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To Accounting: BM 111: Fundamentals of Accounting FSM 122: Principles of Accounting

This document provides an introduction to the key concepts in accounting. It defines accounting as the process of recording, classifying, and summarizing financial transactions and interpreting the results. Accounting is broader than bookkeeping as it includes analysis and interpretation, not just recording data. The document outlines the history and fields of accounting, users of accounting information, underlying assumptions, and the accounting cycle of recording, classifying, summarizing and interpreting financial data. It also defines the different types of business organizations and concludes with references for further information.

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Chreann Rachel
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194 views21 pages

To Accounting: BM 111: Fundamentals of Accounting FSM 122: Principles of Accounting

This document provides an introduction to the key concepts in accounting. It defines accounting as the process of recording, classifying, and summarizing financial transactions and interpreting the results. Accounting is broader than bookkeeping as it includes analysis and interpretation, not just recording data. The document outlines the history and fields of accounting, users of accounting information, underlying assumptions, and the accounting cycle of recording, classifying, summarizing and interpreting financial data. It also defines the different types of business organizations and concludes with references for further information.

Uploaded by

Chreann Rachel
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTRODUCTION

TO ACCOUNTING
BM 111:
FUNDAMENTALS
OF ACCOUNTING
FSM 122: PRINCIPLES
OF ACCOUNTING
CONTENT
o Definition of Accounting
o Accounting vs Bookkeeping vs Auditing
o Fields of accounting
o History of accounting and Development of Accounting
o Users of Accounting Information
o Basic Underlying Accounting Assumptions Accounting
Constraints
o Conceptual Framework
o Phases of Accounting
o Kinds of Business Organizations
LEARNING OURCOMES
o Trace the brief history and development of the field of
accounting.
o Define accounting and its related concepts
o Identify the principles guiding the study of accounting such as
underlying assumptions and accounting constraints
o Know the purpose of accounting and the uses and users of
accounting generated information.
o Enumerate and explain the phases of accounting in the
accounting cycle.
o Describe the different kinds of a business as to operation and
organization
Definition of 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 thereof.
 It is the process of identifying, measuring and
communicating economic information to permit informed
judgment and decision by users of information.
Definition of Bookkeeping
 Primarily concerned with the mechanical and the routine
functions of accounting involving recording and
preparation of financial statements.
 Accounting is broader than bookkeeping as it includes not
only the preparation of financial statements but also the
analysis and interpretation of the generated accounting
information.
Definition of Auditing
 The examination of the financial statements to determine whether
they conform to established standards (GAAP: Generally Accepted
Accounting Principles). Now called Philippine Standards of
Accounting (PSA) & Philippine Financial Reporting Standards
(PFRS).
 “ The work of an auditor begins when the work of an accountant
ends”
 Kinds of audit:
 External or Independent Audit
 Internal Audit
Accounting vs Bookkeeping vs
Auditing
Fields of Accounting
 A. Functional Accounting
 1. Financial Accounting
 2. Management Accounting
 3. Auditing
 4. Tax Accounting
 5. Cost Accounting
 6. Accounting Systems Installation
Fields of Accounting
 B. OCCUPATIONAL ACCOUNTING
 1. Public Practice – Independent auditor/s
 2. Private Practice (Commerce and Industry)
 3. Government Accounting
 4. Research and Education
History and Development of
Accounting
Users of Accounting Information
 1. The owners; management
 2. Investors (present and potential)
 3. Employees
 4. Lenders
 5. Suppliers and other trade creditors
 6. Customers
 7. Government and other Agencies
 8. Public
Basic Underlying Accounting Assumptions
Accounting
 Accounting Entity Assumption
 Going Concern Assumption
 Monetary Unit Assumption
 Periodicity Assumption/Time period Assumption
 Calendar Year – Jan. 1 to Dec. 31
 Fiscal Year – Starts any time of the year and ends 12 months after
 Accrual
 Revenues are recorded when they are earned not when they are received/collected.
 Expenses are recorded when they are incurred not when they are paid/disbursed.
Basic Accounting Constraints
Phases of Accounting
 1. Recording
 journalizing
 2. Classifying
 posting to the ledger
 3. Summarizing
 Preparing Financial Statements from the ledger or trial balance
 4. Interpreting
 analysis phase
Kinds of Business Organizations
 A. As to Operation or Source of Income
 1. Service business
 2. Merchandising or Trading Business
 3. Manufacturing Business
 B. As to Organization
 1. Sole or Single Proprietorship
 2. Partnership
 3. Corporation
 4. Cooperative
REFERENCES
 See Reference in our Syllabus (BM 111:
FUNDAMENTALS OF ACCOUNTING and FSM 122:
PRINCIPLES OF ACCOUNTING)
 Fundamentals of Accounting Outline Notes by Dalifer A.
Gano, CPA, MBA, MAEd (module)
THE END!
ANY QUESTIONS?
THANK
YOU FOR
LISTENING
!
NEXT TOPIC WILL BE
ACCOUNTING ELEMENTS AND
RELATIONSHIPS

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