Session 1 - Introduction to Accounting

Session Plan : Introduction to Accounting 

Introduction (5 min): Brief overview of accounting – definition, objectives, and importance in business.

Core Concepts (10 min): Explain basic terms – assets, liabilities, capital, income, and expenditure.

Methods & Principles (10 min): Discuss single vs. double entry system, accounting bases, and conventions.

Bookkeeping vs. Accounting (10 min): Illustrate differences with examples and simple journal entries.

Discussion & Q/A (10 min): Interactive recap through real-life examples and short practice exercise.

Lecture Material : (PDF, PPT)

Introduction_to_Accounting.pptx 

Learning Material (IV Quadrant Approach)

(Q1) : Text and Image based Content (PDF/Image Formats)

Introduction to Accounting

1. Meaning of Accounting

Accounting is the systematic process of:

• Identifying

• Recording

• Classifying

• Summarizing

• Interpreting

• Communicating financial information

It helps users understand the financial health and performance of a business.

2. Definitions of Accounting

• American Institute of Certified Public Accountants (AICPA):

"Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof."

• Accounting Standards Board (ASB):

"Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information."

3. Objectives of Accounting

• To maintain systematic records of business transactions

• To determine profit or loss

• To ascertain the financial position

• To provide information for decision-making

• To comply with legal requirements

4. Functions of Accounting

Function Description

Recording Recording business transactions (Bookkeeping)

Classifying Grouping transactions into categories (e.g., purchases, sales)

Summarizing Preparing financial statements (e.g., Trial Balance, P&L, Balance Sheet)

Analyzing Breaking down financial data for insights

Interpreting Drawing conclusions from financial information

Communicating Sharing financial data with stakeholders

 5. Importance of Accounting

• Provides financial control

• Aids in budgeting and forecasting

• Helps in legal compliance

• Builds investor confidence

• Enables performance evaluation

6. Types of Accounting

Type                                       Description                                        

Financial Accounting           Focuses on preparing financial statements for external users. For external reporting (e.g., investors, govt.)

Management Accounting    Provides information for internal management for planning and control. For internal decision-making

Cost Accounting                  Tracks, analyzes, and controls costs of production or services. For cost control and reduction

Tax Accounting       Deals with tax-related matters and ensures compliance with tax laws. For tax compliance and planning

Auditing       Involves examining financial records to ensure accuracy and compliance. For ensure accuracy, reliability, and compliance with applicable laws and standards.

Forensic Accounting

Examine financial records for use in legal proceedings or dispute resolution.

 For investigation and legal purposes

 7. Users of Accounting Information

• Internal Users: Management, Employees

• External Users: Investors, Creditors, Government, Customers, Public

8. Main Financial Statements

1. Balance Sheet – Shows a company’s financial position at a specific point in time.

2. Income Statement (Profit & Loss Statement) – Reports revenues and expenses over a period.

3. Cash Flow Statement – Tracks the flow of cash in and out of the business.

4. Statement of Changes in Equity – Shows changes in owner’s equity over a period.

9. Basic Accounting Terminologies

Term                  Meaning

Asset                  Valuable resource owned by business

Liability             Financial obligation or debt of the business

Capital               Owner's investment in the business

Revenue             Income earned from business operations

Expense             Cost incurred to earn revenue

Profit/Loss         Result of revenue minus expenses

Journal               Primary book of entry for all transactions

Ledger                Collection of all accounts

Trial Balance      Summary to check debit-credit balance

Balance Sheet     Statement showing assets, liabilities, and equity

 10. Golden Rules of Accounting

Type of Account                 Rule                                                Example            

Personal        Debit the receiver, Credit the giver                      Paid ₹5,000 to Mr. A → Credit Mr. A

Real               Debit what comes in, Credit what goes out          Bought machinery → Debit machinery

Nominal        Debit all expenses/losses, Credit incomes/gains  Paid rent → Debit rent

11. Quiz – Test Your Knowledge!

Q1. Who are the external users of accounting?
A) Managers
B) Investors ✅
C) Employees
D) Owners

Q2. What is the rule for nominal account?
A) Debit the receiver
B) Debit what comes in
C) Debit all expenses and losses ✅
D) Credit the giver

Q3. Which statement shows the financial position of a company?
A) Profit & Loss
B) Balance Sheet ✅
C) Cash Book
D) Ledger

(Q2) : Video Based Content (Youtube): www.youtube.com/watch?v=ii91oi0OpXM&list=PL-ao-8pxqJKKdYBHCu3yxuAYLBVOzZNvP&index=2 

(Q3) : Formative Assessment (Google Form/Any Other Online Quiz Platform): forms.fillout.com/t/iiytjdrytWus