INTRODUCTION TO ACCOUNTING
FINANCIAL ACCOUNTING AND REPORTING
WHAT IS BUSINESS?
Business is a
◼ lawful economic activity
◼ uses economic resources or inputs
◼ provide goods or services to customers
◼ exchange for money or other goods and
services.
TYPES OF BUSINESS
◼ Service Business
◼ Merchandising Business
◼ Manufacturing Business
FORMS OF BUSINESS ORGANIZATIONS
◼ Sole Proprietorship
◼ Partnership
◼ Corporation
FORMS OF BUSINESS ORGANIZATION
Type SOLE PARTNERSHIP CORPORATION
PROPRIETORSHIP
1. Owners Owner / Proprietor Partners Shareholders
2. Number of One (1) Two or more At least 1, maximum
Persons of 15
3. Manner of Initiative of the owner Mere agreement of By operation of law
Creation partners
4.Cost of Creation Least Costly Costly Most costly
or Formation
5.Commencement Upon submission of Upon execution of Issuance of Certificate
of Juridical required documents Articles of of Incorporation to
Personality to Government Partnership SEC
agencies
FORMS OF BUSINESS ORGANIZATION
Type SOLE PARTNERSHIP CORPORATION
PROPRIETORSHIP
6. Management Owner Every partner is an Agent Board of Directors
of the Partnership,
otherwise Managing
Partner
7. Extend of Unlimited, up to Unlimited, up to personal Up to the extent of
Liability personal assets of the assets of the partners interest or investment
owner (except limited partner) of the shareholders
8. Terms of Any period until not Any period of time Not Exceeding 50
Existence declared as bankrupt stipulated by the partners years, subject to
extension
WHAT IS ACCOUNTING?
According to the Accounting Standard Council
(ASC),
Accounting a service activity. Its function is to provide
quantitative information, primarily financial in nature,
about economic entities that is intended to be useful in
making economic decisions.
ACCOUNTING
• Accounting is considered an art
• Accounting is considered as a science
• Accounting involves interconnected "phases“
⮚ Identifying
⮚ Recording and Classifying
⮚ Communicating
• Concerned with transactions and events having financial character
• Business transactions are expressed in terms of money
• Interpret Result
• Decision Making
ACCOUNTING AS AN INFORMATION
SYSTEM
Recording,
Accountable Accounting
Classifying,
Events Report
Summarizing
INPUT PROCESS OUTPUT
ACCOUNTING INFORMATION
Results of Operation
Indicates the performance of the business Statement of
whether the entity has a profit or loss in Comprehensive
certain period of time (month, year, etc.) Income
Financial Position
indicates the resources and the Statement of Financial
obligations of the entity Position
Cash Flows
shows all transactions involving cash
(inflows and outflows) from different Statement of Cash
activities of the entity such as operating, Flows
investing, and financing
USERS OF INFORMATION
INTERNAL USER EXTERNAL USER
◼ Management ◼ Investors/ Stockholders
◼ Board of Director ◼ Creditors/Suppliers
◼ Owners/Partners ◼ Lenders
◼ Employees
◼ Government
◼ Customers
◼ General Public
FIELDS OF ACCOUNTING
Fields of Accounting
Academe Private Public Government
Financial Accounting
Managerial Accounting External Auditing
Cost Accounting Tax Services
Internal Auditing Management Services
Tax Accounting Review Engagements
Fiduciary Accounting
Forensic Accounting
International Accounting
Not-for-profit Accounting
Socio-economic
Accounting
Accounting Information
Systems
Budgeting
