ICCT FABM

• Accounting


  The measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations
• Accountants


  Practitioners of accounting
• Fields of accounting


  • Financial accounting
  • Management accounting
  • External auditing
  • Tax accounting
  • Cost accounting
• Accounting information systems


  Designed to support accounting functions and related activities
• Financial accounting


  Focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers
• Management accounting


  Focuses on the measurement, analysis and reporting of information for internal use by management
• Bookkeeping


  The recording of financial transactions, so that summaries of the financials may be presented in financial reports
• Double-entry bookkeeping


  The most common system of bookkeeping
• Accounting


  • It is a service activity
  • Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions
• Accounting


  An information system that measures, processes and communicates financial information about an economic entity
• Accounting


  The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information
• Accounting


  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 a financial character, and interpreting the results
• Accounting function


  • It is part of the broader business system, and does not operate in isolation
  • It handles the financial operations of the business but also provides information and advice to other departments
• Accounting process


  1. Measure transactions

  2. Classify and summarize data

  3. Interpret or analyze the results
• Financial statements


  Pro-forma general-purpose financial statements that answer questions about operating results, changes in equity, financial status, and cash flows
• Income statement


  Presents a summary of the revenues and expenses of an entity for a specific period
• Statement of changes in equity


  Presents a summary of the changes in capital such as investments, profit or loss, and withdrawals during a specific period
• Balance sheet


  Provides a snapshot by listing all the assets, liabilities and equity

  
• Accounting equation


  Assets = Liabilities + Owner's Equity
• Profit or loss


  Increases or decreases owner's equity
• Income statement


  Reports profit or loss, which is a determining factor in the statement of changes in equity
• Statement of changes in equity

  Reports the ending owner's equity, taken directly from the statement
• Statement of cash flows

  Reports the net increase or decrease in cash during the period and ends with the cash balance reported in the balance sheet
• Sales


  Can provide the entity with ready cash or generate accounts receivable
• Inventory purchases


  Can give rise to accounts payable
• Operating expenses


  Some are prepaid expenses, some costs may give rise to accounts payable or accrued expenses payable
• Depreciation expense


  A periodic charge for the use of property and equipment
• Interest expense


  A cost of capital from borrowing money by issuing promissory notes
• Profit


  Increases owner's equity
• Prepaid expenses


  Expenses paid in advance
• Accounts payable


  Amounts owed to suppliers or creditors for goods or services received
• Accrued expenses payable


  Expenses that have been incurred but not yet paid
• Depreciation expense


  Periodic charge for the use of property and equipment
• Interest expense


  Cost of capital from borrowing money by issuing promissory notes
• Reverse mapping to T-Accounts

  1. Sales figure on income statement resulted from cash sales and sales on account

  2. Cash sales and sales on account increase Sales account

  3. Sales account is credited to increase
• Sales


  Debit decreases, Credit increases
• Cash


  Debit increases, Credit decreases
• Accounts Receivable


  Debit increases, Credit decreases
• Inventory


  Debit increases, Credit decreases
• Accounts Payable

  Debit decreases, Credit increases