Module 1 An Introduction to Accounting and the Accounting Equation Omar ElKheshen – kheshen@gmail.com This module introduces you to accounting and the accounting equation Learning Objectives 1. The value to various groups in society of a knowledge of accounting 2. The role of accounting in management 3. The need for, and use of, accounting information in decision making within any organization 4. The accounting equation 5. The basic layout of the profit and loss account (income statement), the balance sheet and the cash flow statement 6. The distinction between financial accounting and management accounting Omar ElKheshen – kheshen@gmail.com Agenda 1.1 Approaching Accounting 1.2 The Reality of Accounting 1.3 What Accounting Is 1.4 Focus on Profit-Seeking Businesses 1.5 Who Are the Users of a Company’s Accounting Information? 1.6 For what Sort of Decisions Do these Users Value Accounting Information? 1.7 Common Information Requirements among Users 1.8 The Accounting Equation 1.9 The Accounting Statements Do-It-Yourself Example 1.10 Sole Trader versus MBA 1.11 Accounting: The External and Internal Functions Omar ElKheshen – kheshen@gmail.com Students often prefer to avoid accounting since it is misperceived as boring, methodical, and highly numerical – fortunately, it is far from that! Accounting Misconceptions Requires the mastery of rules from the outset, unlike marketing, economics and OB Non-Intuitive Highly Mathematical Deals exclusively with numbers Focused on Precision Involves extensive precision and accuracy, both of which require a highly developed mathematical mind Requires Long Studies Accountants must spend many years studying accounting to acquire their professional qualifications Stereotyped as being humorless, repetitive and unimaginative Dull and Boring Luckily, accounting is none of the above! Omar ElKheshen – kheshen@gmail.com Agenda 1.1 Approaching Accounting 1.2 The Reality of Accounting 1.3 What Accounting Is 1.4