Accounting Lecture-1

Topics: Accountancy, Financial statements, Balance sheet Pages: 10 (2470 words) Published: September 11, 2013
Chapter Name: Basic Concept of Accounting

✓ Definition of Accounting

✓ Development of Accounting Standard

✓ Purpose of Accounting

✓ Nature and Characteristics of Accounting

✓ Accounting as a Language of Business

✓ Distinction between Accounting and Bookkeeping

✓ Financial Accounting Vs Management Accounting

✓ Accounting Practice in Bangladesh

✓ Accounting Profession in Accounting Field

✓ Accounting Ethics

✓ History of Accounting

✓ Definition of Accounting
Accounting is identifying, measuring, and communicating the economic activity of a business to make financially smart and informed decisions. It is an information system. It is called the language of business. Accounting is the art of interpreting, measuring, and communicating the results of economic activities. Accounting is an information system of overall financial transactions. It is called the language of business. The American Accounting Association (AAA) defines accounting as “the process of identifying, measuring, and communicating economic information to permit information judgment and decision by the user of the information” Accounting is the systematic recording, reporting, and analysis of financial transactions of a business. The person in charge of accounting is known as an accountant, and this individual is typically required to follow a set of rules and regulations, such as the Generally Accepted Accounting Principles. Accounting allows a company to analyze the financial performance of the business, and look at statistics such as net profit.

✓ Development of Accounting Standard

Accounting principles have been developed through a historical way. Principles can be acceptable if most professional bodies allow it. These principles can be phrased as GAAP which acts as constitution profitable or non-profitable or governmental organization. Some international bodies have played a vital role in establishing accounting standards. The following merit attention:

American Institute of Certified Public Accountants (AICPA)

American Institute of Certified Public Accountants is the international professional organization of practicing Certified Public Accountants. It is the dominant institution over the establishment of accounting principles and standards. The main two committee of it is – accounting standard committee and auditing standard committee are influential in providing input to the FASB and SEC.

Financial Accounting Standard Board (FASB)

Financial Accounting Standard Board (FASB) communicates its performance about establishing principles through various publications, more specifically Statement of Financial Accounting Standard. These statements outline the generally accepted accounting principles.

Securities Exchange Commission (SEC)

Under Security Exchange Act, creation of securities exchange & commission (SEC) is a government agency that administers a number of acts dealing with securities. The SEC has the authority to prescribe accounting and reporting practices for companies under jurisdiction.

Governmental Accounting Standards Board (GASB):
Governmental Accounting Standards Board (GASB) issues statement on accounting and financial reporting in the governmental area. It is responsible for establishing the new governmental accounting concept and standards.

American Accounting Association (AAA):
An organization, whose members are primarily accounting academics, which encourages the development of accounting theory by encouraging and sponsoring accounting research.

American Accounting Association (AAA) consists largely of accounting educators. This body aims at encouraging research and study at the basic accounting level and developing accounting practice. They publish three types of journals to serve the purpose namely: • The Accounting review

• Accounting Horizon &
• Issues in Accounting Education...
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