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  1. The Need for Book-keeping and Accounting
  2. The Need/Importance of Book-keeping
  3. Users of Accounting Information
  4. Qualities of Accounting Information
  5. Limitations of Accounting Information

The Need for Book-keeping and Accounting

The recording phase of accounting is known as the book-keeping. The practice of accountancy will be virtually impossible if there is no day-to-day recording of financial transactions as they occur.

(a) Keeping accounting records as a soul of the business

Recording of relevant information in accounting is the pivotal and backbone of accounting principle. The recording provides both accounting/financial information to members of the public who are interested in the business through the financial statement. It also helps the management decision making.

(b) Stock valuation

Definition of Stock

Stock may be seen as any item whether raw materials ,work-in-progress or finished goods kept in store for resale or as input for further productions. Specifically stock will consist of :

  1. Finished goods purchased for resale
  2. Indirect materials (e.g stationery)
  3. Raw materials (also referred to as direct materials)
  4. Work in process or work in progress
  5. Finished goods manufactured by the business and yet to be sold

Points to note:

  1. Another term for stock is INVENTORY
  2. The unsold items in one period become the closing stock of that period and the opening stock of the next period.

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Lesson tags: Financial Accounting Lesson Notes, Financial Accounting Objective Questions, SS1 Financial Accounting, SS1 Financial Accounting Evaluation Questions, SS1 Financial Accounting Evaluation Questions First Term, SS1 Financial Accounting First Term, SS1 Financial Accounting Objective Questions, SS1 Financial Accounting Objective Questions First Term
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