FUNDAMENTALS OF

ACCOUNTANCY,
BUSINESS AND
MANAGEMENT 1
 OBJECTIVES

At the end of the lesson

01 the student is expected 02 At the end of the lesson the
student is expected to narrates
to define accounting
the history/origin of accounting

At the end of the lesson

At the end of the lesson the
03 the student is expected to
describes the nature of
04 student is expected to defines
external and internal users and
accounting
gives examples.
01
ACCOUNTIN
G
WHAT DO YOU KNOW ABOUT ME?
 ● Accounting is an art of recording all
transactions of business and knowing the
result of carrying out the business activity.
● A means of keeping track of income and

ACCOUNTIN spending is essential to running a business, or

even maintaining personal finances.

G ● According to the American Institute of

Certified Public Accountants, ‘accounting is
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 financial
character, and interpreting the results thereof.
NATURE OF ACCOUNTING
HISTORY OF ACCOUNTING
*Accounting in Ancient Civilizations: Mesopotamia, the Roman Empire

• Accounting has been around since as far back as 3300

BC, with archaeologists having discovered accounting
on clay tablets from Egypt and Mesopotamia.
• accounting was used to keep track of herd and crop
growth.
• Roman Empire, 27 BC, Emperor Caesar Augustus
began recording his own financial transactions and
other "good deeds" as 'Res Gestae Divi Augusti' or
"The Deeds of the Divine Augustus."
HISTORY OF ACCOUNTING
*Medieval Accounting

• Merchants began needing bookkeeping to keep track of multiple

transactions.

• The beginning of "double-entry" bookkeeping- a system of book

keeping where every entry to an account requires a corresponding
and opposite entry to a different account known as DEBIT and
CREDIT.
HISTORY OF ACCOUNTING
*1494: Luca Pacioli, the Father of Modern Accounting:

• In 1494, Luca Pacioli published "Summa Arithmetica,

Geometria, Proportioni et Proportionalita,“ describing the system
of double-entry bookkeeping in his tome, Pacioli included a 27
treatise purely on the subject of bookkeeping, called "Particularis
de Computis et Scripturis," or "Details of Calculation and
Recording."
USERS OF ACCOUNTING
INFORMATION
 USERS OF ACCOUNTING
INFORMATION
INTERNAL USERS - are that individual who runs, manages and
operates the daily activities of the inside area of an organization.
1. Management – Organization’s internal management includes all junior and
senior business managers.
They use it for:
1. Budgeting, forecasting, analysis & take important financial
decisions.
2. Investment decisions, identification of warning and opportunity
signals.
3. Taking informed & evaluated decisions.
4. Compliance with all statutory, regulatory, and any other external
body.
 USERS OF ACCOUNTING
INFORMATION
INTERNAL USERS
2. Owners/Partners – Owners are the legal stakeholders of the business and the
ultimate
signing authority.

They use it for:

1. Tracking their investment and monitoring their return on investment.
2. Observing their capital invested and evaluating its upward or
downward move.
3. Keeping an eye on the overall well-being of the business.
 USERS OF ACCOUNTING
INFORMATION
INTERNAL
USERS
3. Employees – Full-time & part-time workers. They are essentially on the company’s
payroll.

They use it for:

1. Checking the overall financial health of the company as it affects their
remuneration and job security.
2. Decision making in case of shares based payment such as ESOPs offered by
the employers.
3. Examining if the employer is depositing all required funds to the appropriate
authorities such as the provident fund, 401(k), etc. Examples: owners and stockholders,
directors, managers, employees, and internal auditor.
 USERS OF ACCOUNTING
INFORMATION
EXTERNAL USERS - are those individuals who take interest in the account
information of an organization but they are not part of the organization’s administrative process.
1. Investors
Potential investors are interested in the past performance of a
business and its potential for future earnings. The financial statement of a
company summarizes historical information on performance, financial
position, and business activities. These sets of information are vital in
assessing profitable investments. Current investors also want to track the
performance of their investments to be able to decide whether to hold on
to such investment or look for more promising ones.
 USERS OF ACCOUNTING
INFORMATION
EXTERNAL
USERS
2. Trade Creditors or Suppliers
Some suppliers of businesses provide goods and services on credit.
Before extending credit, trade creditors review the ability of a business to pay.
Creditors are particularly interested in a company's liquidity (i.e., ability to pay
short term obligations). Cash flows and profitability is also assessed.
Information gathered may also be used in determining the extent of credit to be
allowed, credit period, and other credit policies to be applied.
 USERS OF ACCOUNTING
INFORMATION
EXTERNAL
USERS
3. Banks and Other Lenders
Lenders would like to know if a business is capable
of paying debts. Lenders often asses the stability of the
business as well as cash flows and profitability. They are
particularly interested in the ability of a business to pay
borrowings and the corresponding interests when they
become due.
 USERS OF ACCOUNTING
INFORMATION
EXTERNAL
USERS
4. Tax Authorities and Regulatory Agencies
Tax authorities use accounting information in determining taxes
due from the business. Businesses pay different kinds of taxes and are
computed in reference to different tax bases and different tax rules.
Businesses are also required to submit reports to regulatory agencies
such as the SEC. These agencies watch over compliance to corporate and
trade laws.
 USERS OF ACCOUNTING
INFORMATION
EXTERNAL
USERS
5. Employees and Labor Unions
Non-managerial employees form part of the
operations of the company but do not participate in decision-
making. Employees want to know if the company has the
ability to pay remuneration and benefits. Labor unions
review the financial performance and condition of the
company before making demands on salary increase,
employment benefits, and other labor matters.
 USERS OF ACCOUNTING
INFORMATION
EXTERNAL
USERS
6. Customers
Customer or clients may become interested in knowing
whether a company is capable of continuously providing their
needs. This happens when a customer uses the goods from a
particular company as raw materials or supplies in his own
business or when he is heavily dependent upon the goods or
services of the company.
 USERS OF ACCOUNTING
INFORMATION
EXTERNAL
USERS
7. Others
Anyone outside the company who do not participate
in the day-to-day operations of the business and makes use of
the company's financial information is considered an external
user. This includes analysts, researchers, students, media
reporters, and publishers. They are interested in financial
information about the company for educational, scholarly,
and other non commercial purposes.
 Other activities
Mercury Venus Mars
It’s the closest planet to Venus is the second planet Mars is actually a very
the Sun from the Sun cold place

Jupiter Saturn Neptune

Jupiter is the biggest It’s composed of It’s the farthest planet
planet of them all hydrogen and helium from the Sun
 02
ACTIVITY
 ACTIVITY!!!
Answer the following questions.

1. Do you agree: “Accounting is vital to the success of a

business?” Explain.

2. Do you think that non-financial information is still useful in

the accounting process? Why or why not?

3. Give concrete example on how you can use accounting in

your daily lives.
Awesome
words
QOUTE OF THE Don't
f
to SM orget
DAY ...
ILE 

“LIFE IS LIKE ACCOUNTING,

EVERYTHING SHOULD BE
BALANCE”