WRI COLLEGE-Metro Naga, Inc.

11

PRELIM WEEK 1

PRELIM – WEEK 1

Page 1
SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.

Module 1: INTRODUCTION TO ACCOUNTING

LEARNING OBJECTIVES
At the end of this lesson the learners will be able to ;
a. Define accounting and describe its nature
b. Explain the functions of accounting in business
c. Give examples of business transactions and decisions requiring the need for accounting
d. Narrate the history of accounting

EXPECTED OUTPUT
The learners demonstrate an understanding of the;
Definition
Nature
Function
history of accounting

Do your parents ask how you spend your allowance every day? When deciding between buying a
bottle of soft drinks or fruit juice, what is the basis of your decision? Do you compare the prices of both
and then decide? When going home, do you sometimes choose to walk from school rather than riding a
jeepney because you want to save?

Is accounting important to you? Yes. These are the definition of accounting.

Accounting
Is the process of IDENTIFYING, RECORDING, and COMMUNICATING economic events of an
organization to interested users. (Weygandt, J. et. al)

IDENTIFYING – this involves selecting economic events that are relevant to a particular business
transaction.
Examples of economic events or transactions - In a bakery business:
• sales of bread and other bakery products 2 Teacher tip Acknowledge the answers of the
learners. As an alternative, ask the learners to write anything they know about accounting on the board.
• purchases of flour that will be used for baking
• purchases of trucks needed to deliver the products
RECORDING – this involves keeping a chronological diary of events that are measured in pesos. The diary
referred to in the definition are the journals and ledgers which will be discussed in future chapters.
( which means you need to record all the transactions like purchases of flour or other expenses into
ledger or journals. Lahat ng cash in, cash out, mga ginastos and cash beginning kelngan nakalista/ record).

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
COMMUNICATING – occurs through the preparation and distribution of financial and other accounting
reports.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
MODULE 1.1: The Nature of Accounting

According to Accounting Theory (http://accountingtheory.weebly.com/nature-and-scope-of-

accounting.html): “Accounting is a systematic recording of financial transactions and the presentation of
the related information to appropriate persons.” Based on this definition we can derive the following
basic features of accounting:
 Accounting is a service activity. Accounting provides assistance to decision makers by providing
them financial reports that will guide them in coming up with sound decisions.
 Accounting is a process: meaning, accounting is identified as a process like collection, recording,
classification, summarization, finalization, and reporting of financial data.
( Kelangan nakalista lahat ng iyong pinagkagastusan, pagkakagastusan para malaman kung meron
income ang isang business o palugi na.)
 Accounting is both an art and a discipline. Accounting is the art of recording, classifying,
summarizing and finalizing financial data. The word “ arts” refers to the way something is
performed. So by nature, accounting is an art. And because it follows certain standards and
professional ethics, it is also a discipline. ( May mga rules sa paggawa o pgrecord ng mga
transaction.)
 Accounting deals with financial information and transactions: ( Sa Accounting, kelangan
nakarecord lahat ngg transaction and financial data and kelangan matapos in the period of
time. From start to finish, accounting deals with financial information and financial information
only. Kelangan tandaan.
 Accounting is an information system: Accounting is recognized and characterized as a storehouse
of information. As a service function, it collects processes and communicates financial
information of any entity. ( So, kelangan lahat ng details of financial statement dapat nakalista
and tama ang information na makukuha upang maiwasan ang kalituhan).

Page 4
SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
MODULE 1.2: Function of Accounting in Business

Why accounting is considered as the language of business?

Accounting is the means by which business information is communicated to business owners and
stakeholders. The role of accounting in business is to provide information for managers and owners
to use in operating the business.
(before magtayo ng isang business dapat nakaprepare na lahat ang accounting reports para
madetermine how business is doing.
Accounting helps the users of these financial reports to see the true picture of the business in
financial terms. In order for a business to survive, it is important that a business owner or manager be
well-informed.

Let us now discuss the function of accounting in business.

(Example):
Mr. Juan is a retired government employee who is good at baking. One day he decides to put up
a bakery shop in your barangay. He renovates a portion of his house to serve as the area for the
production of bread. He purchases baking equipment and raw materials to produce five different
types of bread. Mr. Juan also hires Jose to help him with the baking and, at the same time, to be in-
charge of sales. Mr. Juan pays Jose on a weekly basis. Every day, Mr. Juan’s wife deposits the daily
cash sales in their bank account at XY Savings Bank. With the help of accounting, what possible
decisions or questions of Mr. Juan can accounting provide an answer to?
 (Kung ikaw si Juan, Is your business earnings? Profitability).
 How much daily or monthly sales do you need in order to recover your fixed cost? (break-even)
 Do you need to hire additional workers to help you with your production?
 Can you afford to set up a new store in another place? Where do you get the funds?
 Can you afford to pay a bank loan?

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
Ito ang unang- una nating maidentify o maanalyse pra maiwasan ang pagkalugi kung sakali man na
magtatayo ng isang business.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
MODULE 1.3: The 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.
Following is the evolution of accounting:
• The Cradle of Civilization Around 3600 B.C., record-keeping was already common from Mesopotamia,
China and India to Central and South America.
( Sinsabing pinakaeldest evidence na sinulat sa “Clay Tablet” sa Mesopotamia na nakarecord ang
mga account receivable(matatanggap ) and accounts payable (babayaran)
• 14th Century - Double-Entry Bookkeeping The most important event in accounting history is generally
considered to be the dissemination of double entry bookkeeping by Luca Pacioli (‘The Father of
Accounting’) in 14th century Italy. Pacioli was much revered in his day, and was a friend and
contemporary of Leonardo da Vinci.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
( Si Pacioli ang Ama sa larangan ng Accounting, unang gumamit ng Arabic numerals at sya rin ang sumulat
ng Summa de Arithmetica na nakadetalye dito ang Double Entry Bookkeeping).
• French Revolution (1700s) The thorough study of accounting and development of accounting theory
began during this period.

Luca Pacioli (Father or Accounting)

• The Industrial Revolution (1760-1830) Mass production and the great importance of fixed assets were
given attention during this period.
• 19th Century – The Beginnings of Modern Accounting in Europe and America The modern, formal
accounting profession emerged in Scotland in 1854 when Queen Victoria granted a Royal Charter to the
Institute of Accountants in Glasgow, creating the profession of the Chartered Accountant (CA).
• The Present - The Development of Modern Accounting Standards and Commerce The accounting
profession in the 20th century developed around state requirements for financial statement audits.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.

LEARNING ACTIVITY

Essay 20 points

1. Define Accounting for your own understanding.

2. Give examples of decisions or questions that can be supported by accounting information.

MODULE 2: BRANCHES OF ACCOUNTING

3. Who is Pacioli? Why Pacioli called the Father of Accounting?

4. Why accounting is considered as the language of business?

5. Give the exact amount of your weekly allowances from your parents and deduct your
weekly expenses.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
MODULE 2: BRANCHES OF ACCOUNTING
LEARNING OBECTIVES
The learners shall be able to
a. Make a list of business within the community on the types of accounting services they require.
b. Solve exercises in the identification of the branches of accounting described through the types of
services rendered.
c. Differentiate the branches of accounting.
d. Explain the kinds/types of services rendered in each of these branches.

The learners demonstrate an understanding of the varied branches and areas of accounting, particularly:

Financial Accounting
Management Accounting
Government Accounting
Auditing
Tax Accounting
Cost Accounting
Accounting Education
Accounting Research

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
Branches of Accounting

“Accounting is divided into several branches to better serve the needs of different users with varying
information needs. These branches sometimes overlap and they are often closely intertwined.”
Financial accounting is the broadest branch and is focused on the needs of external users. Financial
accounting is primarily concerned with the recognition, measurement and communication of economic
activities.
Examples of these financial reports include:
• the balance sheet (statement of financial condition)
• income statement (the profit and loss statement, or P&L)
• statement of cash flows
Financial accounting is primarily concerned with processing historical data.
(kapag narecord na lahat ng financial statement sa journal and ledger, kailangan natin ilagay sa balance
sheet kung ito ay balance o hindi. Next, paggawa ng income statement para makita kung naluluugi o
my profit ang isang business then cash flow pra malaman naman kung generated ba o direct and
indirect ang pera naimiikot sa isang business).

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
Management (or Managerial) Accounting

Management accounting emphasizes the preparation and analysis of accounting information within the
organization.

Oftentimes, these are sensitive information and is not distributed to those outside the business - for
example, prices, plans to open up branches, customer list, etc. Managerial accounting involves financial
analysis, budgeting and forecasting, cost analysis, evaluation of business decisions, and similar areas.

Government Accounting

Government accounting is the process of recording, analyzing, classifying, summarizing, communicating

and interpreting financial information about the government in aggregate and in detail reflecting
transactions and other economic events involving the receipt, spending, transfer, usability and
disposition of assets and liabilities.

(when we say government accounting deals with how the funds of government recorded and reported.
Ano ba ang source income ng government? Of course, mga taxes paid by Filipinos. And where do taxes
go? Sa roads, hospital, for education and for emergency situation like calamities due to typhoon,
pandemic due to COVID -19 Virus.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
Auditing

There are two types of auditing: external and internal auditing.

1.External auditing refers to the examination of financial statements by an independent CPA

(Certified Public Accountant) with the purpose of expressing an opinion as to fairness of
presentation and compliance with the generally accepted accounting principles (GAAP).
2. Internal auditing deals with determining the operational efficiency of the company regarding
the protection of the company’s assets, accuracy and reliability of the accounting data, and
adherence to certain management policies.

Tax Accounting

Tax accounting helps clients follow rules set by tax authorities. It includes tax planning and preparation of
tax returns.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
Cost accounting

Cost Accounting is very useful in manufacturing businesses since they have the most complicated
costing process. Cost accountants also analyze actual and standard costs to help managers determine
future courses of action regarding the company's operations. Cost accounting will also help the owner set
the selling price of his products. For example, if the cost accounting records show that the total cost to
produce one can of sardines is PHP50, then the owner can set the selling price at PHP60.

Accounting Education

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.
This branch of accounting deals with developing future accountants by creating relevant accounting
curriculum. Accounting professionals can become faculty members of educational institutions.

Accounting Research

Accounting research focuses on the search for new knowledge on the effects of economic events on the
process of summarizing, analyzing, verifying, and reporting standardized financial information, and on the
effects of reported information on economic events. Researchers typically choose a subject area and a
methodology on which to focus their efforts.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.

QUIZ

IDENTIFICATION: Identify what branch of accounting render this service.

1. Preparation of general-purpose financial statements .

2. Evaluation of the performance of a sales department .

3. Develop standards to address a new business set up .

4. Review tax compliance of the business .

5. Evaluate whether a branch of the business complies with the collection and deposit
policy of the company

6. Review whether the financial statements are presented fairly and in compliance
with accounting.

7. Report on the spending of government.

8. Report on the total cost of materials and labor used in the production.

9. Conducting lectures on accounting topics.

10. Preparation of bank payment.

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission:
 WRI COLLEGE-Metro Naga, Inc.

REFERENCES

Accounting Basics: Branches of Accounting (n.d.) Retrieved from

http://www.investopedia.com/university/accounting/ accounting2.asp

http://www.investopedia.com/university/accounting/accounting2.asp and
https://slideplayer.com/slide/5995358/

___https://www.youtube.com/watch?v=RJp_76CfCAQ&t=53s _

https://slideplayer.com/slide/5995358/

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SUBJECT TEACHER CRISTITA T. RAMBOYONG
SCHOOL ADMINISTRATOR DANIEL DOMINIC DE LEON Date of Submission: