Chapter 1
What is Accounting?
• Definition of Accounting
– service activity
– art (recording, classifying, summarizing)
– process (identifying, measuring,
communicating)
Objective
• Accounting vs Auditing
• Accounting vs Bookkeeping
• Financial Acc. vs Managerial Acc.
• Accounting vs Accountancy
Generally Accepted Accounting
Principles
• Rules, procedures, practices and
standards followed in the preparation and
presentation of FS
• Developed on the basis of experience,
reason, custom, usage and practical
necessity
• Political process, incorporates actions of
various interested user groups,
professional judgment, logic and research
Purpose of Accounting Standards