FOA 1

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Jade

Cards (34)

  • Accounting is a system designed to identify, collect, process, measure and communicate economic information about the business entity to those users having interest in the financial affairs of the entity.
  • Information produced by accounting serves as a service activity which informs users as to its financial status, condition and other quantifiable measures of a business
  • accounting is a service activity, Its function is to provide quantitative information, primarily financial in nature, about finances, about economic entities, that is intended to be useful in making economic decision.
  • BRANCHES OF ACCOUNTING
    1. Financial Accounting
    2. Management Accounting
    3. Government Accounting 
    4. External Auditing
    5. Internal Auditing 
    6. Tax Accounting
    7. Cost Accounting 
    8. Accounting Education 
    9. Accounting Research
    1. Financial Accounting - concerned with recording and classifying business transactions concluding to the preparation of general-purpose financial statements. Mainly concerned on the reports on the entity’s financial position (its resources and claims), financial performance (income and expenses), and the changes in a particular owners’ equity
  • Management Accounting- provides assistance to the internal users of financial information particularly the management in doing economic decisions such as planning, controlling, and strict implementation of the plan
  • Government Accounting - mostly focused on the allocation of the  resources and funds of the National Government. It basically reports on the income and expenditures of government, the allotment to different Departments (DOH, DepEd, DBM, etc.), agencies and projects
  • External Auditing - primarily focuses on the systematic, coherent and critical examination of financial statements by an independent Certified Public Accountant. Using the professional judgment and scepticism of the external CPA, the main objective of external auditing is to express an opinion by issuing an audit report regarding the fairness of the contents of the financial statements in accordance with the given reporting standards.
  • Internal Auditing  - deals with determining the operational efficiency and effectiveness of the company regarding protection and safeguarding of the company’s assets, accuracy and reliability of the accounting data, and adherence to prescribed managerial policies set by the Board of Directors.
  • Tax Accounting - Taxes are the life-blood of one country. Without these taxes one country could not allot income to its operating departments. There will be no funds to be used for the continuous development of infrastructure, transportation and tourism. The proper collection and valuation of taxes depends on the use of one of the branches of accounting – tax accounting. It is concerned on the proper measurement of the amount to be paid by one entity or individual.
  • Cost Accounting - deals with the valuation of the materials, labor and other cost incorporated in producing one product. It is mainly oriented on manufacturing business.
  • Accounting Education - One of the professional fields one Certified Public Accountant can engage with is the Accounting Education. One of the requirements before one CPA candidate can take the licensure examination is to have a degree of Bachelor of Science in Accountancy. Because of this, the need to have an Accounting teacher which will train every individual in the preparation to the CPA board examinations arises.
  • USERS OF ACCOUNTING INFORMATION
    1. Government
    2. Lenders
    3. Investors
    4. Management
    5. Public
    6. Supplier and Trade Creditors
    7. Employee
    8. Customer
  • USERS OF ACCOUNTING INFORMATION
    1. Government - concern not only with the taxes being paid by one entity based on the reported net income but also with the compliance of the entity with their particular regulations.
  • USERS OF ACCOUNTING INFORMATION
    2. Lenders - may be existing or potential users of financial statement. With the financial statements represented by one entity, this type of user can assess the capability of one entity to pay its long- term and short- term obligations.
  • USERS OF ACCOUNTING INFORMATION
    3. Investors - may also be classified as existing or potential users of financial statement. Investors are mostly concerned with how much will they earn (earning power) if they will invest in one company. How will be the return on their investment and the turnover of their investment or return of investment?
  • USERS OF ACCOUNTING INFORMATION
    4. Management - accounting as the language of business focuses on the status of the growth and possible downfall of every client. The financial statements will help managers predict their future. Plan certain inputs and control and apply corrective actions. For instance, F Company using the previous data for sales presented in the financial statement can predict what will be the next period sales. From the forecast, manufacturing and planning of actions for the production can now be possible.
  • USERS OF ACCOUNTING INFORMATION
    5. Public - As part of the public, user will be concerned on the particular pros and cons as well as the benefits and cost if one company will start operation. Pros and benefits will focus on how  one entity responds to the corporate social responsibility.
  • USERS OF ACCOUNTING INFORMATION
    6. Supplier and Trade Creditors -- Financial statements are mirrors of one company. They reflect the status of one entity. Suppliers depend on the financial statements of one company most especially if this company has the trade credit.
  • USERS OF ACCOUNTING INFORMATION
    7. Employee -- This particular user of financial statement are concerned with the financial capability of one company to pay their compensation. Another thing is, employees are concern with the long--term benefit that their company can offer (SSS, PhilHealth, PAG- -IBIG and other retirement benefits).
  • USERS OF ACCOUNTING INFORMATION
    8. Customer -- use the financial statements of their suppliers to assess and monitor the latter's continuity in business because some customers are dependent on the existence of their suppliers to insure the availability of supplies that will sustain their business operation.
  • NATURE OF ACCOUNTING
    1. Standards of Discipline - accountants follow certain standards in performing their professional services.
    2. Art and Science - follows certain style to make its reporting more meaningful, relevant and useful to the users of financial statements. Example, journal entries should maintain a slant format to give distinction of the item to be debited and to be credited.
  • NATURE OF ACCOUNTING
    Accounting as a science on the other hand follows a systematic process before the financial statements will be produced. Step-by-step procedure to attain reliable and relevant information for the users of financial information. This coherent system is condensed into the accounting cycle process.
  • NATURE OF ACCOUNTING
    3. Service Activity - Accountants are merely concerned with giving professional services to the client rather than engaging in the actual business of the company.
    4. Language of Business - Through the end-product of accounting, and financial statements, different users of financial information can be able to ask for its assistance for their individual needs.
  • FUNCTIONS OF ACCOUNTING
    1. Recording - the simple and basic function of accounting. It is essentially focus on not just ensuring all business transactions of at least financial in nature are completely recorded but also they are recorded in manner acceptable to both users of financial information. Recording is done in the books of original entry, the “Journal”.
  • FUNCTIONS OF ACCOUNTING
    2. Classifying - is concerned with the systematic analysis of the journalized data, in view to group of transactions or entries of one nature at one a certain account. The work of classification is completed in a book known as the “Ledger”.
  • FUNCTIONS OF ACCOUNTING
    3. Summarizing - involves presenting and condensing the classified data in a system manner which is understandable and useful to the internal as well as external end users of accounting statements. This procedures leads to the preparations of the following statements:
    1.      Trial Balance
    2.      Income Statement (Statement of Comprehensive Income)
    3.      Capital Statement (Statement of Changes in Equity)
    4.      Cash Flow Statement
    5.      Statement of Financial Position (Balance Sheet)
  • FUNCTIONS OF ACCOUNTING
    4. Analysis and Interprets - The final end-function of accounting. The recorded, classified and summarized financial data is analyzed and interpreted in a manner that the end-users can make a meaningful judgment about the conditions, stability, and profitability of the business operation. The data is also used for preparing the future plan and developing of policies and procedures in executing financial and non-financial plans.
  • FUNCTIONS OF ACCOUNTING
    5. Communicate - accounting information after being meaningfully analyzed and interpreted has to be communicated in a proper form and manner to the proper person. This is done through preparation and distribution of accounting reports, which include besides the usual income statement and the balance sheet, additional information in the form of accounting ratios, graphs, diagrams, funds flow statements etc.
  • service business - services only
    merchandising business - selling products
    manufacturing business - making products
  • Journal - Book of original entry
    Ledger - Book of final entry
  • External Users of Accounting Info:
    1. Government
    2. Lenders/Creditor
    3. Investors
    4. Public
    5. Supplier
    6. Customer
  • Internal Users of Accounting Info.:
    1. Management
    2. Employee
  • long-term obligations - 1 year and above
    short-term obligations - 1 year and below