Purpose of Accounting yr 10(Lesson Plan).ppt

Accounting introduction

1. Introduction to Introduction to
AccountingAccounting
1By Benjamin Anosike

2. Rules of Rules of
EngagementEngagement
Rules of Engagement in Lessons:Rules of Engagement in Lessons:
1)We should Focus on Knowledge, Application,
Analysis and Evaluation.
2)All Questions Must be RESPONDED TO. No
more I don’t have a clue. Rather you may use
the term LET ME THINK ABOUT IT.
3)Respect is a two way thing, as you are giving,
you are receiving at the same time.
4)Try to enjoy the course. Afterall “a genius is
someone who is 20% intelligent and 80% hard
working” Albert Einstein
This is not about me telling you what you should NOT
DO in the class, it about you taking and showing
responsibility!
2By Benjamin Anosike

3. Purpose of Accounting
&
Basic D/Entry
Unit 1 Week One
3By Benjamin Anosike

4. Lesson Objectives
At the end of these lessons, you will be
able to:
Explain the meaning of Accounting.
Describe the purpose of Accounting.
Analyse the uses and users of accounting
information
4By Benjamin Anosike

5. Meaning of Accounting
Write down in your own words, what
accounting means to you.
(Your own Definition of Accounting)
3mins
5By Benjamin Anosike

6. Accounting is a system of recording,
Analysing and communicating
financial information to permit
informed judgement and decision by
the users of financial statement.
6By Benjamin Anosike

7. Purpose of Accounting
Discuss in group of 5s and suggest the
purposes of accounting.
Thinking about the importance of
accounting to Businesses
7By Benjamin Anosike

8. Purpose of Accounting
There are several reasons why accounting is
necessary to a business:
a)Recording Transactions.
b)Monitoring activity and controlling the business.
c)Helping the management of the business.
d)Measuring the financial performance of the
business.
e)Complying with the Law.
f)Communicating to the users the financial health
of the business.
B
8By Benjamin Anosike

9. Recording Transactions
Accurate records are essential: if documents
are lost the business may forget to demand
payment for some jobs that have been done
or may forget to pay bills that become due.
This must be avoided at all costs because not
paying your debts promptly is technically an
act of bankruptcy.
9By Benjamin Anosike

10. Monitoring activity and
controlling the business
•Sound record keeping allows the
managers of the organisation to keep
track of orders, sales and bills, which
mean they should have a good idea of
how well the business is doing.
10By Benjamin Anosike

11. Helping the management
of the business
•Financial information should also inform
the management of the business and help
the board to make better decisions.
•Well prepared accounting statements will
allow directors and managers to monitor
the progress of the company and to keep
better control over its activities.
11By Benjamin Anosike

12. Measuring the financial
performance of the
business
•Profit is the lifeblood of the organisation and
good accounting records will assess accurately
the level of profit that are being achieved.
•Good records will also give clues about
strategies that could improve the profitability
of the business.
12By Benjamin Anosike

13. 13
Complying with the Law
Businesses have a legal requirement to maintain
complete and accurate records. Failure to comply with
the law will have disastrous consequences for the
business. Such as fines or even closure of the
business.
This enables HM Revenue and Customs to collect all
amounts due in taxes
This includes the income tax for a sole trader, NI,
and VAT (not examined in AS)
By Benjamin Anosike

14. Communicating the financial
performance of the
business
Accounting does not only measure the financial position of
the business, it also communicate the financial
performance of the business to various stakeholders in a
true and fair view.
One of the most important document used in account to
communicate to the wider community is the Annual
Report.
(P&L and Balance Sheet)
Summary
14By Benjamin Anosike

15. Users of Accounting
information
In small groups, discuss the following:
•Users of accounting Information:
(those parties or persons that make
use of accounting information).
•The type of information each party is
interested in.
15By Benjamin Anosike

16. Users of accounting Information
These are basically the stakeholders of a
business:
Owners/Shareholders
The Management:
Employees:
Government:
Customers:
Local Community:
Creditors (Banks):
Suppliers:
Pressure Groups:
A stakeholder is
an individual or
organisation that
have an interest
in the accounts
of the Business
16By Benjamin Anosike

17. Features of Good Accounting
What are the things that make a good
accounting Information?
C3U2T1 T1U2C3
Complete
Consistent
Correct
Unambiguous
Unbiased
Timeliness
17By Benjamin Anosike

18. Accounting Equation and Double
Entry Principle
What do you understand by the
following?
Capital:
Assets:
Money brought in to the Business by
the Owner of the Business.
These are the resources own by the
business and used in running the
Business.
It is the money the Business is owing to
the owner of the business.
18By Benjamin Anosike

19. Accounting Equation and Double
Entry Principle
The principle of Accounting Equation is
that:
LEFT side is = to RIGHT side
19By Benjamin Anosike

20. Accounting Equation and Double
Entry Principle
1st Accounting Equation stipulates that
A = C
Assets is = to Capital
What the
Business Owe
to the owner
What the
Business Own
=
That is
20By Benjamin Anosike

21. Accounting Equation and Double
Entry Principle
If you invest £10 in a Business, what do you
think the Business will buy with the £10
invested?
Therefore
A = C
(Assets Bought £10) = (Capital Invested £10)
NB: You Can Swop sides of the equation
Assets
21By Benjamin Anosike

22. Accounting Equation and Double
Entry Principle
2
nd
Accounting Equation stipulates that:
A = C + L
Assets = Capital + Liabilities
What the
Business
own.
What the
business
owed to
the
owner.
What the
Business
borrowed
from another
Person (who
is not the
owner).
= +
That is

22By Benjamin Anosike

23. Pass on the ball Game
Get the question right, you pick the next
person to answer the next question by
passing on the ball to that person.
Can’t answer the question, ask for help and
anyone can answer. Whoever answers will
pick the next person to pass the ball to.
Plenary
23By Benjamin Anosike

24. Plenary
Pass on the ball game.
Q1. in your own understanding what is the meaning
of accounting?
Q2. Mention one purpose of accounting.
Q3. Who and who are interested in accounting
information?
Q4 Why is customers interested in accounting
information?
Q5 Why is suppliers interested in accounting
information?
Q6 What information is shareholders interested
in?
24By Benjamin Anosike

25. Q7. Is accounting important?
YES Why?
NO Why?
Q8 Users of accounting Information is also refers
to as ........
Q9 Who are the stakeholders of the business
mention 2 .........
Q10 What kind of information does the employees
interested in?
Q11 Accounting is not really important, do you
agree? Justify
25By Benjamin Anosike

26. Q12. The 1st Accounting Equation States
that ............ = .............
Q13. The 2
nd
Accounting Equation states
that Assets = ............ + ...........
26By Benjamin Anosike

27. Next Lesson
In the next lesson, we are going to look
into Double Entry Principle
27By Benjamin Anosike

28. Next Lesson
In the next lesson, we are going to look
into Double Entry Principle
28By Benjamin Anosike

29. 29By Benjamin Anosike