1. Dr. Mohamed A. Hamada Lecturer of Accounting Information Systems
Accounting I BA 104
Lecture 1
Introduction to Accounting
Dr. Mohamed A. Hamada
Lecturer of Accounting Information Systems

2. Reference Book Accounting Principles,
Weygandt,. Kieso. Kimmel, 8th. Edition, by Wiley.

3. Assessment
Performance will be evaluated according to following criteria:
Regular attendance is a prerequisite for passing the course.
Continuous Quizzes and Assignments (20%)
Mid year Exam (20%)
Final written exam (60%)

4. Main objective of this course
1. Explain what is accounting 2. Identify the users of accounting 3. Explain GAAP and the cost principles 4. Describe the nature and purpose of subsidiary ledger 5. Explain the concept of depreciation 6. Define different method for calculating Account receivables 7. Apply the accounting equation and define assets , liabilities and owner's equity 8. Discover the effects of business transactions on the accounting equation

5. Main objective of this course- cont,.
9. Calculate financial statements and how they are prepared 10. Calculate debits and credits and explain their usage in their recording process 11. Discover what is ledger and how it helps in the recording process 12. Prepare the general journal 13. Manipulate the general ledger 14. Arrange the trial balance 15. Connect adjusting entries and closing entries 16. Prepare financial statements 

6. Study Objectives for chapter one
Explain what accounting is.
Identify the users and uses of accounting.
Understand why ethics is a fundamental business concept.
Explain generally accepted accounting principles and the cost principle.
Explain the monetary unit assumption and the economic entity assumption.
State the accounting equation, and define its components.
Analyze the effects of business transactions on the accounting equation.
Understand the four financial statements and how they are prepared.
1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements?
Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases).
Forward-looking Information
Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image).
Timeliness (no real time financial information)

7. Introduction to Accounting
What is ACCOUNTING -
Accounting is the “language of business”
Accounting is the information system that
Measures business activities
Processes that information into reports
Communicates the results to decision makers

8. THE ACCOUNTING SYSTEM: THE FLOW OF INFORMATION
1. People make decisions
2. Business transactions occur
3. Businesses prepare reports to show the
results of their operations

9. Importance of Accounting
is a
system that
Identifies
Records
information
that is
Relevant
Communicates
Identifying business activities requires selecting transactions and events relevant to an organization.
Ex. The sale of cosmetics, such as perfume, lipsticks.. by SaSa
Recording business activities requires keeping a chronological log of transactions and events measured in dollars and classified and summarized in a useful format.
Communicating business activities requires preparing accounting reports such as financial statements. It also requires analyzing and interpreting such reports.
The difference between bookkeeping and accounting: bookkeeping is the recording of transactions and events. This is only one part of accounting. Accounting also identifies and communicates information on transactions and events.
Reliable
to help users make better decisions.
Comparable

10. Main Accounting Activities
Identifying Business Activities
Recording Business Activities
Communicating Business Activities

11. ACCOUNTING VS. BOOKKEEPING
Bookkeeping is the recording on a day-today basis of financial transactions.
Transactions include purchases, sales, receipts and payments.
It involves organizing and managing all business transactions in a company

12. What is the relation between accounting and bookkeeping?
Bookkeeping is the recording of financial transactions and events, either manually or electronically.
Accounting is much more. It includes identifying, measuring, recording, reporting, and analyzing business events and transactions, and helps information users to make economic decisions.

13. DECISION MAKERS WHO USE ACCOUNTING INFORMATION
Individuals
Businesses
Investors and Creditors
Government and Agencies
Taxing Authorities
Nonprofit Organizations

14. FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING
Financial accounting provides information to managers and people outside the firm
Financial accounting information must meet certain standards of relevance and reliability
Management accounting generates confidential information for internal decision makers, e.g.,
Top executives
Department heads

15. TYPES OF BUSINESS ORGANIZATIONS
Proprietorships
Have a single owner who is generally the manager
Are business entities, but not legal entities

16. TYPES OF BUSINESS ORGANIZATIONS
Partnerships
Join two or more persons together as co-owners
Are business entities, but not legal entities

17. TYPES OF BUSINESS ORGANIZATIONS
Corporations
Are owned by stockholders or shareholders
Are business entities and legal entities
Stockholders have no personal obligation for corporation debts

18. What is main purpose Accounting?
The main purpose of accounting is to:
identify, record, and communicate the economic (financial) events of an organization to the interested users.

19. Three Activities What is Accounting? The accounting process includes
Illustration 1-1
Accounting process
The accounting process includes
the bookkeeping function.

20. Users of Accounting Information
External Users
Financial accounting provides external users with financial statements.
Internal Users
Managerial accounting provides information needs for internal decision makers.

21. Who Uses Accounting Data?
Internal Users
IRS
Management
Investors
Human Resources
There are two broad groups of users of financial information: internal users and external users.
Labor Unions
Finance
Creditors
Marketing
SEC
Customers
External Users
IRS is the U.S. government agency responsible for tax collection and tax law enforcement*** SEC Securities and Exchange Commission

22. Users of Accounting Information-External
Lenders: Whether the firm (borrower) can repay the money?
Shareholders: whether to buy, hold, or sell stocks?
Governments: whether the firm pay all due tax?
Customers: whether the firm can exist to provide post-sale services?
External Auditors: whether the financial statements are prepared according to GAAP?
Etc.

23. Users of Accounting Information-Internal
Marketing managers: target customers, set price, monitor sales.
Production managers: monitor cost and ensure quality.
Purchasing managers: what, when and where to purchase materials.
Human resource managers: employees’ performance and compensation.

24. What is the difference between a shareholder and a stakeholder?
Shareholders are stakeholders in a corporation, but stakeholders are not always shareholders.
A shareholder owns part of a company through stock ownership, while a stakeholder is interested in the performance of a company for reasons other than just stock appreciation.
Stakeholders could be:
Employees who, without the company, would not have jobs
Bondholders who would like a solid performance from the company and, therefore, a reduced risk of default
Customers who may rely on the company to provide a particular good or service
Suppliers who may rely on the company to provide a consistent revenue stream

25. Who Uses Accounting Data?
Common Questions Asked
User
1. Can we afford to give our employees a pay raise?
Human Resources
2. Did the company earn a satisfactory income?
Investors
3. Do we need to borrow in the near future?
Management
4. Is cash sufficient to pay dividends to the stockholders?
Finance
5. What price for our product will maximize net income?
Marketing
6. Will the company be able to pay its short-term debts?
Creditors

26. Who Uses Accounting Data?
Discussion Question
Q1-1: “Accounting is ingrained in our society and it is vital to our economic system.” Do you agree? Explain.
See notes page for discussion
Question 1 (textbook) Yes, this is correct. Virtually every organization and person in our society uses accounting information. Businesses, investors, creditors, government agencies, and not-for-profit organizations must use accounting information to operate effectively.

27. Very thanks