C hapter 1: Introduction to accounting

Contents of chapter
This chapter contains a brief introduction to the world of business, and how accounting fits into it. It also looks
at the main essential functions of accounting, and considers who is going to use accounting information.

Notes for teachers

Definition of accounting.
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We have deliberately not given the students a definition of accounting in Chapter 1. At this point in their
studies, it would mean nothing to them. Instead the definition is left until later in the book. See
Section 10.9 in Chapter 10.

Keep it simple.
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It is better if unnecessary detail is not included early in the course. For instance, there is no point in
mentioning balance sheets, trading and profit and loss accounts, or funds flow statements, as students do
not yet know what they are.

The main factors.

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If you get students to understand that accounting is concerned with:
(i) recording accounting data,
(ii) classifying and summarising,
(iii) and then communicating the information to:
(a) business owners,
(b) banks,
(c) tax officials,
(d) possible buyers of the business, and
(e) other interested people e.g. creditors,
that will be sufficient at this stage.

The website for HKSA is http://www.hksa.org.hk and HKAAT is http://www.hkaat.org.hk.

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To arouse students’ interest, ask students why accounting is needed in business.

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Use the family as a context to introduce some basic accounting concepts and terms such as revenue,
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expenses, etc.

Use more local examples to explain the three types of business.

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