Fundamentals of ABM 1 powerpoint present

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1. This is Your Presentation Title

2. Pinpoint your thoughts: Answer this with honesty: Why did you choose ABM strand? What is your understanding in the word ACCOUNTING? Not the book meaning but your own interpretation.

3. What are the things push you to pursue Accounting? What do you think is the essence of the Accounting subject to your life?

4. INTRODUCTION TO ACCOUNTING What is Accounting? - It is a system that helps businesses track events that affects them, identify the events that affect the business, recording these events and communicating the summarized results of all events within a particular period to interested parties.

5. - According to The AMERICAN ACCOUNTING ASSOCIATION (AAA) accounting i s the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by the users of information.

6. According to t he AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ( AICPA ) accounting as the art of recording, classifying, and summarizing in a significant manner and in terms of money, transaction, and events which are in part at least of a financial character and interpreting the result thereof.

7. Many says that Accounting is the “Universal Language in the Business World” Why? For the reason that Accounting is the one that being discussed in any ventures. It is the means of information to all the users in a business through Financial Statement.

8. The Accounting Process The accounting process is the series of steps followed by the business entity to record the business financial transactions that include steps for collecting, identifying, classifying, summarizing and recording of the business transactions in the books of accounts of the company so that the financial statements of the entity can be prepared and the profits and the financial position of the business can be known after regular intervals of time.

9. Accounting Process Consist of Three Major Steps: Identification of economic events to a business To identify relevant economic events, there should be a transfer of things with VALUE. For example, purchasing equipment in exchange with cash or money. Equipment and cash have value so the purchase is relevant economic event.

10. R ecording of Relevant E conomic E vents It will serve as the history of financial activities It should be done systematically and chronologically for faster and easier tracking and interpretation Records of events are inputted to so-called ACCOUNTING BOOKS

11. Summarizing all recorded events into accounting reports All similar events during the period (usually one year) are lumped together to provide meaningful and presentable information. This makes the information understandable to other parties. The most popular accounting report is the FINANCIAL STATEMENTS.

12. IDENTIFYING – this process is the recognition or non-recognition of business activities as “ACCOUNTABLE” events MEASURING – this process is the assigning of peso amount to the accountable economic transactions and events COMMUNICATING – it the process of preparing and distributing accounting reports to potential users of accounting information Three Essential elements in the definition of Accounting

13. Nature of Accounting – the basic features of accounting are as follows: ACCOUNTING IS A PROCESS It composed of multiple steps that leads to a common end goal When talking about accounting process it consists of identifying, recording and communicating economic events with the end goal of providing information to internal and external parties.

14. ACCOUNTING IS AN ART Accounting is the art of recording, classifying, summarizing and finalizing financial data. Accounting is a combination of techniques and its application requires applied skills and expertise so this is the reason why accounting can be considered as an art.

15. ACCOUNTING DEALS WITH FINANCIAL INFORMATION AND TRANSACTION 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. However, non-financial transaction data may be used to interpret and better estimate some financial data.

16. ACCOUNTING IS A MEANS AND NOT THE END As mentioned earlier, accounting is a tool to achieve specific objectives. It is not the objective itself. imagine that you dream to go to Paris someday, Accounting can be thought as the plane that will bring you to your destination.

17. ACCOUNTING IS AN INFORMATION SYSTEM Accounting is recognized and characterized as the storehouse of information. As a service function, it collects processes and communicates financial information of any entity

18. Functions of Accounting Keeping systematic record of business transaction Protecting properties of the business Communicating results to various parties in or connected to the business Meeting legal requirements

19. Answer the following: 1. What are the types of accounting? 2. What are the characteristics of accounting? 3. Compare the different types of accounting.

20. HISTORY OF ACCOUNTING

21. For some, the first name that might come to mind when referencing early accounting history is Luca Pacioli . Pacioli described double-entry bookkeeping in his “Summa de Arithmetica , Geometria , Proportioni et Proportionalita ” back in 1494. While that may sound like a long time ago, accounting may have roots that trace back even earlier. Accounting has been around for centuries. It’s a critical part of the business, record-keeping, and life in general. The first record of accounting occurred thousands of years ago in Mesopotamia and has evolved into the intricate element of business and life that it is today. Below is an informative guide that explores a short history of how accounting has evolved over thousands of years.

22. Earliest Record of Accounting The earliest accounting records were found over 7,000 years ago among the ruins of Ancient Mesopotamia. At the time, people relied on accounting to keep a record of crop and herd growth. They used accounting techniques that are still used today to determine if there was a surplus or shortage after crops were harvested each season.

23. Accounting History During the Roman Empire Later, during the reign of the Roman Empire, accounting continued to evolve much further. “The Deeds of the Divine Augustus” is an account of Emperor Augustus’ financial dealings. It listed such quantities as distributions to the people, grants of land, building of temples, money to military veterans, religious offerings, and money spent on theatrical shows and gladiator events. This discovery hints at the scope of accounting information available to the emperor, which he then probably used for planning and decision-making purposes. Roman historians also recorded public revenues, the amount of money in the state treasury, taxes, slaves, freedmen, and more.

24. Luca Pacioli’s Contribution to the Accounting Profession In 1494, Pacioli wrote Summa de Arithmetica , Geometria , Proportioni et Proportionalita , which included a twenty-seven-page treatise on bookkeeping titled, Particularis de Computis et Scripturis (Details of Calculation and Recording) on the subjects of record keeping and double-entry accounting. Pacioli’s book became the reference text and teaching tool on the subjects of bookkeeping and accounting for the next several hundred years. This was the first time that symbols for plus and minus appeared in a printed book. This book was the first known published work on the topic of double-entry bookkeeping. Summa Arithmetica was also the first known book printed in Italy to contain algebra

25. Accounting During the Middle Ages During the Middle Ages, bartering was the primary form of money-changing, but when Europe changed to a monetary economy is the 13th Century, merchants began relying on bookkeeping to keep a record of multiple transactions. This is when double-entry bookkeeping got its start, which is when a debit and credit value is entered for each transaction by the accountant. Merchants at the time used accounting as an ad-hoc ordering system. It provided them with constant information about their businesses that they could use in decision-making to grow their business as they saw fit. This laid the foundation of how we use and understand accounting today.

26. Accounting Methods Today Nowadays, there are accounting standards, auditing regulations, and ethical standards for accountants to follow. Accountants and their peers handle the monetary ebb and flow of the economy. Obviously, they are not the only people responsible for this, but they play a huge role. Each business, company, corporation, government, and an individual must use at least basic accounting principles during their life, and often during their daily activities. It’s an important element of business and over thousands of years has evolved into what we know as in modern accounting today.

27. WEEK 2 BRANCHES OF ACCOUNTING

28. INTRODUCTION: Aside from the accounting process mentioned in Chapter 1, Accountants can offer other services. In this chapter, we will tackle the different branches of accounting and the services provided by this branches.

29. There are 8 Branches of Accounting as follows: FINANCIAL ACCOUNTING MANAGEMENT ACCOUNTING GOVERNMENT ACCOUNTING AUDITING TAX ACCOUNTING COST ACCOUNTING ACCOUNTING EDUCATION ACCOUNTING RESEARCH

30. FINANCIAL ACCOUNTING It is the branch of accounting primarily handling the recording of financial transaction of a business. The financial transaction are later summarized into standardized accounting reports, more popularly known as FINANCIAL STATEMENTS, for the benefit of internal and external users.

31. FS should provide information useful to a wide range of users in their economic decisions. This is the reason why accounting standards such as PHILIPPINE FINANCIAL REPORTING STANDARD (PFRS) and the PHILIPPINE ACCOUNTING STANDARDS (PAS) are created. It serves as guidelines on how companies should prepare their FS to allow users to compare results of operation of different companies regardless of size and nature.

32. As stated, Financial A ccounting caters to the needs of both internal and external users. However, it is evident that financial accounting’s main goal is to provide the information needs of external uses that have no capability to request information directly from managers.

33. 2 PURPOSE OF FINANCIAL STATEMENT General Purpose Financial Statement – FS prepared to accommodate the information needs of persons who have no capability to request or acquire information directly from the company (external users). They use the FS to evaluate the performance of the company. Special Purpose Financial Statement – directly used by internal parties to guide them in the decision making process for the company.

34. USERS OF GPFS USERS OF SPFS INVESTORS TOP MANAGEMENT ( BOD, CEO, CFO, COO) CREDITORS DEPARTMENT MANAGERS ( SALES MANAGER, PRODUCTION MANAGERS) SHAREHOLDERS/STOCK HOLDERS OTHER INTERNAL PARTIES GOVERNMENT AGENCIES   AUDITORS   OTHER INTERESTED OUTSIDE PARTIES  

35. MANAGEMENT ACCOUNTING It is the branch of accounting which focuses on the preparation of Financial reports used by Managers in their day to day decision making. Reports generated using Management Accounting is for internal users only.

36. It didn’t follow accounting standards like PFRS and PAS. Additionally, unlike the financial reports that are generated quarterly, semi-annually or annually, management reports can be done daily, weekly, or whatever managers require a specific reports Management reports typically contain information regarding the amount of cash on hand, level of sales revenue for a particular period, cost incurred, or even the comparison of actual results with budgeted amounts.

37. GOVERNMENT ACCOUNTING According to Section 109 of Presidential Decree 1445, GA is defined as an accounting system which “encompasses the process of analyzing, recording, classifying, summarizing, and communicating all transactions involving the receipt and disposition of government fund and property and interpreting the result thereof.

38. GA is used by all the government agencies. Due to the specialized nature of the government transactions, stricter controls should be put in place to prevent the misuse of country’s resources. The creation of New Government Accounting System (NGAS) aims to address this concern.

39. OBJECTIVES OF GOVERNMENT ACCOUNTING To provide information concerning past operations and present conditions To provide a basis for guidance for future operations To provide for control of the acts of public bodies and offices in the receipt, disposition, and utilization of funds and property To report on the financial position and the result of operations of the government agencies for the information and guidance of all persons concerned

40. AUDITING It is an unbiased examination and evaluation of the financial statements of an organization. Auditing is the process that includes numerous steps to determine whether or not a company’s financial statements are presented truthfully

41. Accountants that perform auditing procedures are called “AUDITORS” An Audit of the Financial Statements improves their credibility FS that underwent the process of auditing are called “AUDITED FS” Audited FS are accompanied by auditor’s opinion and it will be the basis whether or not the FS are prepared truthfully and without any material errors.

42. TAX ACCOUNTING It refers to the rules used to generate tax assets and liabilities in the accounting records of a business or individual It is also derived from NATIONAL INTERNAL REVENUE CODE (NIRC) , rather that one of the accounting framework such as GAAP or IFRS. Tax accounting may result in the generation of a taxable income figure that varies from the income figure reported on an entity’s income statement.

43. COST ACCOUNTING Defined as a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includes methods for recognizing, classifying, allocating, aggregating and reporting such costs and comparing them with standard costs.

44. COMMON TERMS USED IN COST ACCOUNTING Cost - the resource sacrificed to achieve an objective Cost object – anything that you wish to find the cost of Cost driver – an activity that a cause of the incurrence of cost Direct cost – costs that can economically be traced to a cost object Indirect cost – cost that cannot be traced to a cost object Fixed cost – cost that do not change within a relevant range of activity Variable cost – cost that change as the level of activity or production

45. ACCOUNTING EDUCATION The Bachelor of Science in Accountancy (BSA) is normally 5-year program composed of subjects in accounting, audit, administration, and business laws and taxation. Although the subjects usually highlights the business environment, the scope of the topics in BSA also covers other fields such as banking and finance, government, non-profit organizations and the academe. Students of the course are also trained to create and understand computerized accounting systems to cope with the rapidly changing technology .

46. ADMISSION REQUIREMENTS FOR BSA Must be high school graduate Must have a college entrance examination of above average or depending on the specific rating set by the school Aside from the college entrance examination, must pass the aptitude test specific for BS accountancy Must pass the interview conducted by the college admission officer Some schools require a high school QPA of 85% and above with no grade less that 80% in all subjects

47. There are schools who require students to have an 85% or higher average rating in the National Secondary Assessment Test (NSAT) As set by CHED, all schools must conduct an English Proficiency examination to all BS Accountancy applicants Admission of Philippine Educational Placement Test (PEPT) passers mainly depends on the school’s discretion since some colleges and universities offers selected courses

48. ACCOUNTING RESEARCH Branch of accounting that deals with the creation of new knowledge. Combining the models produced by the hard sciences in research and testing with financial statements, stock prices, surveys and experiments, we can gain specific perspective and basis on the ff.

49. Deciding and implementing new accounting and auditing standards Presenting unusual economic transaction in the financial statements Learning how new tax laws impact clients and employers Discerning how the accounting profession affects the capital market through academic accounting research

50. Thankyou and Godbless