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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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