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Unit I

Introduction to Accounting

Overview

|Background |The evolution of accounting is attributed to the social and economic needs of society. As business and society | | |become more complex, accounting develops new concepts, methods and techniques to meet the ever changing and | | |increasing needs for financial information. Without the necessary information furnished by accounting, many | | |complex social programs and economic development may never have been realized. | | |Information, in any market economy, assists decision-makers in making wise choices regarding the use of limited | | |resources under their control. When decision-makers are able to make well-informed decisions, resources are | | |allocated in a manner that better meets the needs and goals of companies within the given market. | | |The Philippines, being a developing country, would need a great deal of reliable and timely information to compete| | |in the global market and accounting will play an important role in this prevailing competitive global structure of| | |the economy. Companies use accounting information to evaluate the business situations around the world. It is | | |therefore necessary that future accountants, businessmen, entrepreneurs and economists must be trained properly on| | |how to generate and interpret this financial information. |

|Purpose |The purpose of Unit I “Introduction to Accounting and Basic Accounting Principles” is to provide students with | | |brief descriptions of the nature and scope of accounting. This unit also includes simple explanation of the 13 | | |basic accounting concepts. |

|In this unit |This unit contains the following topics: |

|Topics |See Page | |Nature and Scope of Accounting |2 of A | |History of Accounting Thought |5 of A | |Users of Financial Statements |6 of A | |Forms of Business Organizations |8 of A | |Basic Accounting Concepts |9 of A | |The Accounting Profession |17 of A | |Basic professional values and business ethics |18 of A |

Nature and Scope of Accounting

|Overview |The two terms accounting and bookkeeping have been used interchangeably and without distinction. This line of | | |thought finds support based on the condition prevailing during the early times when businesses were not as complex| | |and multifarious as they are nowadays. However, recognition of the importance of accounting in the development of | | |modern business methods, the industrial revolution and the growth of unlimited companies that provided the impetus| | |for the development of accounting as a profession has led to the distinction in...
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