[Music] hello everybody so this is a lesson three our introduction to accounting okay so I will be introducing you to the wonderful world of accountancy okay so this is our very first lesson in this starts your journey on becoming an accountant okay so today I will be introducing you accounting so we will have the definition of accounting and then we will also be explaining here the nature and function of accounting and just a bit history of accounting just for you to understand where it came from okay so I hope that you will be able to understand the lessons the topics that we will be discussing today okay so first of all allow me to discuss with you the definition the very definition of accounting okay so according to accounting standards council accounting as a service activity its function is to provide quantitative information primarily financial in nature about economic entities that is intended to be useful in making economic decisions any making reason choices among alternative courses of action the definition of accounting for you might be too deep for you to understand it in reading so allow me to discuss it to you my wife okay sorry nothing in definition on housing first accounting is a service activity and when we say service activity as accountants diapole NIV big I now service automatically and if a lawyer or an attorney is giving legal services and a doctor is available for funds of the consultation for medical or he gives medical services then an accountant provides accounting services but shall pray on a professional perspective we are giving accounting services for a fee okay so accounting as regarded as a service activity in a sense that Wickham service we provide service and the kind of service that we provide our clients as accounting service okay so that's the meaning that we regard accounting as a service activity now talking about the function of accounting the function of accounting is to provide quantitative information which is primarily financial in nature now remember that we have two kinds of information we have qualitative and quantitative so when we say qualitative it does not talk about numbers right so it just describes something it just discusses something these are paragraphs of words however when we are talking about quantitative information we are talking about numbers however in accounting we are not just talking about numbers what we are talking about in accounting is information that is financial in nature okay so the so the nature in the function of accounting is being mixed in this specific sentence remember that what we do in accounting is about how much okay we're talking about how much and that how much is being represented by the word quantitative in financial take a look at the item or the picture that this give this here beside me that is what you call an income statement so you can see their revenues and expenses and the net income so let me give you first a quick overview of that revenues are items that the company earns how much does the company are in mechanik indicate an on company and then expenses are the amounts that are being sacrificed by a company in order for them to do business operations in simple Tagalog moppida caja Gaston sana na and company like Renta rent or salaries now empleado or sempre they also pay for electric bills and for water and Internet so those are utility bills so they also pay for those expenses okay now in accounting we match revenues versus expenses in order for us to know who commits Abbate or in the loogie now and the Puma pass my own nusiness I've been adding quantitative information at financial information in accounting protego things to begin now my Eric Nam business now looky who last one day but putting it on a deeper perspective lagina dan McConnell let's say for examples I've been ordering on business who lugia who last month para maana 200 pesos lambda1 the impact might not be too deep okay but the impact might not be too deep however if the owner of the company says the hulu ginga who last month a 100,000 non-irrigated attention and numbers non-nil and again the net income Macondo the information became more understandable because mean again latinum how much and that quantifiable information is financial in nature and because of that we are able to understand what happens inside the company okay so due to a path of incidents have been nothing quantitative information do parts of incidents have been adding financial information so remember that equation that I've that I've told you earlier revenue minus expenses will give you net income but if the expenses of a company is greater than what they earn then what is what you call net loss okay okay so let's continue accounting is about Namie entities we're talking about businesses however always remember that accounting or the art of doing accounting is not only limited to businesses we are also dealing or accounting can also be used in nonprofit entities like churches or foundations Casa Cayla and Vina Manila no record-keeping and that method of record-keeping can be provided by the science by the art of accounting okay and then accounting is intended to be useful in making economic decisions remember what I told you earlier in my example is that the owner of the business knew that last month the business suffered a loss okay now because accounting was able to give the owner of the business that information the owner of the business will now be able to make decisions for the company new guitar last month and they end up at napping event this month OD kya quick immediate anomaly last month onion a but nothing go in parody read the Reg so every month who Makita bio because of the information that accounting provides the owners or the managers of a company is able to make economic decisions and also not decisions they can also choose from alternative courses of action back at Ong Navajo and Emani Eric ok Tanguy navajo and the money and then the order of the business through the use of those financial information they will be able to make proper decisions and choose from the alternative courses of action that are available so you need to memorize that definition okay again accounting as a service activity its function is to provide quantitative information primarily financial in nature about economic entities that is intended to be useful in making economic decisions and in making reason choices am alternative courses of action okay so that's the very definition of accounting according to Accounting Standards Council so I'm leaving it to you we we also have other definitions of accounting as provided by the American accounting Association and the American Institute of Certified Public Accountants let's now move on to the nature of accounting the nature of accounting tells us that number one accounting is an art because it is a designed process that will give us an output in the end because it is a design process accounting is regarded as an art by nature also what I told you earlier is that it is financial in nature because we are talking about how much and remember number three that the nature of accounting is it is a process we do a step by step procedures until we get to the end which is financial reports or financial statements and because of the vast amounts of data and information that is available in accounting because it is a record-keeping methodology then accounting is also regarded as an information system now let's move on to the function of accounting now I've told you earlier in the discussion of the definition of accounting that the main function of accounting is to provide quantitative information this financial in nature and Sangha meeting owners or managers and company in order for them to make decisions now here are other functions of accounting number one the maintenance of systematic records we need record-keeping methodologies we need to keep those records and accounting is a very helpful tool okay and then financial results of an entity can be communicated because of accounting it can give the owners or the managers of a company what happened in the operations like my example canina knock on Alam because of accounting an alarm and no owner in the Naha loogie palace on asthma okay and because Nogami not a new accounting information nagar and panatela Tolna communication the financial information has been communicated well to the owner of the company and because we use accounting as a communication tool then we can regard accounting as the language of business always remember that accounting is the language of business because it serves as a communication tool for the owners or the managers of a company to understand the operations of the entity better in financial terms also we can also use accounting and meeting legal requirements so taxation authorities and the Securities of Exchange Commission also needs financial information so for us to be able to meet those requirements statutory requirements then we can also use the art of accounting and then we can also protect the assets or the resources of a business the assets of the reorder resources of a business can be protected because we have a proper record-keeping methodology you can keep track of our resources and lastly it can provide assistance to the management because it gives information about the operations of an entity okay so those are the functions of accounting now let's move on to the last part which is a quick detail no quick overview of the history of accounting we will not be digging too deep into the historical information of accounting but at least let's have an appreciation of where it came from okay so accounting can be traced into ancient civilization among Egyptian tablet Somalia hieroglyphics yeah record-keeping nothing in ancient civilizations gives us evidences of the greatly use of accounting okay so accounting dates back to more than 7,000 years ago in Mesopotamia and also other early accounting records were found in the ruins of Asian Babylon Assyria and Samaria what might be the reason when there is a civilization there is a big chance that there is trade there is Commerce there are merchants and those merchants need record-keeping and the art of record-keeping in itself it's accounting already ok so I have met on May long a chance that Eragon made detailed records no uncommon it's because there's business no intimate okay in the Roman Empire they had access to detailed financial information as evidenced by the deeds of the divine Augustus so it's a big tablet as well and as what you can see beside me okay and then records of cash commodities and transactions were kept by the military personnel on there now let's go to Asia the merchants during the Goryeo dynasty of Korea kept track of their businesses and trades through record-keeping methodologies okay actually there are some more country examples or some more civilizations or dynasties that used record-keeping like in China China's a very broad history of their dynasty so I think there are also record-keeping methodologies that they used during that time now I want you to meet Luca Bartolomeo de Pacioli Luca Pacioli he is the father of accounting now and a bad one see the shine okay so these are Italian mathematician any offenses can friar who who published in 1494 the book summary of arithmetic geometry proportions and proportionality and that is actually a mathematics book but Maron dawn nah chapter nah on business and sabi the chapter name in the phone business or the details of calculation and recording it describes the accounting methods Nagina God made naman order in the Italian merchants okay so I know asama doing the double entry bookkeeping system so just to give you an idea we will be discussing this in the succeeding lessons the double entry bookkeeping system is I'm sorry doing in every business transaction de la epic that door to accounts are always affected the left side on the right side I don't want to call it debit and credit Mona because English I owe that it's like that no in every transaction there are two accounts that are being affected okay so param Babu Millican an office supplies lil alamin office supplies unaffected but the cash no company affected Gaza the Quran can office supplies pero mail uma Bosna para garlics company cassette vinieron DeLeon param Maha billion on office supplies that's how adult double-entry bookkeeping works okay so the evidence of the usage of a double entry bookkeeping system has been in the book of Luca Pacioli okay then gently pull your momma methods nag in the government until today like the preparation of trial balance and balance okay so yeah so just pour the movie sell a hot guy Luca but surely okay so I hope that you understand the our lesson today our next lesson would be the branches of accounting so I'll be talking about the different branches of accounting and the functions of those branches like financial accounting management accounting cost accounting in other branches of accounting thank you for listening very well and see you in the next video I am Kevin throw it to what is a search u.s. accounting lessons pH see you in the next lesson bye bye [Music]