.9 Keywords
1.10 Self Assessment
1.11 Review Questions
1.12 Further Readings

Objectives

After studying this unit, you will be able to:
z Explain the needs and objectives of accounting
z State the branches of accounting
z Identify the users and differences between book-keeping and accounting

Introduction

Accounting is a business language which elucidates the various kinds of transactions during the
given period of time.

Accounting is broadly classified into three different functions viz
1. Recording

2. Classifying and
3. Summarizing

American Institute of Certified Public Accountants Association defines the term accounting as

follows “Accounting is the process of recording, classifying, summarizing in a signifi cant manner

of transactions which are in financial character and finally results are interpreted.”

!
Caution Accounting is not an equivalent function to book keeping. Accounting is broader
in scope than the book keeping, the earlier cannot be equated to the latter.

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