Fundamentals of Accountancy, Business and Management 1

Fundamentals of Accountancy,
Business and Management 1

STRAND: ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)
INTRODUCTION
Mrs. Mylene S.
Candido
Ms. Mye
Your Subject Teacher
Things you need
NOTEBOOK / PEN / PENCIL

WHITEBOARD AND MARKER
or CLEAR BOND PAPER
CALCULATOR
Lots of PATIENCE
Fundamentals of Accountancy, Business and
Management 1
Course Description: This is an introductory course

in accounting, business, and management data
analysis that will develop students’ appreciation of
accounting as a language of business and an
understanding of basic accounting concepts and
principles that will help them analyze business
transactions.
RULES
Lesson 1 Day 1: Definition, nature and history
of Accounting
MOST ESSENTIAL LEARNING COMPETENCIES:

1. define Accounting
2. describe the nature of accounting
3. narrate the history / origin of accounting
Accounting (Definition)
 Is the systematic process of measuring and reporting

relevant financial information about the activities of an
economic organization or unit. Its underlying purpose is to
provide financial information
Accounting
 It 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
(American Institute of Certified Public Accountants (AICPA) ,”Review and Resume”,

Accounting Terminology Bulletin No. 1 (New York AICPA,1953), Par 9)
Accounting
• The Accounting Standards Council (ASC) see

accounting as a service activity. Its function is to provide
quantitative information, primarily financial in nature,
about economic entities, intended to be useful in making
economic decisions.
Nature of Accounting
Accounting as the Language of

Business
Accounting is the process of gathering financial
information about a business and reporting this
information to its end users. Accounting is also
called the language of business. (Cabrera, 2016)
1. Accounting is an art. The word ‘art’

refers to the design of how something can
be performed. It is a behavioral knowledge
involving creativity and skill. By the very
nature that accounting activity is systematic,
it has definite techniques and its proper
application requires a particular skill and
expertise.
2. Accounting deals with transactions

that are financial in nature. The
definition of accounting requires that
business transactions have to be
measured in terms of money. All other
transactions that are non-monetary are
not within the scope of accounting.
3. Accounting is a systematic process. A ‘process’ is a systematic series of the actions directed

towards a particular outcome. As a process, accounting performs specific actions such as identifying,
measuring, and communicating financial information. It has to follow logical steps in the accounting
cycle like recording, classifying, and summarizing financial transactions, and communicating the
results after.
4. Accounting is a service activity.

Accounting is a work or occupation for serving a particular purpose. The purpose is to provide
financial information.
5. Moreover, accounting is a means and not an end. Although this has a tangible
output in the form of financial statements, it still underscores that users have the
liberty to make economic decisions based on the management assertions in the
financial statements. Using this logic, accounting indeed paves the way to an end
and it is not the end itself.
Four Aspects of Accounting
 RECORDING – writing down of

business transactions chronologically
in the books of accounts as they
transpire.
 CLASSIFYING – sorting similar and

related business transactions into the
three categories of assets, liabilities,
and owner’s equity.
 SUMMARIZING – preparing the

financial statements from the
transactions recorded in the books of
accounts that are designed to meet
the information needs of its users.
 INTERPRETING – representing the

qualitative and quantitative financial
information about the business
transactions in a language
comprehensible to the users of
financial information.
History of Accounting –
Accounting is as old as civilization itself. It has evolved in response to

various social and economic needs of men.
Accounting started as a simple recording of repetitive exchanges. The
history of accounting is often seen as indistinguishable from the history
of finance and business.
History of Accounting - Ancient Accounting in Egypt,
Mesopotamia, Greece and Rome
5000 B.C.E
Abacus functioned as a calculator
in the ancient times
4000 BCE
Papyrus allowed recording of
commercial transactions.
Clay Tablets are considered to be
among the oldest written tax
accounting record.
Clay tokens and Clay tablets from

Mesopotamia to record their loans,
herds, crops, and system pf trade.
They used detailed code
requirements for commercial
truncations.
Greeks introduced money in the

form of coins.
Invented Greek alphabet to
facilitate record keeping
Romans introduced the use of

annual budget which coordinated
estimated revenues and taxes paid
by the citizen in relation to the
nation’s expenditures.
Cash Book was maintained by
households.
In England, William the conqueror

took possession of all properties in
the name of the king upon his
invasion
Pipe Roll contained yearly
accounting of rents, fines and taxes
due to the king of England from
1130 to 1830
History of Accounting -14th Century – The birth of
Double-Entry Bookkeeping
Who is Luca Pacioli?
Luca Pacioli was a Franciscan friar who is often associated with the introduction of
double-entry bookkeeping.
In 1494 he published the book Summa de Arithmetica, Geometria, Proportioni et
Proportionalita.
His work described double-entry bookkeeping and reflected the trading practices of
Venice, known as ‘the Method of Venice’ or ‘the Italian method’.
He did not invent double-entry bookkeeping but rather made a record of what was
happening in Italy at the time.
What did Luca Pacioli write?
The terms Debit (adebeo) and Credit (credito) were used.
He explained that three books are used in the ‘Italian method’: a memorandum, a journal and a ledger.
He said, ‘All entries … have to be double entries, that is, if you make one creditor, you must make
someone debtor’.
He advised the computation of periodic profits and the closing of the books. ‘It is always good to close
the books each year, especially if you are in a partnership with others. Frequent accounting makes for
long friendship’.
History of Accounting -19th Century – The dawn of
modern accounting in Europe and America
Industrial Revolution
The development of accountancy
profession
In 1854, Queen Victoria created the
profession of chartered accountants after
granting a royal charter to the Institute of
Accountants in Glasgow and laid the
way for the modern, formal accounting
profession.
History of Accounting -20th Century – The Evolution of
Modern Accounting Standards
Rise of the SEC and Accounting

Standards In 1973, the private nonprofit the
The U.S. Securities and Exchange Financial Accounting Standards
Commission was created in 1934 in the Board (FASB) was created to take
wake of the Great Depression. over the job of establishing what is
Accountants certified the reports filed known as Generally Accepted
with the SEC by all companies that were Accounting Principles.
publicly-traded.
History of Accounting –The Information Age
Manual, tedious and time

consuming tasks were replaced by
faster and more accurate computer
methods.
History of Accounting – 21st Century Accounting in the
Modern Times
Arthur Andersen, founded in 1913 and

Accounting Scandals known as one of the “Big Five”
A few high-profile accounting accounting firms, faced criminal charges
scandals in the early 21st century as the auditor of the energy company
Enron, which committed fraud. It was
significantly changed the world of
also revealed that other companies had
accounting in the United States. been poorly audited
Modern Times
These scandals resulted in the creation

of the Sarbanes-Oxley Act Of 2002
which brought in a number of changes 2010 - Dodd-Frank Act - An Act to
including more oversight and promote the financial stability of
regulation in accounting. The Public the United States by improving
Company Accounting Oversight Board accountability and transparency in
was created to oversee the audits of the financial system
public companies and to assist in
regulation in other areas as well.
Modern Times
1997
The Philippines started 2001
transitioning from applying The Philippines adopted the
American accounting International Financial Reporting
Standards (IFRS) in order to support
standards to applying comparability and understandability
International Accounting across the globe.
Standards IAS.

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Fundamentals of Accountancy,

Business and Management 1

NOTEBOOK / PEN / PENCIL

Course Description: This is an introductory course

MOST ESSENTIAL LEARNING COMPETENCIES:

 Is the systematic process of measuring and reporting

 It is an art of recording, classifying, and summarizing in a

(American Institute of Certified Public Accountants (AICPA) ,”Review and Resume”,

• The Accounting Standards Council (ASC) see

Accounting as the Language of

1. Accounting is an art. The word ‘art’

2. Accounting deals with transactions

3. Accounting is a systematic process. A ‘process’ is a systematic series of the actions directed

4. Accounting is a service activity.

 RECORDING – writing down of

 CLASSIFYING – sorting similar and

 SUMMARIZING – preparing the

 INTERPRETING – representing the

Accounting is as old as civilization itself. It has evolved in response to

Clay tokens and Clay tablets from

Greeks introduced money in the

Romans introduced the use of

In England, William the conqueror

The terms Debit (adebeo) and Credit (credito) were used.

Rise of the SEC and Accounting

Manual, tedious and time

Arthur Andersen, founded in 1913 and

These scandals resulted in the creation

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