Importance of accounting:-

 Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s business activities.

Recordkeeping, or bookkeeping, is the recording of transactions and events, either manually or electronically. This is just one part of accounting.

Very important notes:-
1- Accounting is information system. 2- Accounting is science and art.
3- Accounting helps in making decisions.

Users of accounting information:

External users of accounting information:-
Are not working in the organization
Internal users of accounting information:-
Are working in the organization

Generally Accepted Accounting Principles
 There are 3 setters of accounting principles:-
1- Financial Accounting Standards Board (FASB).

2- The Securities and Exchange Commission SEC).

3- The International Accounting Standards Board (IASB)

Accounting principles
Cost Principle:-
if cash is given for a service, its cost is measured as the amount of cash paid

Revenue Recognition Principle:-
It provides guidance on when a company must recognize revenue.
Recognize revenue when it is earned.
Matching Principle (expense recognition principle):-
A company must record its expenses incurred to generate the revenue reported
Full Disclosure Principle:-
A company is required to report the details behind financial statements that would impact users’ decisions.
Accounting Assumptions:-
Going-Concern Assumption
Reflects assumption that the business will continue operating instead of being closed or sold.
Business Entity Assumption
A business is accounted for separately from other business entities, including its owner.
Monetary Unit Assumption
Express transactions and events in monetary, or money, units.
Time Period Assumption
Presumes that the life of a company can be divided into time periods, such as months and years.
Types and forms of business entities
1- sole proprietorship:-
It is owned by one person.It is not a separate legal unit from its owner
2- a partnership:-
It is owned by two persons or more called partners. It is a separate legal unit
3- a corporation:-
It is owned by stockholders
The capital of corporation is divided into parts , each part is called share or stock. Stocks consists of common stocks and preferred st