Download - CH1 Introduction to Accounting P1
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Reference:
Accounting Essentials I
Veron • Anastacio
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Accounting is 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
in making reasoned choices among
alternative courses of action.
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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 a financial
character, and in interpreting the results
thereof.
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Accounting is the process of identifying,
measuring and communicating economic
information to permit informed judgment
and decision by users of the information.
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Identifying
• The process of recognizing or not
recognizing events
Measuring
• The process of determining the monetary
value of the accounting elements
Communicating
• The delivery of the accounting reports to
potential users of the accounting information
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Keeps track of profits
Provides framework by which profit can
be planned, monitored and controlled
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Whether or not the business generates profits or incurs losses
Whether or not the business is growing Whether or not the business is on the verge
of bankruptcy Whether or not the business can pay its
liabilities as they fall due
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Auditing
Tax Accounting
Management Consulting
Cost Accounting
Financial Accounting
Accounting Systems
Government Accounting
Budgeting
Accounting Education
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Public practice
Commerce and industry
Government
Education
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Accounting covers a wider scope than bookkeeping
Bookkeeping refers to the clerical
dimension of the accounting Accounting involves not only the
recording aspect of the accounting but also the preparation and the interpretation of financial reports
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Financial Accounting • The accounting process that starts with the
accumulation of accounting information and ends
with the preparation of the financial statements.
Financial Reporting
• The process of communicating financial accounting
to interested users of such information. It involves
supplying them with additional financial quantitative
and qualitative information to facilitate informed
decisions.
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Financial Accounting • Serve the information needs of decision makers
outside the firm like government authorities and
creditors.
Managerial Accounting • Serve the information needs of decision makers
within the firm like shareholders and directors
or managers.
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Accounting focuses on cost of the past
rather than current values
Accounting does not capture non-
financial items like opportunities and
threats, management strengths,
weaknesses, strategies and risks, human
resources and their knowledge and skills
which all impact the business
performance
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FRSC • Established in 2006 by the Board of Accountancy
(BOA) of the Professional Regulation
Commission (PRC)
• Funded by the Philippine Institute of Certified
Public Accountants (PICPA)
• It was established with main function of
promulgating accounting standards and the
generally accepted accounting principles in the
Philippines.
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Investors Employees Lenders Suppliers and other trade creditors Customers Government Public
External Users – those persons or entities who
are outside the business enterprise and who are not involved in the day-to-day operations of the enterprise.
Internal Users – individuals from within the business enterprise.