 Hello, I welcome you to this session. In this session, we will discuss the first unit of the course Financial Accounting of Become First Semester. The name of the unit is Introduction to Accounting. This unit will be discussed through three differentiations. This is the first part and in this part we will discuss meaning of bookkeeping, meaning and objectives of accounting and functions of accounting. So, let us start our discussion with an example. Let us suppose Mr. X wants to start a business for that he invested Rs. 10,000. Then he appointed an employee. He purchased some goods that will be sold to the consumers. At the same time, he has some expenses like payment of electricity bill, payment of phone bill. At the same time, the salaries that he has to pay to the employee. As the business continues, Mr. X desires to know at the end of the first month what is the amount of profit that he has earned or the amount of loss that he has suffered. But how he will come to know about this? Besides the profit or loss, there are some other aspects too, like business properties, business liabilities, etc. So, the way to know about all this is to keep the records of the business transactions. So, when the recording of business transaction is concerned, the system through which these transactions are recorded known as bookkeeping. So, we can define bookkeeping as the process of recording business transactions. These transactions are recorded in a set of books. That set of books is generally known as book of accounts. So, we have different types of books like journal, book, leisure book, etc. We will discuss these books as we will move forward to other units of this course. So, bookkeeping is the process of recording transactions and it is the scientific way of keeping the records of the business transactions as and when it takes place. So, let us move to another term that is accounting. What is accounting? Accounting is mainly concerned with classification, summarization and furnishing of financial information to the users. So, accounting starts where bookkeeping ends. Bookkeeping is concerned with recording the transactions on the basis of the date of the transactions, means as and when they take place. When we move to accounting, accounting is concerned with classification, summarizing and furnishing of financial information. So, accounting is the system of interpreting the results of the business transaction that has been recorded. So, as far as bookkeeping is concerned, we will mainly deal with two books, journal book and leisure book. When a transaction first takes place on that particular date, we record that transaction that is known as journalizing. So, that will be recorded in journal book. Then these transactions will be transferred to another book known as leisure book. So far as accounting is concerned, we will record the transactions or the accounting is mainly concerned with the preparation of trial balance and final accounts. So, we will discuss these aspects later on. Let us move to another part of this discussion, that is, objectives of accounting. Number one objective to evaluate the performance of the business periodically. If we refer back to our example of Mr. Axe, then he wants to know the business performance at the end of the first month. So, the way is to keep the records from the very beginning, keep the records of the business transactions and on the base of those transactions, how the business is performed in terms of profit or in terms of loss can be evaluated. Then to ascertain the financial position of the business, the amount of money that the business is required to pay to other person or the amount of money that the business will receive, the amount of capital, the amount of profit, amount of loss, all this shows the financial position. So, if there is any borrowed money, how will come to know only through the process of accounting? So, the financial position in terms of assets, liabilities, profit, loss, etc. can be ascertained through accounting. Number three, to help the management in taking business decisions. To take any business decisions, we have to first depend on the financial information, that information is supplied by accounting. So, management can take decisions on the basis of the accounting, on the basis of the information supplied through the process of accounting. Then accounting provides information about the business to the users, to the users of various financial information. So, there are tax authorities, there are creditors, there are investors, all these stakeholders need financial information and accounting provides information to these users. Then to control the use of resources and business activities of the business. As the financial information will be provided by accounting on that basis, we can use our radar, we can optimally use our resources and we can control business activities as well. So, if we move forward to the third aspect of this discussion session, that is functions of accounting. Number one, record keeping, that we have already discussed that in bookkeeping, we first recorded the transactions. This is the primary recording of business transactions. Then in accounting, we summarize it, we classify it and the information is provided to the users. In our case that is the example we have discussed in that case, Mr. X is the user of financial information. So, he wants to know his amount of profit or amount of loss. So, as a function accounting provides that information to the users. Then number two, decision making. Accounting aids in decision making. Without the accounting information, it is very difficult to take any business decision. Meeting legal requirements. In business, we have to meet the defined legal requirements, defined legal conditions, like payment of taxes to the tax authorities. So, tax information, the filing of tax is done at the end of the financial year. So, this is possible if we record all the business transactions from the very beginning. And accounting helps us in keeping the records as well as providing the information of financial position of the business. Then the last one is communicating information. So, the results of the financial performance will be communicated to the prospective investors, to the financial institutions, to the creditors, means to those persons to whom the business is inducted. Then shareholders, the owners of the business. All these stakeholders, all these interested parties wants to know accounting information. And the system of accounting helps in furnishing this information. So, in this session, we have mainly discussed the meaning of bookkeeping, which is a scientific process of recording business transactions. Then accounting, which is concerned with classification, summarization, and furnishing of information. Then we have discussed objectives of accounting. And at the last, we have discussed the functions of accounting. In the second session, we will discuss the users and users of financial information. Thank you for watching.