Are you a BBA 1st Semester student looking for easy-to-understand and exam-ready notes on Financial Accounting? You’re in the right place!
This page covers Unit 1: Introduction to Financial Accounting, where you’ll learn the basics of accounting, including how businesses record and report financial transactions. You can also download unit-wise PDF notes for free.
Download Unit 1 Notes – Financial Accounting (PDF)
Click the link below to download your Unit 1 Financial Accounting notes in PDF format – ideal for BBA 1st Semester students:
Download Unit 1 – Introduction to Financial Accounting PDF
These notes are curated for clarity, simplicity, and are aligned with major university syllabi.
What is Financial Accounting?
Financial Accounting is the process of recording, summarizing, and reporting the financial transactions of a business.
In this unit, you will study the definition, scope, and objectives of financial accounting and understand how it helps businesses track performance and make informed decisions.
Importance and Limitations of Financial Accounting
This section explains:
Why financial accounting is crucial for business transparency and accountability
How it helps with decision-making, compliance, and attracting investors
Its limitations – such as historical data, ignoring non-financial factors, and limited forward-looking insights
Users of Accounting Information
You’ll explore who uses accounting data and why, including:
Internal users: Management, employees
External users: Investors, creditors, government, tax authorities
Each user group relies on financial statements for different purposes like planning, investment, and compliance.
Accounting Concepts, Conventions, and Principles
Financial accounting is based on a set of rules and assumptions. This part of the unit covers:
Accounting concepts: Going concern, matching, accrual, money measurement, etc.
Accounting conventions: Conservatism, consistency, materiality
Principles that form the foundation of accurate financial reporting
Accounting Standards & IFRS (Brief Overview)
Learn about the role of Accounting Standards in ensuring consistency and comparability across financial reports.
You’ll also get a brief introduction to IFRS (International Financial Reporting Standards) – the globally accepted framework for preparing financial statements.
Accounting Process – From Journal to Financial Statements
Accounting is a systematic process. In this section, you’ll learn how transactions are recorded and processed:
Journal, Ledger, and Trial Balance
Journal: The book of original entry (chronological record of transactions)
Ledger: Classifies and summarizes the journal entries by account
Trial Balance: A statement to check mathematical accuracy of ledger accounts
These three form the backbone of the accounting cycle.
Types of Accounts & Rules of Debit and Credit
Learn the Golden Rules of Accounting and how to apply them to:
Personal accounts
Real accounts
Nominal accounts
Understanding debit and credit rules is essential for recording accurate journal entries.
Preparation of Basic Financial Statements
After processing all transactions, businesses prepare key financial reports:
Trading Account
Profit and Loss Account
Balance Sheet
These statements provide insights into a company’s performance, profitability, and financial position.
The Accounting Equation
The basic accounting equation is:
Assets = Liabilities + Owner’s Equity
You’ll explore how this equation stays balanced through every transaction, forming the basis for double-entry bookkeeping.
Final Thoughts
Unit 1 lays the foundation of your journey into the world of accounting. Mastering these basics will not only help you ace exams but also prepare you for real-world business finance.
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