FABM

• The accounting equation is Assets = Liabilities + Owner's Equity
• Accounting information system (AIS) refers to the people, procedures, equipment, and software used by an organization to collect, process, store, retrieve, analyze, report, and distribute financial data.
• Financial statements are reports that summarize the results of operations, changes in assets and liabilities, and owner’s equity during a period of time.
• Accounting is defined as an information system that measures, processes, and communicates information which are primarily financial in nature, about an identifiable entity for the purpose of making economic decisions.
• Analyzing involves looking for transactions entered into, economic events that have taken place, and determining their effects on the business.
• Think if the transaction is economic or not.
• Analyzing the standard if it is qualified for the next process (Recording).
• Recording involves writing the effects of the transactions and events that have been analyzed.
• General journals contain all of the transactions.
• Purchasing Activity involves transactions related to foods.
• Investing Activity involves transactions for long lasting items such as technology.
• Operation Activity involves maintenance purposes.
• Special Journals contain specific activity such as Purchasing, Investing, and Operational.
• Classifying involves sorting or grouping of similar transactions and events into specific account titles.
• Classify the nature of Transaction.
• Summarizing involves grouping the various accounts referred to in the classifying process.
• Reporting involves the preparation of financial summaries called financial statements.
• Income statement is a financial statement that shows the income earned and expenses incurred by a business during a specific period.
• Balance sheet is a financial statement that lists the assets, liabilities, and equity of a business as of a specific date.