INTRODUCTION TO ACCOUNTING
PANOS PAPADOPOULOS
WHAT IS ACCOUNTING?
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Accounting is the recording of financial transactions plus storing, sorting, retrieving,
summarizing, and presenting the information in various reports and analyses.
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Accounting is also a profession consisting of individuals having the formal education
to carry out these tasks.
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One part of accounting focuses on presenting the information in the form of
general-purpose financial statements(balance sheet, income statement, etc.) to
people outside of the company. These external reports must be prepared in
accordance with generally accepted accounting principles often referred to
as GAAP or US GAAP. This part of accounting is referred to as financial accounting.
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Accounting also entails providing a company's management with the information it
needs to keep the business financially healthy. These analyses and reports are not
distributed outside of the company. Some of the information will originate from the
recorded transactions but some of the information will be estimates and projections
based on various assumptions. This area of accounting is known as management
accounting.
FOCUS ON ACCOUNTING
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Bookkeeping : Recording of Financial Transactions manually or
electronicky
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Accounting Rules: Rules for reporting on a business
performance and financial condition known as GAAP
(Generally accepted accounting principles).
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Accounting & technology: Reduces the time, effort and cost
of bookkeeping. Information are record, stored and
processed.
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Business Income, expenses, revenue…
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Return & risk…
BUSINESS ORGANIZATIONS
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Sole proprietorship: Owned by one person
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Partnership: Own by 2 or more people.
Limited Liability
 Unlimited liability

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Corporation: Legally separate from its owners, liable for its own
acts and debts
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Non business organizations: Governments, non profit,
MAIN ACTIVITIES OF BUSINESS
ORGANIZATIONS
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Planning : Defining organization’s ideas, goals and actions
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Financing: Means to pay for resources( lands, buildings,
equipment etc) to carry out plans
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Investing: Acquiring of assets in order to be able to create and
sell its products and services.
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Operating: MKT, research, Salaries, employees
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Owners claim: Equity
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Creditors claim: Liability
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Accounting Equation : Assets=Liabilities + Equity
FINANCIAL STATEMENTS
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INCOME Statement: Reports on Operating activities
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Statement of Financial Position: Reports on investing and
financing activities
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Statement of Changes in Equity: Reports on changes on
owners claim
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Statement of Cash flow: Reports on cash flows from Investing,
Financing and operating activities
INCOME STATEMENT – OPERATING
ACTIVITIES
FINANCIAL POSITION – INVESTING &
FINANCING ACTIVITIES
OWNERS EQUITY
CASH FLOW STATEMENT
PRINCIPLES OF ACCOUNTING
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Business Entity Principle: Business is accounting for separately
that its owners
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Objectivity principle: Financial statements information is
independent & unbiased
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Cost principle: Financial statements are based on real/actual
cost
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Going Concern Principle: Assumption that the business will
continue operating instead of being closed
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Monetary Unit Principle: We express transactions and events in
monetary unit (money)
TRANSACTIONS EXAMPLES
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Investment by Owner: 30k (Assets/Equity)
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Purchase Supplies for Cash:5k (Cash/Supplies)
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Purchase Equipment for Cash: 25k (Assets)
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Purchase Supplies on Credit: 5k
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Services Rendered (offered)for cash: 5k
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Product Sales on Credit
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Receipt of Cash from A/C Receivables
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Payment of Account Payables
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Withdrawal of Cash by Owners