Principles of Accounting

Accounting and its Environment

 Accounting
 Absolutely essential in the world of business
 System that measures business activities, processes that information into reports and
communicates the results to decision-makers
 Quantifies business communication
 Called the “language of business”

-Definition of Accounting-

 Accounting
 A service activity
- Provide quantitative information
- Primarily financial in nature
- About economic entities
- Intend to be useful in making economic decisions

 Information system
- Measures
- Process
- Communicates financial information

 Is the process of
- Identifying
- Measuring
- Communicating economic information to permit informed judgements and decisions

 The art of
- Recording
- Classifying
- Summarizing in a significant manner and in terms of
a. Money
b. Transactions
c. And events
Which are, in part at least, of a financial character, and interpreting the results
thereof.

Ex. Your name is “A”, and you want to start a small sari-sari store. Your starting money is P 5,000.

entity
A A’s Store
First Financial Interaction
P5,000 P5,000  Capital
 - When you start a business, your capital will be the entity of your business
- We need to separate your personal concerns from business

-Evolution of Accounting-

 Giovanno Farolfi and Company

- Amatino Manucci is their partner
- Oldest known existing examples of the double-entry system

 Amatino Manucci
- Inventor of double-entry bookkeeping
- Used five books- general ledger, two merchandise ledgers, expenses ledger, cash book

 Luca Pacioli
- A Franciscan friar and celebrated mathematician
- Associated with the introduction of double-entry bookkeeping
- Published the book, “Summa de Arithmetica, Geometria, Proportioni et Proportionalita or
“Everything about Arithmetic, geometry, Proportions and Proportionality” which includes
Particularis de Computis et Scripturis “Details of Calculation and Recording”
- Did not invent double-entry bookkeeping, but rather describe what were prevalent accounting
practices of the day.

-Schmalenbach and the Model Chart of Accounts-

 Eugen Schmalenbach
- German academic and economist
- Was frustrated repeatedly with his failure to compare meaningfully the financial data made
available by different companies
- The Model Chart of Accounts, he published

 ASEAN
- Association of Southeast Asia Nations
- Established Aug. 8, 1967
- Founding Fathers are: Indonesia, Malaysia Philippines, Singapore and Thailand
- Brunie Darussalam joined Jan. 7, 1984
- Vietnam joined July 28, 1995
- Lao PDR and Myanmar joined July 23, 1997
- Cambodia on April 30,1999 Sales
-Fundamental Business Model-
Capital
4
4
1
Asset Products or
Business Owner Operating
Cash Services
Assets Use
3
Banks
2
5

Return Cost
2
 1. First, the investors provide the required capital for the business. The cash investment will then be
held in a bank account.
2. The cash in the business can be:
o Converted into another type of asset that will be used in the business or sold; or
o Spent on operating costs such as salaries, rentals, and utilities.
3. The combination of business resources provides the basis for producing the products or services.
4. The sales of a product or service generates an asset called a receivable (debtor). This asset once
collected will produce a cash inflow for the business.
5. If there’s an existing debt from banks, the cash inflow from collections will be used to provide the
debt providers with interest on their loans to the company.
 The model illustrates the way money flows around a business and provides the basis of
accounting

-Types of Business-
Type Activity Structure Example
Services Selling people’s time Hiring skilled staff and selling their time Accounting, Pedicure, Restaurants
Trader Buying and selling products Buying a range of raw materials and manufactured goods Wholesaler, Retailer
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 converting them to finished Construction, Chemicals, Food and drink
components, and assembling goods
finished products
Raw Growing or extracting raw Buying blocks of land and using them to provide raw Farming. Mining
Materials materials materials
Infrastructur Selling the utilization of Buying and operating assets; selling occupancy Hotels, telecoms, transport
e infrastructure
Financial Receiving deposits, lending and Accepting cash from depositors and paying them interests Bank Investment house
investing money
insurance Pooling premiums of many to Collecting cash from many customers Insurance
meet claims of a few

-Forms of Business Organizations-

 Sole Proprietorship
- Business organization has a single owner
 Partnership
- Business owned and operated by two or more persons (no limitation)
- Mutually agreed
 Corporation
- Business owned by its stockholders
-Micro, Small and Medium Enterprises-
 99.6% of the total business enterprises in the Philippines composed of MSMEs
 Micro enterprises
- P3.0 (before P1.5 million) or less
- Not more than nine workers
 Small
- Above P3.0 (before P1.5 million) to P15 million
- Employed 10 to 99 workers
  Medium
- Above P15 million to p100 million
- Employ 100 to 199 workers
-Activities in Business Organizations-
 Financing Activities
- Organizations require financial resources to obtain other resources used to produce goods and
services.
- Methods an organization uses to obtain financial resources from financial markets
- Owners and creditors, such as banks and suppliers are its primary sources
 Investing Activities
- Managers use capital from financing activities to acquire other resources
 Efficient business- one that provides good and services at low costs
 Effective business- one that is successful in providing goods and services demanded by
customers
 Operating Activities
- Involve the use of resources to design, produce, distribute, and market goods and services.
- Include research and development
-Pacioli’s Double- Entry Bookkeeping and its Evolution
 Fra Luca Pacioli
- His book “Summa” has 36 short chapters on bookkeeping
- Three essential things in able to be a successful merchants: sufficient cash or credit, a good
bookkeeper, and an accounting system
 Summa
- Pacioli introduces double-entry accounting system
o For every debet dare (should give) there exists a debet habere (should have or should
receive)
- Memorandum
 the book where all transactions are recorded
 chronologically order prepared
 necessary because no document to support transactions
- Journal
 Merchant’s private book
 In one currency, chronological order, in narrative form
- Ledger
 Alphabet listing of all the business’s accounts along with the running balance of each particular
account
-Fundamental Concepts-
 Entity Concept
- Most basic concept in accounting
- Organization or a section of an organization that stands apart from other organizations and
individuals as a separate economic unit
 Periodicity Concept
 -
Allows the users to obtain timely information to serve as a basis on making decisions about future
activities
 Stable Monetary Unit Concept
- Allows accountants to add and subtract peso amount as though each peso has the same purchasing
power as any other peso at any time
 Going Concern
- Assumed that the entity has neither the intention nor the need to enter liquidation or to ceases
trading.

-Accountancy in the Philippines-

 March 17,1928, approval of Act No. 3105 or “An Act Regulating the Practice of Public Accounting;
Creating the Board of Accountancy; Providing for Examination, for the Suspension or Revocation
of Certificates; and for Other purposes
- Law paved the way for local accountants to do the work
 Don Vicente Fabella
- First Filipino CPA in US in 1915, and founder of Jose Rizal
 Dr. Nicanor Reyes
- Founder and first president of the Far Eastern University in 1928 as the Institute of Accountancy
(Institute of Accounts, Business and Finance)
 Belen Enrile- Gutierrez
- First Filipina CPA
 Jaime Hernandez and Paciano Dizon
- First and second Filipino Auditor Generals on COA
 Manuel Villar
- Filipino tycoon
- Former speaker of the House of Rep
 Washington SyCip
- Past Pres of International Federation of Accountants
 Jose W. Diokno
- Former senator of the Philippines and secretary of justice
 Wenceslao Lagumbay
- Former senator of the Philippines
 Alberto Romulo
- Executive summary and sec. of Foreign Affairs
 Andres Soriano
- Founder of the leading conglomerates
 Manuel Morales
- Full-time member of Monetary Board of the BSP
-Accountancy Act of 2004)-
 Republic Act No.9298
- “Philippine Accountancy Act of 2004
- Signed by President Gloria Macapagal-Arroyo on May 13, 2004
- Repealed Presidential Decree No. 692 (Revised Accountancy Law) enacted May 5, 1975
Readings in Philippine History
The people established the government.
 State- community of people occupying a territory, having its own government, and enforces laws
without the consent of higher authorities.
 Government- system of social control under which the right to make laws, and the right to enforce
them, is vested in a particular group in society.
 4 Essential Elements of a State
 People- population. Refers to the mass of population living within the state
 Territory- boundaries and jurisdictions. Refers to the mass of land and water under the
jurisdiction of a state.
 Government- carry out the will of the people. refers to the agency through which the will
of the state is formulated, expressed, and carried out.
 Sovereignty- the power of a state to take action, is defined the supreme power of the state
to command and enforce obedience to its will from people within its jurisdiction.
 Economics- science that deals with the study of production, distribution, and consumption of goods
and services.
Economic System of the Philippines
-Mixed economy is a combination of capitalism and socialism, NOT communism.
 Types of Economic System of the Philippines
 Capitalism
- Economic system where the major and minor means of production can be controlled by individual
private sectors/government/corporation.
 Socialism-
- Economic system where the major means of production can be controlled by the government, only
the minor can be controlled by the private sectors.
 Communism
- Economic system where all, the major and the minor, must be controlled by the government, even
their freedom.
Law of Supply and Demand
- When the demand is low and the supply is high, the price decreases; when the demand is high and
the supply is low, the price increases.
- Supply is the concern of the producers and demand is the concern of consumers.
Subjects of Social Sciences
 Ethics
- Science of morality
 Logic
- Science of correct thinking
 Psychology
- Study of the mind
 Sociology
- Study of society as a whole
 Anthropology
 - Study of the mind in relation to society
 Jurisprudence
- Study of the existing legal system
 Philosophy
- The study of fundamental nature of knowledge, reality, and existence.
 Vox Populi, Vox Dei
- The voice of the people [is] the voice of God.
 Ignorantia juris non excusat (Ignorantia legis neminem excusat)
- Ignorance of the law excuses no one.
 Dura lex, Sed lex
- The law may be harsh, but it is the law
 Maxim nullum crimen, nulla poena sine lege
- There is no crime when there is no law punishing it. [there is no crime when there is no law]
 There can be a state without constitution, the Absolute Monarchy. Absolute monarchy is where
the king can tell his people whatever he wants, and no one can disobey him. Limited Monarchy is
another type of monarchy wherein the king rules with an ordinance together with a constitution.
 Philippines called Republic because all the leaders were chosen by the people through elections.
 History is past politics and politics present history means history repeat itself.
Tejeros Convention
- is the election of the president between Andres Bonifacio (Magdiwang) and Emilio Aguinaldo
(Magdalo)
- was held on March 22, 1897, in San Francisco de Malabon, Cavite
- Aguinaldo won and Bonifacio became the Director of Interior
- Bonifacio founded the Katipunan
-Historical Method-
 History- defined as the recorded struggle of people for ever increasing freedom and for
newer and higher realizations of the human person (Constantino)
 The historian is many times removed from the events under investigation
 Historians relay on surviving records

 “Only a part of what was observed in the past was remembered by those who observed it, only a
part of what was remembered was recorded, only a part of what was recorded has survived, only
a part of what has survived has come to the historian’s attention.
 “Only a part is credible has been grasped, and only a part of what has been grasped can be
expounded or narrated by the historian.”
 Historian
 Fallible- Capable of error.. capable of making mistakes
 Biases- personal, political, religious, personal idiosyncrasies
 Each has his own frame of preference- a set of interlocking values, loyalties, assumptions,
interests, and principles of actions.
 History is not a fiction
 Historical accounts must be based on all available relevant evidence
 A version of the past that cannot be supported by evidence is worthless
  The reconstruction of the total past of mankind, although it is the goal of historians, thus becomes
the goal they know full well is UNATTAINABLE.
 What is Historical Method?
 Agreed ground rules for researching and writing academic research or professional
history
 Core protocols historians use for handling sources.
 Historians have to base their accounts on source materials
 Historians need to be able to locate and organize the relevant sources on which they will
base their accounts
 Historians have to verify sources, to date them, locate their place of origin and identify
their intended functions.
 In short, the Historical method is..
- The process of critically examining and analyzing the records and survivals of the past
 Thus, it involves
- Selection of subject
- Collection of sources
- Examination of genuineness
- Extraction from sources
 Historical Sources
 Source- an object from the past or testimony concerning the past on which historians depend in
order to create their own depiction of that past
 Tangible remains of the past
 Written Sources
1. Published Materials
 Books, magazines, journals
 Travelogue
 Transcription of speech
2. Manuscript [any handwritten or typed record that has not been printed]
 Archival materials
 Memoirs, diary
 Non-written Sources
 Oral History
 Artifact
 Ruins
 Fossils
 Art works
 Video recordings
 Audio recordings

 Primary Sources
 Testimony of an eyewitness
 A primary source must have been produced by a contemporary of the event it narrates
 Is a document or physical object which was written or created during the time under
study
 These sources were present during an experience of time period and offer an inside view
of a particular event
  Provide first-hand testimony or direct evidence concerning a topic under investigation.
They are created by witnesses or recorders who experienced the events or conditions
being documented
 These sources are created at the time when the events or conditions are occurring, it can
also include autobiographies, memoirs, and oral histories recorded later
 Are characterized by their content, regardless of whether they are available in original
format, in microfilm/microfiche, in digital format, or in published format

 Four Main Categories of Primary Sources

1. Written Sources
2. Images
3. Artifacts
4. Oral testimony

 Secondary Sources
 Interprets and analyzes primary sources. These sources are one of more steps removed
from the event
 Secondary sources may have pictures, quotes or graphics or primary sources in them
 Examples:
1. History textbook
2. Printed materials (serials, periodicals which interprets previous research)

ENRICH
 1941
- Uno-R was established
 ONI (Occidental Negros Institute)
- first name of Uno-R
- located at Talisay City
- they offered 1st and 2nd year
 Founders of Uno-R
- Dr. Antonio A. Lizares (1st President)
- Francisco Kilayko (1st Director)
 1950
- Transferred at Lizares St. (Present Address)
 1956
- ONI became UNO
 1962
- UNO became UNO-R
 Rev. Fr. Federico Terradillos
 - 1st Father Rector
UNO-R Core Values
S- Service and Community Life
I- Interiority
M- Marian and Moral Integrity
P- Peace and Justice
L- Love and Passion for
E- Excellence
Slogan
- UNO- Recoletos: Cradle of Evangelization and Excellence
Recoletos Attributes
- Orthodoxy in Catholic life - Apostolic Character
- Integrity in Moral life - Marian Character
- Dynamism in Prayer life
- Contemplative Character
- Communitarian Character
LITERA
-Gen Z and the Rise of Information Technology-
 Generation Z
- Individuals who were born in the mid – 2000s.
 Impact of Technology on Generation Z
 Positive
 Increase Commitment on Social Cause
 Better employment aspects in the future
 Access to information
 Negative
 Low self-esteem
 Lack of confidence
 Risk of cyberbullying

 Generation of Technology Users Technological Development

 Gen Z spends an average of 3 hours 38 minutes online on smartphones.
 Gen Z are Tech Dependency
  Categories of Technological Development
 Communication- sending and receiving of messages.
 Construction- design and development of new buildings and structures
 Energy- power/fuel of technology. Considered the “food” of technology.
 Manufacturing- design and development of products
 Transportation- movement of people or goods
 Bio Related Technology- technology related to life.
-Digital Signatures-
- type of e-signature that verifies the authenticity of digital document or message
 Signature types
 Electronic Signature
 Biometric Signature
 Digital Signature
 Advanced Biometric Signature using Digital Signature
Digital Signature- mathematical technique used to validate message, software, or digital
documents.
-Introduction to Computing-
 Computer
- is an electronic device, operating under the control of instructions stored in its own
memory
 Data
- Is the raw, unprocessed facts
- When data is processed, it becomes information
- These kinds of data, especially digital data us stored electronically in file formats

 Information Processing Cycle

 Collecting data -> Processing -> Producing Information

 Components of a Computer
- A computer contains many electric, electronic, and mechanical components known as
hardware
 Types of Hardware
 Input Device
- Allows you to enter data into the computer. It also translate data into computer language
 Output Device
- Translate computer data into information usable by the user
 System Unit
- Case that contains the electronic components of the computer that are used to process data
 Storage Media
 - Holds data, instructions, information and programs even if power is off
 Communication Devices
- Enables a computer to send and receive data, instructions, and information to and from
one or more computers or mobile devices

 Computer Software
- also known as a program, tells the computer what tasks to perform and how to perform them.

 Types of Computer Software

 System Software
- Enables application software to interact with the computer hardware
- Background software that helps manage resources
- Collection of system programs
o Types of System Software
- Operating System- Windows, MAC OS, Android
- Utility Software- Anti-virus, File Management system

 Application Software
- Applications that are commonly used by the user
- These applications are commonly used in our everyday lives

 Categories of Computers
 Personal Computers
 Mobile Computers/ Devices
 Game Console
 Servers
 Supercomputers
 Wireframe
 Embedded Computers
-Internet and Traditional Media-
 Traditional Media
- Any forms of mass communication available before the advent of digital media. This
includes television, radio, newspaper, books and magazines
- Is what most people think of when talking about marketing or sharing news.
- Its difficult for people to know about the advertisement or news
- Includes mostly non-digital advertising and marketing methods
- Companies have used these methods to reach their consumers because it is very effective
and it helped businesses to make a profit.

 Types of Traditional Media

  Television Advertisements
 Radio Advertising
 Print Advertising
 Direct mail Advertisement
 Door-to-door sales
 Billboards and off-site signs
 Banner advertisement

 New Media
- Any media- from newspaper articles and blogs to music and podcasts – that are
delivered digitally
- Any internet-related form of communication can be considered new media
- Has developed into a vastly complex form of communication
- Also called digital media, consists of methods that are mostly online or involve the
internet in some sense.
 Types of New Media
 Website
 Blog
 Email
 E-book
 Social media
 Music and television
 Streaming services
 Virtual and augmented reality

 Traditional Media Vs. New Media

Advantages
Traditional Media New Media
A trusted resource Wider range of sources
Real world communication Works better for busy people
No need for internet/wifi Communicating with more people
Can be reached easily Has more audience valuable business and educational tool
Available for everyone

Disadvantages
Traditional Media New Media
Has less audience Lack of real-world communication
Rhard to get information from Not a reliable source
Lack of encouragement to talented artists Not controlled
Biased news or opinions Cyberbullying and plagiarism
Takes a long time to get fresh news expensive
-Utopian Visions of the internet-
 Utopia
- An ideally perfect place, an impractical idealistic scheme, modeled on or aiming for a
state in which everything is perfect; idealistic
- Imagined community or society that possesses highly desirable or nearly perfect qualities
for citizens
- Term was coined by Sir Thomas More for his 1516 book Utopia, describing a fictional
island society in the South Atlantic Ocean off the coast of South America

 Technological Utopianism
- Often called techno-utopianism or technoutopianism
- Is any ideology based on the premise that advances in science and technology could and
should bring about a utopia, or at least help to fulfill one or another utopian ideal.
- An ideal society, in which laws, government, and social conditions are solely operating for
the benefit and well-being of all its citizens, set in the near- or far- future, as advanced
science and technology will allow these ideal living standards to exist
- Does not disregard any problems that technology may cause, but strongly believes that
technology allows mankind to make social, economic, political, and cultural
advancements.
- Views technology’s impacts as extremely positive

 Varieties of Utopian Views

 Ecological Utopia
- A traditional way of life that is more in harmony with nature. An organic way of life
 Economic Utopia
- An equal distribution of goods, frequently with the total abolition of money, and citizens
only doing work which they enjoy and which is for the common good
 Political Utopia
- Everyone getting along regardless of race, culture, political beliefs. A world without war.
 Religious Utopia
- Harmony, peace, understanding, enlightenment
 Science and Technology Utopia
- Set in the future

-Dystopian Visions of the Internet-

 Dystopia
- An imaginary place or state in which the condition of life is extremely bad. As from
deprivation, oppression, or terror
 - An imaginary world or society in which people lead wretched, dehumanized, and fearful
lives

 Dystopian View of Technology

- Most dystopian works present a world in which oppressive societal control and the
illusion of a perfect society are maintained through technological control; society is
controlled by technology- through computers, robots, and/or scientific means

 Varieties of Dystopian Views

 Society
- People referred to as numbers rather than names
- People are cloned so there are several of the same people, they are uniform and lose
individuality
- People required to “not excel” and lose their competence
- Class system
 Social Groups
- Concept of religion under attack
- Concept of families no longer exists
 Nature
- Urban
- Separate all characters from any contact with nature
- People are conditioned to be afraid of nature
 Politics
- Governing class is hedonistic or shallow
- Negative consequences, oppressive
- Pessimistic view of governing class- brutal, uncaring
 Economics
- Black market for goods that are difficult to get
- Governing class controls everything
- Big business have control and are corruption

-Mail Merge-
- the automatic addition of names and addresses for a database to letters and envelopes in order
to facilitate sending mail, especially advertising to may addresses.
- lets you create a batch of documents that are personalized for each recipient.

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