Accounting Notes
Learning Unit 1
An introduction to the business, bookkeeping and accounting
History of accounting
Romans were most developed.
Arabic numerals more precise for reading financial data.
Romans used Arabic numerals to record, capital, assets and liabilities.
o Double-entry accounting
o Developer = Luca Pacioli
o 3 things for successful merchant:
Sufficient cash or credit
Bookkeeping + detailed list of transactions
An easy-to-read accounting system
Users and uses of accounting information
Users
o Investors
Providers of capital and their advisers are connected with the risk
inherent to, and return provided by, their investments.
o Employees and labour unions
Interested in information about the stability and profitability of their
employers. Also interested in in information which enables them to
assess the ability of the enterprise to provide remuneration,
retirement benefits and employment opportunities.
o Lenders
Determine whether their loans, and the interest attached to these,
will be paid when due.
o Suppliers and other trade creditors
Determine whether amounts owing to them will be paid when due.
Interested in an enterprise over a shorter period than lenders, unless
they are dependent upon the continuation of the enterprise as a
major customer.
o Customers
Continuance of an enterprise especially when they have a long-term
involvement with, or are dependent on, the enterprise.
o Governments and their agencies
Allocation of resources and the activities of enterprises. Determine
taxation policies and use as the basis for national income and similar
statistics.
o The general public
The number of people they hire
Financial statements = information about the trends and recent
developments in prosperity of the enterprise and the range of its
activities.
, o Management
Responsibility for the preparation and presentation of the financial
statements of the enterprise.
Uses
o Accounting records obviate the necessity of remembering various
transactions.
o Accounting records = compare results of one period with another period.
o Taxation authorities are likely to believe the facts contained in the set of
accounting books if maintained according to International Financial Reporting
Standards (IFRS).
o Records stored and authenticated vouchers – good evidence in a court of law.
o Selling a business – financial records can show the value of different assets
and assist in bargaining a proper price for the business.
Learning Unit 1
An introduction to the business, bookkeeping and accounting
History of accounting
Romans were most developed.
Arabic numerals more precise for reading financial data.
Romans used Arabic numerals to record, capital, assets and liabilities.
o Double-entry accounting
o Developer = Luca Pacioli
o 3 things for successful merchant:
Sufficient cash or credit
Bookkeeping + detailed list of transactions
An easy-to-read accounting system
Users and uses of accounting information
Users
o Investors
Providers of capital and their advisers are connected with the risk
inherent to, and return provided by, their investments.
o Employees and labour unions
Interested in information about the stability and profitability of their
employers. Also interested in in information which enables them to
assess the ability of the enterprise to provide remuneration,
retirement benefits and employment opportunities.
o Lenders
Determine whether their loans, and the interest attached to these,
will be paid when due.
o Suppliers and other trade creditors
Determine whether amounts owing to them will be paid when due.
Interested in an enterprise over a shorter period than lenders, unless
they are dependent upon the continuation of the enterprise as a
major customer.
o Customers
Continuance of an enterprise especially when they have a long-term
involvement with, or are dependent on, the enterprise.
o Governments and their agencies
Allocation of resources and the activities of enterprises. Determine
taxation policies and use as the basis for national income and similar
statistics.
o The general public
The number of people they hire
Financial statements = information about the trends and recent
developments in prosperity of the enterprise and the range of its
activities.
, o Management
Responsibility for the preparation and presentation of the financial
statements of the enterprise.
Uses
o Accounting records obviate the necessity of remembering various
transactions.
o Accounting records = compare results of one period with another period.
o Taxation authorities are likely to believe the facts contained in the set of
accounting books if maintained according to International Financial Reporting
Standards (IFRS).
o Records stored and authenticated vouchers – good evidence in a court of law.
o Selling a business – financial records can show the value of different assets
and assist in bargaining a proper price for the business.
