INTRODUCTION

TO
ACCOUNTING
Lesson 1
LESSON OBJECTIVES:
At the end of this lesson you should be able to:

Define accounting
Narrate the history and origin of accounting
Describe the nature of accounting
Participate actively in class discussion
I HAVE HERE THREE QUESTIONS FOR
YOU…
▪ Do your parents ask how you spend your allowance every
day? Why?
▪ When deciding between buying a bottle of soft drinks or fruit
juice, what is the basis of your decision? Do you compare the
prices of both and then decide?
▪ When going home, do you sometimes choose to walk from
school rather than riding a jeepney because you want to
save?
YOU SEE!

IN EVERYTHING WE DO, THERE IS

ACCOUNTING…
IS ACCOUNTING IMPORTANT TO YOU?

WHY?
ACTIVITY#1: DEFINITION OF
ACCOUNTING

▪ Write anything you have known about

accounting on the board.
▪ Validate your answers from the definition to
be given afterwards.
ACTIVITY #2-HISTORY OF ACCOUNTING
(STORY TELLING)
Instructions:
1. Divide the class into two (2) groups.
2. Each group will summarize the history of accounting.
3. By storytelling, one representative from each group will narrate
the history of accounting in front of the class.
4. Perform the task for five (5) minutes only.
ACCOUNTING CAN BE DEFINED AS...
 Accounting is the process of IDENTIFYING, RECORDING, and
COMMUNICATING economic events of an organization to
interested users.
According to Weygandt, J. et al,
WHEN WE SAY ECONOMIC EVENTS OF AN
ORGANIZATION, WHAT COMES INTO YOUR
MIND ?
ECONOMIC EVENTS OF AN
ORGANIZATION
Economic events are referred to as transactions,
specifically financial transactions (transactions
involving money)
EXAMPLES OF ECONOMIC EVENTS IN A BAKERY BUSINESS:

▪ Sales of bread and other bakery products

▪ Purchases of flour that will be used for baking
▪ Purchases of trucks needed to deliver products
 LET’S HIT IT ONE BY ONE…
Accounting is a process of IDENTIFYING,
means selecting economic events that are
relevant to a particular business transactions.

Examples:
▪ Sales of bread and other bakery products
▪ Purchases of flour that will be used for baking
▪ Purchases of trucks needed to deliver products
 LET’S HIT IT ONE BY ONE…
Accounting is a process of RECORDING
involves keeping a chronological diary of
economic events that are measured in pesos or
financially.
The diary referred to are the journals and
ledgers which will be discussed on the next
chapters.
 LET’S HIT IT ONE BY ONE…
Accounting is a process of COMMUNICATING
occurs through the preparation and distribution
of financial and other accounting reports
* Financial reports are interpreted in such a way
that results can be understood and appreciated by
at least non-accounting users of the business.
 NATURE OF ACCOUNTING
1. Accounting is a service activity.
- Accounting provides assistance to decision makers by
providing them financial reports that will guide them in
coming up with sound decisions.

2. Accounting is a process.
- A process refers to the method of performing any specific job step by
step according to the objectives or targets. Accounting is identified as a
process, as it performs the specific task of collecting, processing and
communicating financial information. In doing so, it follows some
definite steps like the collection, recording, classification,
summarization, finalization, and reporting of financial data.
 NATURE OF ACCOUNTING
3. Accounting is both an art, science and a discipline.
- It started as a science. In the history of men where mankind
had relied on their special skills and natural-born
intelligence, accounting was simply invented by them in a
way they could understand it. (skill of discovering something)
- It was defined as an art. The art is on the recording aspect, classifying,
summarizing and interpreting. When art is applied, processes and
policies are made uniquely for the business including management
reports which are customized as needed by the users.
- It became a discipline because accountancy became a profession and
the practice of it is governed by sets of rules and accounting
standards. The accountant is bound by Code of Ethical Standards.
 NATURE OF ACCOUNTING
3. Accounting is both an art, science and a discipline.
- It started as a science. In the history of men where mankind
had relied on their special skills and natural-born
intelligence, accounting was simply invented by them in a
way they could understand it. (skill of discovering something)
- It was defined as an art. The art is on the recording aspect, classifying,
summarizing and interpreting. When art is applied, processes and
policies are made uniquely for the business including management
reports which are customized as needed by the users.
- It became a discipline because accountancy became a profession and
the practice of it is governed by sets of rules and accounting
standards. The accountant is bound by Code of Ethical Standards.
NATURE OF ACCOUNTING
4. Accounting deals with financial information and
transactions.
- Accounting records financial transactions and data, classifies these and
finalizes their results given for a specified period of time, as needed by
their users. At every stage, from start to finish, accounting deals with
financial information and financial information only. It does not deal
with non-monetary or non-financial aspects of such information.

5. Accounting is an information system

- Accounting is recognized and characterized as a storehouse of
information. As a service function, it collects processes and
communicates financial information of any entity. This discipline of
knowledge has evolved to meet the need for financial information as
required by various interested groups.
FUNCTIONS OF ACCOUNTING
Accounting helps the users of the financial reports to
see the true picture of the business in financial terms.

With the help of accounting, the following questions can be

answered;
Is my business earning? (profitability)
How much daily or monthly sales do I need in
order to recover my fixed-cost? (break-even)
Do I need to hire additional workers to help me
with my production?
Can I afford to set up a new store in another
place? Where do I get funds?
Can I afford to pay back the loans?
 IS ACCOUNTING IMPORTANT TO YOU?
DOES IT AFFECT YOUR DAILY ACTIVITIES?
HOW?”
 TEST YOURSELF!
Directions: Write TRUE is the statement is correct and FALSE if the
statement is wrong.
_____ 1. The history of accounting dates back to history of mankind
wherein man relied on the natural-born intelligence than on experience.
_____ 2. Accounting is both an art and discipline.
_____ 3. Accountancy became a profession and is not governed by sets of
rules and standards.
_____ 4. One example of financial statement is Balance Sheet.
_____ 5. Accounting is the language of business.
 ASSIGNMENT!

Study in advance the Branches of Accounting.

THE END