Page 14 - Accountancy_F5

Chapter Concepts, theories and

principles of accounting
One
Chapter One: Concepts, theories and principles of accounting

The concept of accountingREADING ONLY

Introduction

LANGUAGE EDITING
Accountancy, is a vital course in business studies. It opens avenues for a variety
of career pathways and higher education opportunities in commerce, business,
LANGUAGE EDITING
financial management, and the accounting profession. In this chapter, you will learn
the conceptual framework of accounting focusing on: objectives of general-purpose
financial statements, users and qualitative characteristics of useful accounting
information. The competencies developed will enable you to demonstrate an
understanding of concepts, theories and principles of accounting.

According to American Institute of Certified
Accounting was not a part and
parcel of our daily life Accountants (AICPA), “Accounting is an art
of recording, classifying and summarising
FOR ONLINE
in a significant manner and in terms of
Accountancy is defined by its relevance, money, transactions and events which are
that is, what it can offer for those interested in part at least, of a financial character and
to learn about it, and what it does in terms interpreting the result thereof”.

of supporting business management and Accounting involves four processes.
decision making. The systematic form of (i) Recording of transactions and events
information related to accounting, including in books of original entry.
the laws and guidelines that control (ii) Classifying transactions through the
real accounting processes, is known as process of posting from the books of
accountancy. Accounting, therefore, is a original entry to different accounts in
subset of accountancy that entails using the ledger.
accountancy concepts in practice to carry (iii) Summarising the results periodically
out the fundamental tasks of the profession. in financial reports.
In other words, accountancy refers to the
career path taken by these individuals, and (iv) Interpreting the results of the business
accounting aims to describe the nature of the operations through the analysis of
work done by accountants (professionals). financial statements.

Student’s Book Form Five
1

23/06/2024 17:34
ACCOUNTANCY_DUMMY_23 JUNE.indd 1 23/06/2024 17:34
ACCOUNTANCY_DUMMY_23 JUNE.indd 1