Accounting

External auditing

Refers to the examination of financial statements by an independent CPA with the purpose of expressing an opinion as to fairness of presentation and compliance with the GAAP

Interpreting

Refers to the process of analyzing and evaluating the information presented in the face of the financial statements and accompanying notes

Clasifying

Refers to the process of sorting or grouping similar business transactions events into their respective kinds or classes.

cost accounting

Refers to the recording, presentation, and analysis of manufacturing costs.

Recording

Refers to the routine and mechanical process of writing down business transactions. Known as Journalizing or Bookkeeping

service business

Simplest form of business and provides services to clients or customers in exchange for fees, rent, interest, or royalties

Step 10 : Reversing journal entries are journalized and posted

To simplify the recording of certain regular transactions in the next accounting period

basic purpose of accounting

To supply financial information to users of the information to help them make informed judgments and better decisions

Step 3 : Journal entries are posted to the ledger

To transfer the information from journal to the ledger for classification

internal auditing

-deals with determining the operational efficiency of the company regarding the protection of the company's assets, accuracy and reliability of the accounting data, and adherence to certain management policies.

Partnership

A form of business owned by two or more persons. The details of the arrangement between the partners are outlined in a written document called articles of partnership. (Profits are divided among partners based kn their agreed sharing)

Sole Proprietorship

A form of business that is owned by one person; the simplest, and the most common form of business organization. It is not separate form the owns. The business and the owner are inseparable.

Accounting is means and not an end

A means to an end: the primary objective of accounting is to provide information that is useful for decision making. Accounting is not an end: the final product of accounting information is the decision that is enchanted by the users of that information.

Branches of Accounting

Financial accounting, Management Accounting, Government Accounting, Auditing, Tax Accounting, Cost Accounting, Accounting Education, Accounting Research.

manufacturing business

Involves the most complex activities and actually produces the goods that it sells to customers

Investing Activities

Involves the selection and management including disposal and replacement of long term resources that will be develop, produce, and sell goods and services

Operating Activities

Involves the use of resources to design, produce, distribute, and market goods and services.

Cooperatives

Is a duly registered association of persons with common bond of interest, voluntarily joining together to achieve their social, economic and cultural needs. The owners plate called members who contribute equitably to the capital of the cooperative.

Forms of Business Ownership

sole proprietorship, partnership, corporation, cooperatives

Accounting Education

deals with developing future accountants by creating relevant accounting curriculum.

Accounting Research

focuses on the search for new knowledge on the effects of economic events on the process of summarizing, analyzing, verifying, and reporting standardized financial information, and on the effects of reported information on economic events.

Phases/ Functions of accounting.

recording, classifying, summarizing, interpreting

Types of Businesses

service, merchandising, manufacturing

Financing Activities

Are the methods an organization uses to obtain financial resources from financial markets and how it manages the resources.

Accounting is a process

As it performs the specific task of collecting, processing, and communicating financial information. It follows some definite steps like the collection, recording, classification, summarization, finalization, and reporting of financial data.

External users

Creditors, Investors, Government, Consumers, Researchers, Financial Institutions, Regulatory Agencies ( individuals and organizations outside a company who wants financial information about the company)

Management Accounting

Emphasizes the preparation and analysis of accounting information within the organization. The objective is to provide timely and relevant information for those internal users of accounting information.

Article 2 - Professional regulatory board of accountancy

Enforces the provisions of the Philippine Accountancy act. It is also granted the right to issue, suspend, revoke or reinstate CPA certificates for the practice of the profession.

Auditing

External auditing and internal auditing

Activities of a Business Organization

Financing Activities, Investing Activities, Operating Activities

RA 9298 Philippine Accountancy Act of 2004

Objectives: - Standardization and regulation of Accounting education - Examination for registration of certified public accountant - Supervision, control, and regulation of the practice of accountancy in the Philippines

Internal users of accounting information

Owners, Management, Employees ( individuals inside a company who plan, organize, and run the business.)

Accounting is a service activity

Provides assistance to decision makers by providing them financial reports that will guide them in coming up with sound decisions

merchandising business

Purchase goods from suppliers and, without altering the state of the goods bought, sell the same at a higher price than cost.

Accounting Cycle

Refers to a series of sequential steps or procedures performed to accomplish the accounting process.

Financial Accounting

The field of accounting that focuses on providing information for external decision makers. Primarily concerned with the recognition, measurement and communication of economic events.

Summarizing

The phase in the accounting process which involves preparation of the financial statement

Government Accounting

This branch of accounting deals with how the funds of the government are recorded and reported

Step 5 : Preparation of worksheet including adjusting entries

To aid the preparation of financial statements

Step 9 : Preparation of a Post-closing trial balance

To check the equality of debits and credits after the closing entries

Step 8 : Closing journal entries are journalized and posted

To close temporary accounts and transfer profit to owners equity

Step 1 : Identification of events to be recorded

To gather information about transactions or events generally through the source documents

STEP 4 PREPARATION OF THE TRIAL BALANCE

To provide a listing to verify the equality of debit and credits in the ledger

Step 6 : Preparation if the financial statements

To provide useful information to decision makers

Step 7 ; adjusting journal entries are journalized and posted

To record the accruals, expirations of deferrals, estimations and other events form the worksheet

Step 2 : Transactions are recorded in the journal

To record the economic impact of transactions on the firm in the journal

Corporations

A business organized as a separate legal entity (artificial person) under the corporation law with the ownership divided into transferable shares of stocks. The owners are called stockholders or shareholders.

Definition of accounting (Accounting Standard Council)

Accounting a service activity, it's function is to provide quantitative information, primarily financial in nature, about an economic entity that is intended to be useful in making economic decisions

Accounting is both an art and a discipline

Accounting is a systematic method consisting of definite techniques and its proper application requires skill and expertise. So by nature, accounting is and art.. and because it follows certain standards and professional ethics, it is also a discipline.

Nature of Accounting

Accounting is a systematic recording of financial transactions and the presentation of the related information to appropriate persons

Definition of accounting (American Institute of Certified Public Accountants)

Accounting is an art of recording, classifying, and summarizing, in a significant manner, and in terms of money, transactions and events which are in part at least of a financial character, and interpreting the results thereof.

Definition of accounting (Financial Accounting Standards Board)

Accounting is an information system that measures, processes, and communicates financial information about an economic entity

Accounting is an information system

Accounting is recognized and characterized as a storehouse of information

Definition of accounting (American Accounting Association)

Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgement and decision by users of the information

Accounting deals with financial information and transactions.

Accounting records financial transactions and data, classifies these and finalizes their results given for a specific period of time, as needed by their users.