FABM 1

• Accounting


  The process of identifying, measuring, and communicating financial information to allow users to make informed judgments and decisions
• Accounting


  The art of recording, classifying, and summarizing transactions and events which are financial and are quantifiable in terms of money
• Purpose of accounting


  • To provide quantitative financial information to help make decisions
• Accounting as a process


  1. Identifying and analyzing

  2. Recording or journalizing

  3. Communicating
• Bookkeeper


  Responsible for developing and maintaining accounting records
• Accountant


  Supplies financial information to make informed judgments and better decisions
• Simple accounting in business involves recording financial and non-financial transactions, organizing them into a financial report, and sharing the results with stakeholders
• Nature of accounting


  • Service activity
  • Process
  • Art and discipline
  • Deals with financial information
  • An information system
• Functions of accounting


  • Keeping systematic records
  • Protecting properties of the business
  • Communicating results to various parties
  • Meeting legal requirements
• The International Financial Reporting Standards (IFRS) are established accounting standards set by the IFRS Foundation and regulated by the International Accounting Standards Board (IASB) for businesses to follow in preparing financial statements
• Following the IFRS standards ensures that investors are provided with transparent and reliable information about a company's financial position, cash flows, changes in equity, and performance
• History of accounting


  • Mesopotamian era
  • Luca Pacioli (The Father of Accounting)
  • Industrial revolution
  • Queen Victoria of British Empire
• Hammurabi Code


  Rules and regulations for commercial transactions
• Luca Pacioli


  • The Father of Accounting
  • Introduced the double-entry system of debit and credit
  • Paved the way for modern accounting
• Industrial Revolution


  • Development of machines and factories for mass production of goods
  • Accounting was emphasized with utmost importance and relevance
  • System of checks and balance to monitor the process and expenses in production
• Queen Victoria of British Empire


  • First recorded accounting standards were formalized during her reign
  • Monitored the reported transactions of companies
  • Evolved into the modern process of auditing
• Accounting systems


  • Continually adapt to the needs of the global market and the business environment
  • The existence of multinational and transnational corporations required uniform accounting standards across different countries and industries
• GAAP


  Generally Accepted Accounting Principles
• IFRS


  International Financial Accounting Standards
• The health crisis brought about by the COVID-19 pandemic demanded an urgent distribution of medical supplies and equipment across the country. The government had to seek the help of private companies to help supply and distribute these needs.
• Several months after implementation, a nationwide controversy erupted from an analysis of the financial statement issued by one of the private contractors. It was discovered that the company only had ₱599,450.00 worth of funds but won a contract worth ₱7 billion.
• From the analysis of the company's financial statement, it appeared that the company was not in a financial position to implement such a big project; but still got the project, and the financial statement had many discrepancies and missing information further fueling the speculation that the enterprise was a conduit for large-scale corruption.
• Financial statements and reports yield crucial information. The role of accountants and the importance of accounting is once more emphasized in avoiding fraud and corruption in our society.
• Accounting


  The process of identifying and analyzing, recording or journalizing, and communicating economic information to permit informed judgment and decisions by users of information
• Accounting


  • A rather complex field
  • Deals with financial information and serves as a service activity, a process, an art and discipline, and an information system
  • Serves functions such as keeping a systematic record of business transactions, protecting properties of the business, communicating results to various parties, and meeting legal requirements
• Early accounting practice


  • Dates back to the Mesopotamian Era, when people used stone tablets to record commercial transactions
  • As economic activities progressed, accounting procedures and standards also evolved
  • Today, different companies, institutions, and governments worldwide have generally accepted uniform sets of accounting standards
• Accounting process


  1. Recognition or nonrecognition of business activities as accountable events

  2. Presenting accounting information to different business stakeholders who might need them

  3. Organizing information into accounting documents such as journals and/or ledgers
• The Mesopotamians used stone tablets in recording commercial transactions.
• Personal financial transactions accounting process

  1. Identify and analyze transactions

  2. Record or journalize transactions

  3. Communicate financial information
• Accounting serves many important functions such as keeping a systematic record of business transactions, protecting properties of the business, communicating results to various parties, and meeting legal requirements.
• As an aspiring entrepreneur or business professional, learning and understanding the accounting process is important to make informed decisions and ensure financial responsibility and transparency.
• All business owners and professionals should learn how accounting works to ensure proper financial management, compliance, and transparency in their operations.
• The third step is to analyze the data gathered from the previous steps.
• The second step is to gather information about the problem.
• The first step is to identify the problem.
• Analyzing the data involves identifying trends, patterns, and areas that require attention.
• This can include analyzing sales figures, expenses, profits, cash flow, inventory levels, and other relevant metrics.
• Based on this analysis, businesses may need to adjust their strategies, pricing, marketing efforts, or operational processes to improve performance and achieve their goals.
• Financial statements are used by stakeholders to evaluate the performance and position of a company over time.