FABM

• is a service activity of identifying, recording, and communicating economic information, which is financial in nature, that is useful in making economic decision.


  Accounting
• IDENTIFYING - analyzing business transactions
• accountable event- events that affect the assets, liabilities, equity, income, and expenses of a business.
• Recording - journalizing the accountable events

  (initial recording of transactionS)
• Communicating- summarizing the information to produce meaningful reports.
• report- financial statements
• types of information provided by accounting.

  1. quantitative information - numbers
  2. qualitative information - words
  3. financial information- money
• financial nature - monetary value
• art - creative and judgement
• Luca Pacioli- molk/ mathematican
• father of double entry book keeping


  Luca pacioli
• valued received = value parted with
• it is the language of business

  accounting
• around 3600 B.C. record-keeping was commonly from Mesopotamia, China, and India to Central and South America.
• The oldest evidence of this practice was the “clay tablet” of Mesopotamia which dealt with commercial transactions at the time such as listing of accounts receivable and accounts payable.
• The Cradle of Civilization


  Around 3600 B.C., record-keeping was already common from Mesopotamia, China and India to

  Central and South America. The oldest evidence of this practice was the “clay tablet” of Mesopotamia which dealt with commercial transactions at the time such as listing of accounts receivable and accounts payable.
• 14th Century - Double-Entry Bookkeeping


  The most important event in accounting history is generally considered to be the dissemination of double-entry bookkeeping by Luca Pacioli (‘The Father of Accounting’) in 14th-century Italy.
• the first book published that contained a detailed chapter on double-entry bookkeeping.

  SUMMA DE ARITHMETICA GEOMETRIA PROPORTIOIN ET PROPORTIONALISTA
• The thorough study of accounting and development of accounting theory began during this period. Social upheavals affecting government, finances, laws, customs and business had greatly influenced the development of accounting.

  • French Revolution (1700s)
• Mass production and the great importance of fixed assets were given attention during this period.

  The Industrial Revolution (1760-1830)
• The modern, formal accounting profession emerged in Scotland in 1854 when Queen Victoria granted a Royal Charter to the Institute of Accountants in Glasgow, creating the profession of the Chartered Accountant (CA).

  19th Century – The Beginnings of Modern Accounting in Europe and America
• PICPA

  Philippine institute of certified public accountant
• The accounting profession in the 20th century developed around state requirements for financial statement audits. Beyond the industry's self-regulation, the government also sets accounting standards, through laws and agencies such as the Securities and Exchange Commission (SEC).

  The Present - The Development of Modern Accounting Standards and Commerce
• Financial Accounting - broadest branch and is focused on the needs of external users. concerned with the recognition, measurement and

  communication of economic activities. This information is communicated in a complete set of financial statements.
• accounting emphasizes the preparation and analysis of accounting information within the organization. The objective of managerial accounting is to provide timely and relevant information for those internal users of accounting information, such as the managers and

  employees in their decision-making needs.

  Management accounting
• is the process of recording, analyzing, classifying, summarizing,

  communicating and interpreting financial information about the government in aggregate and in detail reflecting transactions and other economic events involving the receipt, spending, transfer,

  usability and disposition of assets and liabilities.

  Government accounting
• refers to the examination of financial statements by an independent CPA (Certified Public Accountant) with the purpose of expressing an opinion as to fairness of presentation and compliance with the generally accepted accounting principles (GAAP).

  External auditing
• deals with determining the operational efficiency of the company

  regarding the protection of the company’s assets, accuracy and reliability of the accounting data, and adherence to certain management policies. It focuses on evaluating the adequacy of a

  company's internal control structure by testing segregation of duties, policies and procedures, degrees of authorization, and other controls implemented by management.

  Internal auditing
• helps clients follow rules set by tax authorities. It includes tax planning and preparation of tax returns.

  Tax Accounting
• Sometimes considered as a subset of management accounting,refers to the recording, presentation, and analysis of manufacturing costs.

  Cost Accounting
• This branch of accounting deals with developing future accountants by creating relevant accounting curriculum. Accounting professionals can become faculty members of educational institutions.

  Accounting Education
• focuses on the search for new knowledge on the effects of economic events on the process of summarizing, analyzing, verifying, and reporting standardized financial information, and on the effects of reported information on economic events.

  Accounting Research
• Internal users- of accounting information are those individuals inside a company who plan, organize, and run the business. These users are directly involved in managing and operating the business.
• Examples of Internal Users

  Management, Employees, Owners
• requires accounting information for analyzing the performance and

  actual position of the business. Accounting information helps the management to arrive at an evaluated decision. It helps with cost determination, investment decisions, helps to identify warning signals in case of a downfall etc.

  Management
• are interested to know the accounting details of their organization so that they are aware of overall profitability of the company which has a direct impact on their remuneration and job security.

  Employees
• Owners - are more concerned about the returns they get out of their

  investment in the organization and this purpose is fulfilled through the accounting information. Not only do they want their capital safe they are also interested in knowing the profit earned or loss incurred by the business time to time.
• individuals and organizations outside a company who want financial

  information about the company. These users are not directly involved in managing and operating the business.

  External users
• The two most common types of external users are potential investors and creditors.
• use accounting information to make decisions to buy shares of a company.

  Potential Investors