INTRODUCTION TO ACCOUNTING

• Accounting is "language of business" because it is practical and universal.
• GAAP

  Generally Accepted Accounting Principles
• FRSC

  Financial Reporting Standards Council
• According to FRSC, accounting is a service. It provides quantitative financial information about economic entities intended to be helpful in making economic decisions
• The largect community of accountants (AAA)

  American Accounting Association
• According to AAA, defines accounting as the "process of identifying, measuring, and communicating economic information to permit informed judgment and decisions"
• AICPA

  American Insitute of Certified Public Accountants
• The AICPA, defines accounting as the "art of recording, classifying, and summarizing"
• Nature of Accounting

  Accounting is an art

  Accounting as a science

  Accounting as idealogy

  Accounting deals with financial information and transaction

  Accounting is an information system
• Accounting is an art

  Accounting is a methodical approach that requires practical skills and knowledge
• Accounting as a science


  Accounting is the science of observing and investigating economic events using established methods to record and present the financial data of an economic entity to different users of accounting information.
• Accounting as idealogy


  Idealogy is a set of ideas or ways of doing things in the world. Economic or political theories and policies are based on a variety of idealogies.
• Functions of Accounting

  systematic recording

  safeguarding

  creating a system

  communicate
• Users of Accounting Information

  Internal Users - People within a business oganization who use accounting information

  owners - need accounting information to determine whether they should withdraw their investments

  managers - need accounting information to study the profitability and financial condition of the business

  employees - examine a business profitablity, stability, and its impact on their salary and job security
• Investors: use accounting information to decide whether to invest in the business
• Creditors/lenders: assess the business's creditworthiness and capability to repay its obligations
• Customers: interested in an enterprise's continuance
• Suppliers: use accounting information to determine if the debts owed to them will be paid on time
• Government agencies, such as the SEC, ensure that companies disclose accounting information following rules and regulations to protect stakeholders' interests
• The public uses financial information to understand trends and recent developments
• History and Development of Accounting

  In the middle east, around 8,500 bc, traders used clay objects to decipt goods like sheep flocks, spice, and oil jars, clothing bolts, and other goods

  
  

  accounting begins In the year 1445, when italian monk and mathematician Friar Luca Pacioli was born in Sansepolcro, Tuscany

  
  

  "Summa de arithmetica, geometrica, proportioni et proportionalista" by Pacioli was published in 1494 in the Gutenberg press. It was a huge hit right away and was later translated into German, Russian, Dutch, and English

  
  

  Friar Luca Pacioli "Father of Accounting"
• Financial Accounting involves gathering, classifying, analyzing, and recording financial data in the books of accounts
• Managerial Accounting gathers and reports data necessary for management decisions
• Auditing includes External Auditing and Internal Auditing
• External Auditing is the work of CPA outside the business organization
• Internal Auditing reviews business operations to check compliance with management policies
• Taxation deals with the preparation of various tax returns and tax planning for the business
• Government accounting is used by all branches of the government and by those who receive government funds
• Cost Accounting analyzes the costs incurred by the business to help managers control expenses
• Specialized Accounting Fields


  practice of public accountancy

  practice in commerce and industry

  practice in government

  practice in education or academe
• Practice of public accountancy


  accountants in public practice work in accounting firms or individually to provide audit
• Practice in commerce and industry


  accountants in private accounting provide a staff function that supports the company by performing accounting related tasks
• Practice in goverment


  agencies need accounting information to help them plan, budget, forecast, and allocate givernment funds
• department of trade industry (dti) oversees the registration of sole propriertorship businesses
• bureau of internal revenue (bir) oversees the proper collection of taxes from the public
• securities and exchange commission (sec) oversees the registration of partnership and corporation businesses
• bangko sentral ng piipinas (bsp) regulates philippine back operations
• commision on audit (coa) oversees auditing government-related transactions
• practice in education comprises accountants who are into teaching