BCA 001 –Accounting Plus

Chapter 1:
Accounting and Its
Environment (Part 1)
Chapter 1:
Accounting and Its Environment

Learning Objectives:

 L0 1- Describe the meaning of business.

 LO 2-Distinguish the different types and forms of

business organization.
 LO 3-Define accounting and explain its role in
business.

2
 Chapter 1:
Accounting and Its Environment

Learning Objectives:

 L0 4- Identify and discuss the branches of

accounting.
 LO5- Explain the basic accounting principles.

 LO 6-Have knowledge and appreciate the history and

evolution of accounting
3
L0 1 - Describe the meaning of business.

What is Business?

“Business” refers to the

systematized effort of
persons to produce and
sell goods and/or services,
with the objective of
making profit.
4
L0 1

Aspects of a Business

1 Establishment of the business

2 Provides goods or services
3 Earn profit
4 Satisfies the customers and consumers

5
 Guess What
Identify the name of the business and describe the nature of its
operation.

,124$
185,244 users

6
L0 2 Distinguish the different types and forms of business organization.

Types of Business

1 Service
- a business that provides work
performed by professional skills,
expertise, advice, and other similar
type of services for the benefit of its
clients or customers.
- provide intangible products

Examples:
parlors, accounting and law firms,
7
banks, schools, etc.
L0 2

Types of Business

2 Merchandising
- known as “buy and sell” business
- buys product/s at wholesale price
and sells the same product/s at retail
or mark-up price.
- sells a product without any
modification.
Examples:
online buy and sell stores, grocery 8
stores, distributors, RTWs.
L0 2

Types of Business

3 Manufacturing
- a business that buys raw materials
with the intention of using them as
materials in making a new product.
- raw material are converted to finished
goods using labor and overhead cost.

Examples:
shoe factories, winery, automotive
9
companies, pharmaceuticals companies
Guess What
Determine the type of business.

1.
Grab and Angkas drivers
4.

Repair and maintenance shops

2.
5.

3.
Gasoline stations Furniture shops
10
 Online Activity
Determine the type of business
1. Grab and Angkas drivers 6. YouTubers/Vloggers

2. Chowking 7. Textile Factory

3. Gasoline stations 8. Doctors and Nurses

4. Repair and maintenance 9. Lazada and Shoppe

shops

5. Furniture shops 10. Food Panda 11

 Key Notes:
Income Determination:
For service, merchandising and manufacturing type of business.

Service Type Merchandising and

Manufacturing Type
Service Revenue XX Sales XX
Less: Expenses (XX) Less: Cost of Goods Sold (XX)
Income (Loss) XX Gross Profit XX
Less: Expenses (XX)
Income (Loss) XX

12
L0 2

Forms of Business Organization

1. Sole Proprietorship

- a business organization or an entity

that is owned by one person,
commonly called the sole proprietor.
- the sole owner manages and make
decisions about the operation of the
business.

Examples: Wilbert’s sari-sari store ,

Dr. Reyes Clinic, etc.
13
L0 2

Forms of Business Organization

2. Partnership
- another form of business organization
that is owned and operated by at
least two or more persons who
agree to contribute money, property
or services to a single fund.

- with the intention to divide the profit

among the partners

Examples:
14
Blanco and Tan Law firm, SGV, etc..
L0 2

Forms of Business Organization

3. Corporation
- considered to be a very complex type
of business organization that is owned
by its shareholders.
- it is considered as legal entity
(artificial being), distinct to its owners.
- it enjoys the right of succession,
powers and responsibilities authorized
by the law.
Examples: Jollibee Foods Corporation,
15
Procter and Gamble Company, etc.
If you decide to put up a business in the
future, what type and form of business would
your prefer?

16
LO 3- Define accounting and explain its role in business.

Definition of Accounting

1 According to the Accounting Definition Highlights

Standards Council (ASC)
A service activity of:
• Journalizing, record keeping/
“Accounting is a service activity. Its bookkeeping of business
function is to provide quantitative transactions
information, primarily financial in • Classifying and Summarizing
nature, about economic entities, that Quantitative Information
is intended to be useful in making
economic decisions.” Economic Entities

Used for Economic decisions

17
LO 3

Definition of Accounting
According to the American Definition Highlights
2
Accounting Association
(AAA): Identifying of accountable events
or business transactions
“ Accounting is the process of “Business transactions are
identifying, measuring and events that must be measurable
communicating economic in terms of money that may affect
the business.”
information to permit informed
Measuring in terms of a monetary
judgments and decisions by users of
value (Philippine peso)
the information.”
Communicating to the
users for decision making
18
LO 3

Definition of Accounting

3 According to the American Definition Highlights

Institute of Certified Public Summarizing financial information in a
Accountants (AICPA): report also known as financial
“Accounting is the art of statements
recording, classifying and Financial statements:
1. Statement of Financial Position
summarizing in a significant 2. Statement of Financial Performance
manner and in terms of money, 3. Statement of Changes in Owners
transactions and events which are, Equity
in part at least of a financial 4. Statement of Cash Flows
5. Footnotes/Notes to Financial
character, and interpreting the Statements
results thereof. 19
LO 3

Accounting as Language of Business

“serves as a tool to facilitate

understanding financial information
between and among users”

20
LO 3

Role of Accounting in Business

to provide new concepts and Who will use this financial information?
strategies in the creation of 1.Internal users 2. External users
reliable and accurate financial o Owners o Potential
information o Management Investors
o Creditors
Financial information about the
company’s: o Employees
o Government
Resources and obligations
o Customers
Profitability o Public
Capital
…for the purpose of making
Cash Flows
right decisions 21
Online Activity
Identify the information needs of the following users of accounting
information.
Internal users External users

1. Owners 1. Potential Investors

2. Management 2. Creditors
3. Employees

4. Government

5. Customers
6. Public
“ “Life is like accounting
everything must be
balance.” -Anonymous

23
Thank you and God bless!
Next Topic

 L0 4- Identify and discuss the branches of

accounting.
 LO5- Explain the basic accounting principles.

 LO 6-Have knowledge and appreciate the history and

evolution of accounting
25
References:

Textbook:
Basic Accounting, Made Easy, Ballada, (2018, 2019, 2020) Sampaloc, Manila

Websites:
▪ https://www.thestreet.com/investing/history-of-accounting-timeline-14944095
▪ https://www.investopedia.com/terms/c/cpa.asp
▪ https://www.accountingverse.com/accounting-basics/types-of-businesses.html

26
For questions and
concerns
aselonino.makabenta@evsu.edu.ph

https://www.facebook.com/ascelllow

27