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21 views32 pages

WEEK-1-2 qtr3 1

subject

Uploaded by

frsclprps
Copyright
© © All Rights Reserved
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Fundamentals of

Accountancy,Business and
Management 1( FABM 1)

Riza R. Calingasan
Teacher II
The Objectives of the lesson are
the following:
Define Accounting and other accounting
terminology
Cite external users and internal users of
financial information
Exhibit integrity on giving accounting
information
Definition of Accounting

 a systematic and comprehensive way of


recording the business’ financial
transactions. It is the process of
recording,classifying,summarizing,reportin
g and interpreting information about the
economic activities of an organization.
Definition of Accounting
Bookkeeping

Is the recording part of accounting


that uses systematic procedures In
listing transactions.
A bookkeeper is the one who handles
the basic accounting functions of a
business that may include recording of
the various transactions.
Components/Functions of
Accounting

 IDENTIFYING
 RECORDING
 SUMMARIZING
 REPORTING
 ANALYZING
Identifying - This involves selecting economic events that are
relevant to a particular business transaction. The economic
events at an organization are referred to as transactions.
Transactions and events are generally supported by
documentary evidences or proofs. Like sales transactions
supported by Sales Invoice together with Delivery Receipt.
Recording – refers to the process of making records of all the
transactions that the business made in a certain period of time
Summarizing - It is the process that involves grouping of
various accounts referred to the classifying process where the
accounts are grouped into assets, liabilities, owner’s equity,
revenue, cost and expenses taken from the general ledger.
Reporting - is the process wherein the
management presents reports to the company
investors as to where the invested money is going.
Analyzing – is the process of drawing out both the
positive and negative points so that the financial
performance of the company will be improved and
where profit , sales and cash are being compared to
be able to draw the needed conclusions within the
given period of time.
NATURE OF ACCOUNTING
NATURE OF ACCOUNTING
NATURE OF ACCOUNTING
Income Statement
Income Statement - captures revenue, expenses, and
net income over a period of time.
Important elements of an income statement:
1.Revenue is the monetary compensation given to the
organization in exchange for goods and services
provided
2.Expenses are the cost incurred by the organization in
providing the goods and services to its customers.
3.Net Income (Losses) is the difference between
income and expenses, depending on which is greater.
Cash Flow Statement – shows how changes in
balance sheet counts, shows how income affects cash
and cash equivalents and breaks the analysis down to
operating,investing and financing activities.
Brief History of Accounting
The Accounting
Doctrine
The Objectives of the lesson are
the following:

1. explain the varied accounting concepts


and principles.
2. solve exercises on accounting principles
as applied in various cases, and
3. manifest a greater level of consistency in
solving exercises on accounting principles
as applied in various cases.
GAAP
Generally Accepted Accounting Principle
1. BUSINESS ENTITY PRINCIPLE
In this principle, there is a separation and
distinction of transactions between the
business enterprise and its owner or investor.
2. Going-Concern Principle
This means that the business is
expected to continue indefinitely.
3. Time Period Principle
The financial statements are usually
divided into specific time intervals.
The business should report the
financial statements appropriate to a
specific period.
4. Monetary Unit Principle
Any amount involved in the business is
stated into a single monetary unit.
5. Objectivity Principle
In this concept, financial statements of an
organization must be presented with
supporting solid evidence and the intent
behind this principle is to keep the
management and the department of
accounting from making financial
statements that are affected by their
opinions and biases
6. Cost Principle
This is an accounting principle wherein
accounts should be recorded initially at
cost as well as assets at their respective
cash amounts at the time the asset was
purchased.
7. Accrual Accounting Principle

In this principle, revenue should be recognized


when earned regardless of collection. Same
goes with expenses which are recorded when
incurred regardless of payment. But in the
Cash Basis Principle, revenue is logged when
collected, and expenses should be recorded
when paid. A Cash Basis is not generally an
accepted principle today.
8. Matching Principle
In this principle, cost should be matched
with the revenue generated. It requires
that the expenses incurred during a period
be recorded in the same period in which
the related revenues are earned.
9. Disclosure Principle
All necessary, relevant, and material
information should be reported in this
principle for transparency.
10. Conservatism Principle
This is also known as prudence. Assets and
income should not be overstated while
liabilities and expenses should not be
understated. In case of doubt, expenses
should be recorded at a higher amount.
Revenue should be recorded at a lower
amount.
11. Materiality Principle
This includes all assets that are immaterial
to make a difference in the financial
statements which the company should
record as an expense.

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