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Module1 Introduction To Acctg

1. Accounting provides quantitative financial information to help with economic decision making. 2. The main branches of accounting are auditing, bookkeeping, cost accounting, financial accounting, financial management, management accounting, taxation, government accounting. 3. Accountants have career opportunities in public accounting, government accounting, private accounting, and accounting education.
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0% found this document useful (0 votes)
37 views20 pages

Module1 Introduction To Acctg

1. Accounting provides quantitative financial information to help with economic decision making. 2. The main branches of accounting are auditing, bookkeeping, cost accounting, financial accounting, financial management, management accounting, taxation, government accounting. 3. Accountants have career opportunities in public accounting, government accounting, private accounting, and accounting education.
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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BASIC ACCOUNTING

Introduction to Accounting & It’s


Environment

Ms. Daizy Marie P. Nicart, CPA


What
What is
is Accounting
Accounting
The Committee on
Accounting Accounting Terminology
American Accounting
of the American Institute
Standards Council of Certified Public Association
Accountants

• Accounting is a service • Accounting is the art of • Accounting is the


activity, Its function is recording, classifying, process of identifying,
to provide quantitative and summarizing in a measuring and
information, primarily significant manner and communicating
financial in nature, in terms of money, economic information to
about economic transactions and events permit informed
entities, that is intended which are in part at judgment and decision
to be useful in making least of a financial by users of the
economic decision. character and information.
interpreting the results
thereof.

1. Accounting is about quantitative information


2. The information is likely to be financial in nature.
3. The information should be useful in decision making.
Purpose
Purpose of
of Accounting
Accounting

Accounting provides the decision-makers with


information to make reasoned choices among
alternative uses of scarce resources in the conduct of
business and economic activities.
Branches
Branches of
of Accounting
Accounting
The main branches of Accounting are :
 AUDITING

An external audit is the independent examination that ensures the


fairness and reliability of the reports that management submits to users
outside the business entity.

 BOOKKEEPING

is a mechanical task involving the collection of basic financial data

The data are first entered in the accounting records or the books of
accounts, and then extracted, classified and summarized in the form of
financial reports.
Branches
Branches of
of Accounting
Accounting
The main branches of Accounting are :
 COST ACCOUNTING

Deals with the collection, allocation, and control of the cost of producing
specific goods and services. This accumulation and explanation of actual
and prospective cost data is important to control current operations and
to plan for the future.

 FINANCIAL ACCOUNTING

Is focused on the recording of business transactions and the periodic


preparation of reports on financial position and results of operations. The
information supplied is usually for the benefit of the owners of an entity,
but it can also be used by management for planning and control
purposes.
Branches
Branches of
of Accounting
Accounting
The main branches of Accounting are :
 FINANCIAL MANAGEMENT

Financial managers are responsible for setting financial objectives,


making plans based on those objectives, obtaining the finance needed to
achieve the plans, and generally safeguarding all the financial resources
of the entity.

 MANAGEMENT ACCOUNTING

Incorporates cost accounting data and adapts them for specific decisions
which management may be called upon to make.
Branches
Branches of
of Accounting
Accounting
The main branches of Accounting are :
 TAXATION / TAX ACCOUNTING

Tax accounting includes the preparation of tax returns and the


consideration of the tax consequences of proposed business transactions
or alternative course of action.

 GOVERNMENT ACCOUNTING

It is concerned with the identification of the sources and uses of


resources consistent with the provisions of city, municipal, provincial or
national laws.
Career
Career Opportunities
Opportunities of
of An
An Accountant
Accountant
Accountants can be employed in various fields of endeavor such as the
following:

 Public Accounting

 Government Accounting

 Private Accounting

 Accounting Education
PHILIPPINE
PHILIPPINE ACCOUNTING
ACCOUNTING STANDARDS
STANDARDS
 ACCOUNTING STANDARDS

Are authoritative statements of how particular types of transactions and


other events should be reflected in the financial statements

 ACCOUNTING STANDARDS COUNCIL (ASC)

It is a standard setting body which is tasked to establish and improve the


“Generally Accepted Accounting Principles” in the Philippines.

The approved statements and the relative interpretations of the ASC are
known as “Statement of Financial Accounting Standards” or SFAS which
will be effective only upon approval by the PRC s
BASIC ACCOUNTING

Accounting and Its Environment

Ms. Daizy Marie P. Nicart, CPA


TYPES
TYPES OF
OF BUSINESS
BUSINESS
TYPE ACTIVITY STRUCTURE
Services Selling people's time Hiring skilled staff and selling their time
Trader Buying and selling products Buying a range of raw materials and manufactured
goods and consolidating them, making them available
for sale in locations near to their customers or online
for delivery
Manufacture Designing products, aggregating Taking raw materials and using equipment and staff to
components and assembling convert them into finished goods
finished products
Raw Materials Growing and extracting raw Buying blocks of land and using them to provide raw
materials materials
Infrastructure Selling the utilization of Buying and operating assets; selling occupancy often
infrastructure in combination with services
Financial Receiving deposits, lending and Accepting cash from depositors and paying them
investing money interest; using the money to provide loans to
borrowers, charging them fees and a higher rate of
interest than the depositors receive
Insurance Pooling premiums of many to meet Collecting cash from many customers; investing the
claims of a few money to pay the losses experienced by a few
customers.
FORMS
FORMS OF
OF BUSINESS
BUSINESS ORGANIZATIONS
ORGANIZATIONS

SOLE PARTNERSHIP CORPORATION


PROPRIETORSHIP
Owned and operated Business owned by its
Has a single owner by two or more stockholders. It is an
called the proprietor persons who bind artificial being created by
who generally is themselves to operation of law, having
also the manager. contribute money, the rights of succession
Sole proprietorships property or industry and the powers, attributes
tend to be a small to a common fund and properties expressly
service-type. with the intention of authorized by law or
dividing the profits incident to its existence
among themselves
ACTIVITIES
ACTIVITIES IN
IN BUSINESS
BUSINESS ORGANIZATION
ORGANIZATION
Business
Business Organizations
Organizations

FINANCING INVESTING OPERATING


*methods an organization *involve the selection and *involve the use of
uses to obtain financial management including resources to design,
resources from financial disposal and replacement produce, distribute,
markets and how it of long-term resources and market goods and
manages these resources that will be used to develop, services.
produce and sell goods and
services.
Components
Components of
of Accounting
Accounting

1. IDENTIFYING
 Recognition or norecognition of business activities as “accountable” events.

2. MEASURING
 The assigning of peso amounts to the accountable economic transactions and events.

3. COMMUNICATING
 Process of preparing and distributing accounting reports to potential users of
accounting information

Financial
Statements
Objective
Objective of
of General
General Purpose
Purpose Financial
Financial
Reporting
Reporting

The objective of general purpose financial reporting is to provide financial


information about the reporting entity that is useful to present and potential
investors, lenders and other creditors, who use that information to make decisions
about buying, selling or holding equity or debt instruments and providing or settling
loans or other forms of credit.
Users
Users of
of Financial
Financial Statements
Statements
 Investors
 They need information to help them determine wether they should hold or sell

 Employees
 Employees are interested in information about the stability and profitability of the enterprise.

 Lenders
 Lenders are interested in information which enables them to determine wether their loans and
interest thereon will be paid when due.

 Suppliers and other trade creditors


 These users are interested in information which enables them to determine wether amounts
owing to them will be paid on maturity.

 Customers
 Customers have an interest in information about the continuance of an enterprise especially
when they have long-term involvement with or are dependent on the enterprise.
Users
Users of
of Financial
Financial Statements
Statements
 Government and their agencies
 These users require information to regulate the activities of the enterprise, determine taxation
policies and as a basis for national income and similar statistics.

 Public
 Financial statements may assist the public by providing information about the trends and
recent developments in the prosperity of the enterprise and the range of its activities.
Fundamental
Fundamental Concepts/Assumptions
Concepts/Assumptions

In recording business transactions, accountants should consider the


following:
 ENTITY CONCEPT
• The business is considered as an “entity that is separate and distinct from the owner or
management”.

 GOING CONCERN
• A business is assumed to continue to operate for an indefinite period of time.

 PERIODICITY CONCEPT / TIME PERIOD


• The life of the business is divided into equal periods wherein at the end of each period,
financial statements are prepared.

 STABLE MONETARY UNIT CONCEPT


BASIC
BASIC PRINCIPLES
PRINCIPLES
In order to generate information that is useful to the users of financial statements,
accountants rely upon the following principles:
 Objectivity Principle
 Accounting records and statements are based on the most reliable data available so that they will be as
accurate and as useful as possible.

 Historical Cost
 This principle states that acquired assets should be recorded at their actual cost and not at what
management thinks they are worth as at reporting date.

 Revenue Recognition Principle


 Revenue is to be recognized in the accounting period when goods are delivered or services are rendered or
performed.

 Expense Recognition Principle


 Expenses should be recognize in the accounting period in which goods and services are used up to produce
revenue and not when the entity pays for those goods and services.

 Adequate Disclosure
 Requires that all relevant information that would affect the user’s understanding and assessment of the
accounting entity be disclosed in the financial statements.
BASIC
BASIC PRINCIPLES
PRINCIPLES
 Materiality
 Financial reporting is only concerned with information that is significant enough to affect
evaluations and decisions.

 Consistency Principle
 The firms should use the same accounting method from period to period to achieve
comparability over time within a single enterprise.

 Comparability
 Means that the financial statements prepared are worth comparing for with other companies of
the same line of business by pointing out similarities and differences

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