1. What is Accounting?

- American accounting association:

The process of identifying, measuring, and
communicating economic information to permit informed
judgements and decisions by users of the information.
- Philippine Institute of certified public accountants
(PICPA)
System that measure business activities, processes,
given information into reports and communicates finding
to decision makers.
-association of international certified professional
accountants
Art of recording, classifying, and summarizing in a
significant manner, and in terms of money, transaction,
and events, which are in part at least of a financial
character and interpreting the result thereof.
2. THE NATURE OF ACCOUNTING
- Accounting is a process
- Accounting is an art
- Accounting deals with financial information
- Accounting is a means and not an end
- Accounting is an information system
3. HISTORY OF ACCOUNTING
- Cradle of civilization:
= 75,000 BC
= Mesopotamians
= Use of clay tablet
= Egyptian use bone labels
- 14th Century (Double entry bookkeeping)
= Single entry
= Double entry bookkeeping system by Luca Pacioli in
1494
- French of Revolution (1700)
= Accounting theory develop
- The Industrial Revolution (1760-1830)
= Mass production and importance of fixed asset has
given attention
- 19th century the beginnings of modern Accounting in
Europe and America
= modern Accounting in Europe and America
= Chartered Accounting (CA)
 - The present development of modern Accounting
standards and commerce.
= Financial statement audit
= SEC
= International Accounting standards
4. FUNCTIONS OF ACCOUNTING IN BUSINESS
1. Keeping a systematic record of business transaction
1. Protecting properties of the business
1. Communicating result to various parties in or connected
with the business
1. Meeting legal requirements
1. 8 BRANCHES OF ACCOUNTING
1. Financial accounting
Primarily handling the recording of financial transactions
of a business
- Financial accounting involves recording and clarifying
business transactions along with the preparation and
presentation of financial statements.
- It Follows General Accepted accounting (GAAP)
principles and focuses on historical data. In the
Philippines, we used PAS or Philippines Financial
Reporting Standards and PFRS or the Philippine
Accounting Standards.
Analyza the company's balance sheet and prepare a
profit and loss statement to advise management or
stakeholders regarding loans, investments. Or
acquisition.
-Provide vital economic business information for
creditors, banks or financial institutions, regulators,
suppliers and tax professionals.
2. Management Accounting
Emphasizes preparation and analysis of accounting
information within the organization. It's objective is to
provide timely and relevant information for internal users
of accounting information such as managers and
employees in their decisions making needs.
3. Government Accounting
Encompasses the process of analysing, recording,
classifying. Summarizing and communicating all
transaction involving receipts and deposition of
government fund and property and interpreting result
thereof.
- Government accounting process
COA
= Responsible for keeping Government general
accounts
= Dissemjnates accounting rules to be used by all
agencies
DBM
= Formulation and implementation of the national budget
to attain our national and socio economic plans and
objectives
=Efficient utilisation of government funds and revenues.
BTr
= Safekeeping of national funds
= Management and control of the disbursement of funds

4.Auditing
An unbiased examination and evaluation of the financial
statements of an organization. It includes steps you
determine whether or not the company's financial
statements are presented truthfully. Audited financial
statements are accompanied by the authors opinion.
5. Accounting Research
It helps standard setting bodies around the world to
develop new standards that will address recent issues or
trends in Global business.
6. Accounting Education
It deals with developing future accountants by creating a
relevant accounting curriculum
7. Tax accounting
A tool used by companies to understand their tax liability
and avoid penalised. It involves the determination of
income tax and other taxes, tax advisory service,
evaluation of tax decisions, and other related matters.
 8. Cost Accounting
A subset of management accounting that aims to
capture the company's total cost of production by
assessing all the variables and fixed cost.
2. ACCOUNTING INFORMATION
- it is the end product of Accounting
- it is used in deciding between different courses of
action and results in informed decisions making.
3. TYPES OF INFORMATION CLASSIFIED AS TO
USERS NEEDS
- General purpose accounting information
 To meet the common needs of most statements users. It
is provided by financial accounting and is prepared
primarily for external users.
- Special purpose accounting information
To meet the specific needs of statements users. It is
provided by management accounting or other branch of
accounting and is prepared primarily for internal users.
4. USERS OF FINANCIAL INFORMATION
1.INTERNAL USERS
- Investors/Owners/Stockholder
These parties provide the financial resources to keep
the business going. They decide whether to invest or not
deoending on the estimated amount on incomes on
investment.
- Management
Organizational managers use financial information to set
goals for their company. Managers evaluate their
progress towards these goals and use financial data for
future management actions.
- Employees
Although employees are not involved in the decision
making of the company, nonetheless they are interested
in the financial information to determine if they have a
future in the company.
2. External users
- Financial institutions/creditors
Before extending any credit, financial institutions use
financial information to determine the capacity of the
business organisation to pay its obligations and its
interest at the appropriate time.
- Government
Financial information is important for tax purposes and
in checking compliance with SEC requirements.
- Labor Unions
Labor unions negotiators wants to see a firm financial
statements to arrive at negotiating position regarding the
compensation and benefits of the employee that they
represent.
- Customer
Customers or clients mat become interested in knowing
whether a company can continously provide their needs
- Suppliers
 Supplier who supply credit will likely want to delve into
the company's financial statements and historical
payments patterns to reach a maximum amount of
allowable credit.
- Potential investors
Before investing, potential investors may not only br
interested in the company's current financial position
and the result of the operation but also in the company's
financial history.
5. FORMS OF BUSINESS ORGANIZATION
- Sole proprietorship
= Most popular form of business structure and is east to
set up.
= Owned by one person.
- Partnership
= A business organization owned and managed by two
or more people to contribute money, property, or
industry to a common fund to earn profit
= Two types of Partnership are:
General Partnership
Limited Partnership
- Corporation
= A business organization that acts as a unique and
separate entity from its shareholders
= It is managed by an elected board of directors;
investors are called STOCKHOLDERS and unit of
ownership is called SHARE OF STOCKS
- Cooperative
= It is an association of small producers and consumers
who come together voluntarily yo form a business that
they own, manage, and patronize
- LLC or Limited Liability company
= it is a hybrid entities that combine the characteristics
 of a corporation with those of a partnership or sole
proprietorship
- Business Activities
= Refers to all actions a business undertakes with the
primary aim to generating profits.
= It Encompasses all economic Activities carried out by
a company in its daily operations.
6. MAJOR TYPES OF BUSINESS ACCORDING TO
ACTIVITIES
- Service business
= an enterprise composed of a professional or team of
experts that deliver work or aid in completing a task for
the benefit of its customers
= it generally utilises it's employees to provide intangible
products or services to customers
= A service business primary revenue source is service
performance, often called service revenues.
Cash on hand - pays employees and other expenses -
perform devices - Receive payment from customer
- Merchandising business
= Companies that purchase goods ready for sale and
then sell them to customers.
= it generally sells tangible products
= Primarily earn revenues from the sale of goods or
merchandise also known as sales revenues or sales
= there are two types of merchandising business
Retailers
Wholesalers
Cash on hand - buys good - stores good as inventory -
sells inventory- received payment from customer
- Manufacturing business
= it refers to the company that uses raw materials or
components to create finished goods.
= they use raw materials, components or parts that are
processed using machines, computers. And Labor to
produce a product.
= similar to a Merchandising business, they earn
revenues primarily from the sale of their manufactured
products
Cash on hand - pays for inputs - converts inputs into
finished goods - sell inventory - received payment from
customer
- Accounting concepts
 = Refers to basic assumptions on which we base our
accounting records
- Accounting principles
= Refers to rules that have emerged from the use of
basic accounting concepts. These rules have involved
over a long period of time and represent the collective
wisdom of accounting history.
7. ACCOUNTING CONCEPTS AND PRINCIPLES
- Materiality principle
Key accounting principles that financial statements
should reflect all information that could influence the
decision of the users without overwhelming them with
irrelevant information
- Going concern principle
A company that has the resources needed to continue
operating indefinitely until it provides evidences to the
contrary
- Time period
Business should report the financial result of its activities
over a standard time period
- Monetary unit principles
You inly record business transaction that can be
expressed in terms of currency. Any amount involved in
the business is stated in a single monetary unit.
- business entity principles
The transaction associated with a business must be
separately recorded from those of its owners or other
businesses.
- Cost principles
Companies should value large fixed assets, like real
estate and machinery, based on what the company paid
for them at the time of acquisition, rather than at their
current fair market value.
- accrualaccounting principles
Allows a company to record revenue before receiving
payment for goods or services sold and record
expenses as they incurred
- matching principles
Cost should be matched with the revenue generated
It requires that the expenses incurred during a period be
recorded in the same period in which the related
revenue was earned
- Disclosure principles
All necessary, relevant, and material information should
be reported in this principle of transparency
- Conservatism principles
Expenses and liabilities should be recognized as soon
as possible in a situation where there is uncertainty
about the possible outcome and in contrast record
assets and revenues only when they are assured to be
received
- objectivity principles
Financial statement of an organization is based on solid
evidence
This principle intended to keep the management and
accounting depth in the entity from producing financial
statements that are slanted by bias and opinions.