FINANCIAL ACCOUNT 101.

         INTRODUCTION TO ACCOUNTING.

Hey Guys, we are starting a new Subject Today. For the Commercial Class People, other subjects will be introduced as time goes on, so sit back and enjoy.

WHAT IS FINANCIAL ACCOUNTING?

   Account can be as the Recording, Classifying, Creating, Summarizing and Communicating of Financial Information to interested Parties, to help in making specific Business Decisions. In Order words, it includes all processes involved in preparing a Financial Document.

Book Keeping is the act of Recording and Classifying Financial Transactions on a Daily Basis into Appropriate Books. It is a Part of Accounting; it is done using the Double Entry System.

IMPORTANCE OF BOOK KEEPING & ACCOUNTING.

1.      Accounting Information can be used for Decision-Making.

2.      It Provides Permanent Records for all Transactions.

3.      It Helps to Ascertain the True Position of the Business.

4.      It Helps to Prevent Fraudulent Practices.

5.      It is used for Tax Assessment.

6.      It Helps to Ascertain the Assets and Liabilities of the Business.

7.      It Shows the Income and Expenditure of the Company.

DIFFERENCE BETWEEN BOOK KEEPING & ACCOUNTING.

1.      In Book Keeping, it requires a few weeks/months to become a Proficient Book Keeper. While In Accounting, it requires several years and experiments to become a Professional Accountant.

2.      Book Keeping involves Day-to-Day Recording of Transactions whereas; Accounting involves Designing of Accounting System.

3.      Book Keeping is a small part of Accounting whereas; Accounting goes beyond Recording of Transactions.

4.      Book Keeping involves Recording and Classifying Transactions while, Accounting involves Recording, Classifying, Summarizing, Analyzing and Interpretation of Financial Statement/Transaction.

USERS OF FINANCIAL INFORMATION.

1.      Government for Decision-Making and Statistics.

2.      Business Owners for Assessing the Progress of the Business. To know if the Business made Profit or Loss.

3.      Employees need it to know the level of the business and also to determine the Wage Demand, and Working Condition of the people.

4.      Investors need it to know the strength and Financial Position of the Business.

5.      Tax Authorities need it to fully ascertain the tax of the Business.

6.      Competitors need it to know the level of other companies in order to improve.

7.      Banks need it to ascertain the Health of the Business, if the Owner wants to take a Loan.

8.      Creditors.

9.      Financial Analyst.

10.  Public.

HISTORY OF ACCOUNTING.

The Precise Date when Book Keeping Originated is unknown but the Information available states that Book Keeping is as old as man.

    The Starting Point can be linked to the merchants in the Babylonian and Assyrian civilizations about 4000years B.C. The modus operandi (way of doing things) for keeping records then was to make marks on the wall/stone/papyrus/wax tablets. The Method of keeping financial records was highly primitive.

  The history of accounting is not complete without mentioning an Italian monk and mathematician LUCCA PACIOLO. In 1494 the crucial event in accounting was the introduction of the Double Entry System called ITALIAN METHOD by LUCCA PACIOLO. He said all transactions must have double entry on the debit side and credit side.

   In 1605, a Dutchman called Simeon Stephen advocated the profit and loss account at yearly intervals.

     In 1665, The Preparation of Balance Sheet was introduced. The level of civilization through Technology Advancement helped in the development of modern methods of accounting.

   The Industrial Revolution increased the scale of business transactions based on this; more methods of accounting were needed. This was followed by the formation of Professional Accounting Bodies like I.C.A England and Wales in 1880, I.C.A Scotland In 1854, Association of Public Accountants in USA 1887 etc.

     In Recent Years, the Rules, Policies and Principle guiding Accounting Processes in Nigeria was almost the same as the ones in Britain.

    In 1965, the Institute of Chartered Accountants of Nigeria was established and Affiliated with the professional bodies in USA & Britain.

     In 1982, Nigeria Accounting Standard Board was born to set standards to guide accounting operations. Members include-Central Bank of Nigeria, Finance Ministry, Nigeria Accounting Teachers Association, Chamber of Commerce etc.

   Now in Nigeria, There are two Recognized Bodies namely, Institute of Chartered Accountants of Nigeria (ICAN) and Association of National Accountants (ANA).

PROFESSIONAL BODIES:

1.     Institute of Chartered Accountants of England and Wales.

2.     Institute of Chartered Accountants of Scotland.

3.     Institute of Chartered Accountants of Ireland.

4.     Association of Chartered Accountants.

5.     Association of National Accountants of Nigeria (ANAN).

6.     Institute of Chartered Accountants of Nigeria (ICAN).

7.     Association of Accounting Technicians.

8.     Institute of Cost and Management Accountants.

9.     Chartered Institute of Public Finance and Accountancy.

This concludes our Session for today, hope it was fun and simplified? For any questions and comments send an email to dividiamond@gmail.com. Until we meet again, remain ever blessed.