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Introduction To Accounting

This document provides an introduction to accounting. It defines accounting as identifying, measuring, and communicating financial information to allow for informed decisions. Accounting involves recording, classifying, and summarizing financial transactions and events in terms of money. It is both an art and a systematic process that provides quantitative financial information to help users make economic decisions. The document then outlines the various branches of accounting including public, private, government, and education. It also discusses the internal and external users of accounting information and concludes with an overview of key accounting concepts, principles, and the accounting cycle.

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Kaye Villaflor
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0% found this document useful (0 votes)
24 views23 pages

Introduction To Accounting

This document provides an introduction to accounting. It defines accounting as identifying, measuring, and communicating financial information to allow for informed decisions. Accounting involves recording, classifying, and summarizing financial transactions and events in terms of money. It is both an art and a systematic process that provides quantitative financial information to help users make economic decisions. The document then outlines the various branches of accounting including public, private, government, and education. It also discusses the internal and external users of accounting information and concludes with an overview of key accounting concepts, principles, and the accounting cycle.

Uploaded by

Kaye Villaflor
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTRODUCTION TO

ACCOUNTING
Grade 11 – Accounting Business and Management
Accounting 1
By: Kaye Michelle Villaflor
DEFINITION:
• IDENTIFYING, MEASURING, and COMMUNICATING economic
information to permit informed decisions and judgment by users of
information (American Accounting Association)

• The 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 financial character and interpreting results thereof.
(American Institute of Certified Public Accountants)

• To PROVIDE QUANTITATIVE INFORMATION primarily financial in


nature about economic entities that is intended to be useful in making
economic decisions.
NATURE:
1. ART 2. It deals with TRANSACTIONS
design of how something can be THAT ARE FINANCIAL IN
performed NATURE:
Involves creativity and skills Transactions that can be
measured in terms of MONEY
SYSTEMATIC
3. IT IS A PROCESS
o has definite Techniques and
proper application o Systematic series of actions
directed towards a particular
o requires skills and expertise.
outcome
o Follows logical system in the
accounting cycle
NATURE:
4. It is an INFORMATION SYSTEM 5. It is a MEANS not an END
A set of interrelated components The final outcome of accounting
that work together to achieve a is the FINANCIAL DECISIONS.
common purpose.
FUNCTIONS
1.To fulfill the stewardship function of the
management or owner
2.To help interested users to come up with
informed decisions
3.To support daily operations of the business
500 BC - Egypt
Accounting Records and First
bead and wire abacus

2500 BC Ancient Civilizations


Acctng records kept by rulers
for tax and public Spending
1000 BC 423 BC
Phoenician Alphabet with The term “auditor” was first
coined
accounting

4000 BC (Mesopotamia)
Income of Temples
1500 – 1700
Improvements in double entry
Financial and managerial
accounting
1200-1493
First recorded use of term
Accountant
Bus. Required to keep record
Earliest form of bookkeeping

1494 – Luca Pacioli 1700 – 1900


Father of Modern Accounting First accounting org
Influenced double entry accounting Market Value vs. historical
cost

10 AD – China
First income tax at 10%
2005 – Phil is compliant with IFRS

1973 –
IASC developed IAS

2001 – IASB succeeded IASC


IAS was designated as IFRS

1940-1970 harmonization of
accounting practice
Public Accounting
Private Accounting
Government Accounting
Accounting Education
BRANCHES OF ACCOUNTING
PUBLIC ACCOUNTING
• The accountant performs any activity that will result to the issuance of
an attest report that is in accordance with professional standards.
Consulting activities
Personal Financial Planning
Preparation of Tax Returns
External Auditing
Advice on tax matters (management advisory Services)
CPA
Example: SyCip, Gorres, Velayo & Co., Punongbayan & Araullo
PRIVATE ACCOUNTING
• Setting up systems of recording business transactions that are aggregated into
financial statements
Development and interpretation of accounting information to assist
management in operating the business.
Salaried employee
Financial Accounting
Cost Accounting
Budgeting
Accounting Information System
Tax Accounting
Internal Auditing
GOVERNMENT ACCOUNTING
• Used in government offices to record and report financial transactions
(revenues and expenditures of gov’t offices)
DBM
BSP
COA
BIR examiner
Municipal, Provincial or Regional Accountant
ACCOUNTING EDUCATION
CPA IN SPECIALIZED AREAS

• Forensic Accounting
• IT Services
• Environmental Accounting
• International Accounting
Internal Users
External Users
USERS OF ACCOUNTING INFORMATION
INTERNAL USERS EXTERNAL USERS
• MANAGERS / MANAGEMENT • Potential / existing investors
Top-Level • Creditors and potential
Middle-Level creditors
Lower-Level (frontline) • Customers
• Employees / Labor Union
• Suppliers
• Owners
• Tax Authorities
• Regulatory Bodies
• General Public
ACCOUNTING CONCEPTS AND PRINCIPLES

ACCOUNTING ACCOUNTING PRINCIPLES


ASSUMPTIONS: • Cost Principle
• ECONOMIC ENTITY • Full Disclosure
ASSUMPTION
• Matching Principle
• ACCRUAL BASIS
• Revenue Recognition
• GOING CONCERN
• Materiality
• MONETARY UNIT
• Conservatism
• TIME-PERIOD ASSUMPTION
• Objectivity
THE ACCOUNTING CYCLE
ACCOUNTING EQUATION (CHAPTER 6)

ASSETS = LIABILITIES + EQUITY

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