ACCOUNTING
ACCOUNTING
- is a service activity. its function is to prove
quantitative
Information, primarily financial in nature, about
economic
entities that is intended to useful in making economic
decision
( 1983 )
- is the art of recording, classifying and summarizing
in a
Significant manner and terms of money, transaction &
events
which are, in part at least of a financial character, &
interpreting
the result thereof (1953 )
Types of Business
• Service Business
Selling people’s time
• Merchandising Business
Type of business that buys and sells goods
• Manufacture
Form business organization that converts
materials into products and then sell them to other
companies or to final consumers
Forms of Bus. Or Organization
Sole Proprietorship
- Single owner called the proprietor who generally is
also
Manager, sole small service type. The sole
proprietorship
Is distinct from its proprietor.
Partnership
- Two or more person, who bind themselves to
contribute money, property, or industry to a common
fund, with the intention of dividing the profit among
themselves.
-Each partner is personally liable for
any dept incurred by the partnership. Accounting
considers
the partnership as a separate organization, distinct from
the
personal affairs of each partner.
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Corporation
- Owned by its stockholders, by operation of law,
having
The rights of succession and the powers, attributes &
properties
Expressly authorized by law or incident to its existence
The corporation is a separate legal entity.
- The stockholders are not personally liable for the
corporation’s debt
Activities in Bus. Organization
Financing Activities
- Primary sources of financing for most business are
owners
And creditors, sucks as banks & suppliers.
- Require financial resource to obtain other
resources used to produce goods and services
- A type of business activity wherein the owner
finances the business with a start-up capital in cash or
other resources
Investing Activities
- To transform resources from one form to a different
form
Which is more valuable, to meet the needs of people.
Investing
activities include buying land, equipment, building & etc
. - Uses capital from financial activities to acquire
other resources used in the transformation process.
Operating Activities
- The use of resource to design, produce, distribute
& market
goods and services.
- Includes research, development, design and
engineering, purchasing, human resource, production,
distribution, marketing and selling, and servicing.
Fundemental Concept
Entity Concept
- Is an organization or section of an organization that
Stands apart from oth
Fundamental Concepts
er organization & individuals as a separate enomic unit.
Each entity should be evaluate separately.
Periodicity Concept
- Subdivided into equal time periods for reporting
purposes. This concept allow users to obtain timely
information to serve as a basis on making decision
about future activities reporting outsiders, one year is
the usual accounting period.`
ACCOUNTING
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Stable Monetary Unit Concept
- It allows accountants to add and subtract peso
amounts as though each peso has the same
purchasing power as any peso at any time.
Going Concept
- Financial statements are normally prepared
on the assumption that the reporting entity is a
going concern & will continue in operation for the
foreseeable future. Depreciation of assets over their
useful lives.
USERS/ STOKEHOLDERS
Basic Principle (MARCEHO)
– This equation present the resources controlled by
the
enterprise, the present obligation of the enterprise and
the
residual interest in assets.
Objectivity Principle
- Accounting records and statements are based
on the most reliable data available so that they will
be as accurate and useful as possible.
Historical Cost
- That acquired assets should be recorded at
their actual cost & not at what management thinks
they worth as at reporting date.
Revenue Recognition Principle
- Revenue is to be recognized in the
accounting period when goods are delivered or
services are rendered or performed.
Expense Recognition Principle
- Expense should be recognized in the
accounting period in which goods & services are
used up to produce revenue and not when the
entity pays for those good and services.
Adequate Disclosure
- Requires that all relevant information that
would affect the user's understanding and
assessment of the accounting entity be disclose in
the financial statements.
Materiality
- Financial reporting is only concerned with
information that is significant enough to affect
evaluation and decision, depends on the size &
nature of the item judged in the particular
circumstances of its omission.
Consistency Principle
- The firms should use the same accounting
method from period to period to archive
comparability over time within a single enterprise.
However changes are permitted if justifiable &
disclosed in the financial statements.
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•
•
•
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Owners/ inventors
Manager
Lender/ creditor
Supplies
Regulatory Agencies
Employees
Customer
Accounting equation
The basic accounting model
ASSETS = LIABILITIES + OWNWES' EQUITY
ASSETS
- Resources owned by the business.
• CASH - Bank will accept for deposit at face
value.
Includes coin, currency, checks, money orders,
drafts
And, bank deposits.
• NOTES REC- Written pledge that the
Customer will pay the business a fixed amount of
money
on a Certain date.
• ACCOUNT REC - Claims against
customers arising
From sale service or good on credit. types of less
security
Than a promissory note
• INVENTORIES - .The form of materials or
supplies
To be consumed in the production process or in
the regarding
Of service.
• PREPAID EXP - Paid for by the business in
advance
• PROPERTY, PLAN, & EQUIP - Use
for in the
Production or supply of good s or service. Includes
items
Land, building, machinery and equipment,
furniture, fixture,
Motor vehicles and equip.
ACCOUNTING
Tuesday, 6 September 2022
USERS/ STOKEHOLDERS
•
•
•
•
•
•
•
Owners/ inventors
Manager
Lender/ creditor
Supplies
Regulatory Agencies
Employees
Customer
Accounting equation
– This equation present the resources controlled
by the
enterprise, the present obligation of the enterprise and
the
residual interest in assets.
The basic accounting model
ASSETS = LIABILITIES + OWNWES' EQUITY
ASSETS
- Resources owned by the business.
• CASH - Bank will accept for deposit at face
value.
Includes coin, currency, checks, money orders,
drafts
And, bank deposits.
• NOTES REC- Written pledge that the
Customer will pay the business a fixed amount of
money
on a Certain date.
• ACCOUNT REC - Claims against
customers arising
From sale service or good on credit. types of less
security
Than a promissory note
• INVENTORIES - .The form of materials or
supplies
To be consumed in the production process or in
the regarding
Of service.
• PREPAID EXP - Paid for by the business
in advance
• PROPERTY, PLAN, & EQUIP - Use
for in the
Production or supply of good s or service.
Includes items
Land, building, machinery and equipment,
furniture, fixture,
Motor vehicles and equip.
• ACCUMULATED DEPRECIATION - This
acct.
Deducted from the cost of the related asset- equip. or
building
To obtain book value.
• INTANGIBLE ASSETS - Nonmonetary assets
without
Physical subs. These include good will, patents, copy
right,
Licenses, franchise, trademarks, brand names, secret
process,
Subscription list 7 noncompetition agreements.
LIABILITIES
- Right of the creditors over the asset.
• ACCT. PAYABLE - Reverse relationship of the
acct. receivable.
• NOTES PAYABLE - Is like a notes receivable but
reverse sense.
• ACCRUED LIAB - To others for unpaid expenses.
Includes salaries payable, utilities pay, interest pay and
Taxes payable
• UNEARNED REV - When the goods or service
are
Provided to the customer, the unearned rev is reduce
and
income is recognized.
• MORTAGE PAYABLE - Records long term
dept of
The business entity for which the business entity has
pledged
Certain assets as security to the creditor. (SANLA)
EQUITY
- The owner over the assets under
• INITIAL INVESTMENT
• ADDITIONAL INVESTMENT
• WITHDWALS
• REVENUE - SALES AND SERVICE REV
• EXPENSES
1 SALARIES EXP- Payment of an employer,13
month
2 SUPPLIES EXP- Conduct of daily
business
3 UTILITIES EXP4 RENT EXP
5 ADDITIONAL EXP
6 TAXES EXP
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ACCOUNTING
Tuesday, 6 September 2022
NAME OF THE COMPANY
INCOME STATEMENT
FOR THE MONTH ENDED
SR > OE - NET INCOME
SR < OE - NET LOSS
• Performance report of revenues against cost and
expenses
NAME OF THE COMPANY
STATEMENT OF CHANGE IN OE
FOR THE MONTH ENDED
• Show financial performance for the period showing
separately the total amounts attributable to owners
of the parent and to minority interest
• A statement of change in equity (also referred to as
statement of retained earnings) is a business'
financial statement that measures the changes in
owners' equity throughout a specific accounting
period. It covers the following elements: Net profit or
loss. Dividend payments. (google)
NAME OF THE COMPANY
STATEMENT OF FINANCIAL
PISITION AS OF
The statement of financial position is another term
for the balance sheet. The statement lists the
assets, liabilities, and equity of an organization as of
the report date. As such, it provides a snapshot of
the financial condition of a business as of a specific
date. (google)
NAME OF THE COMPANY
STATEMENT OF CASH FLOW
• Financial report that shows what happened to the
cash by enumerating the activities of cash received
and cash used by the business
• Creditor – stakeholders assess the paying ability of
the business
• Capital – account to record the original and
additional investment of the owner of the business
entity
• Service revenue – revenues earned by performing
services for customer or client
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