FABM1 - Lesson 1 - Introduction to Accounting.pptx

introduction of accounting

1. Introduction to Accounting Fundamentals of Accountancy, Business, & Management 1 Lesson 1

2. Accounting Accounting is, broadly speaking, a system that helps business track events that affect them. This process involves identifying the events that affect a business, recording these events, and communicating the summarized results of all events within a particular period of interested parties.

3. The Accounting Process

4. The Accounting Process

5. The Accounting Process

6. Nature of Accounting Accounting is a process. A process is composed of multiple steps that lead to a common end goal.

7. Nature of Accounting Accounting is a process because it performs the functions of identifying, recording, and communicating economic events with the end goal of providing information to internal and external parties.

8. Nature of Accounting Accounting is an art. Art refers to a way of performing something. It entails creativity and skills to help us attain certain objectives. Accounting is the art of recording, classifying, summarizing, and finalizing financial data.

9. Nature of Accounting Accounting is a combination of techniques, and its application requires skill and expertise . This is the reason why accounting can be considered as an art.

10. Nature of Accounting Accounting deals with financial information and transactions. Accounting deals only with quantifiable financial transactions. These are the only events identified by the accountant, recorded in the books, and communicated to different parties.

11. Nature of Accounting Non-financial transactions are not the focus of the accounting process. However, non-financial data may be used to interpret and better estimate some financial data.

12. Nature of Accounting Accounting is a means and not an end . Accounting is a tool to achieve specific objectives. It is not the objective itself.

13. Nature of Accounting Accounting is an information system. Accounting is recognized and characterized as a storehouse of information.

14. Nature of Accounting As a service function , it collects processes and communicates financial information of any entity. This discipline of knowledge has been evolved out to meet the need of financial information required by different interested groups.

15. Functions of Accounting The American Accounting Association (AAA) defines accounting as “ the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by the users of information .”

16. Functions of Accounting The American Institute of Certified Public Accountants (AICPA) defines accounting as “ 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 .”

17. Functions of Accounting Keeping systematic record of business transactions. Recording transactions does not only involve entering the transactions in the accounting books. The records should be systematic enough to enable easy understanding of readers. No matter how comprehensive the records are, if they are not produced systematically, then they provide little to no value.

18. Functions of Accounting Protecting the properties of the business. The accounting records serve as the evidence that the properties of a business do exist or how much of a particular resource does a company have. If the accounting records show that the amount of cash should be Php1,000,000, any excess and deficiency will be noticed immediately. Moreover, the accounting system helps in preventing employee fraud and misappropriation of company resources.

19. Functions of Accounting Communicating results to various parties in or connected with the business. The accounting reports produced at the end of each period are not only used by external parties (e.g., potential investors, government agencies), but also by the management in their decision-making function. Communication of the results of operations of a company is essential for all concerned parties to enable them to take well-informed decisions.

20. Functions of Accounting Meeting legal requirements . In the Philippines, the government requires some companies (particularly those with public accountability) to provide financial reports quarterly, semi-annually, or annually. This procedure aims to protect the public by providing them the necessary information to make sound decisions. The government also requires reports from heavily regulated industries such as energy and oil industries.