1.
Recording (journalizing) - systematically
CHAPTER 1: maintaining a record of all economical business
THE ACCOUNTANCY transactions after they have been identified or
measured.
PROFESSION 2. Classifying - sorting or grouping of similar
and interrelated economic transactions; posting
AMERICAN ACCOUNTING ASSOCIATION to the ledger
a) Accounting is about quantitative 3. Summarizing - preparation of financial
information. statements
b) Information is likely to be financial in
nature.
c) Should be useful in decision making.
*To provide quantitative information to be
useful in making an economic decision. ACCOUNTING AS INFORMATION
SYSTEM
COMPONENTS OF ACCOUNTING Measures business activities, processes
1. Identifying = analytical information into reports and communicates the
Recognition or non-recognition of reports to decision makers.
business activities as “accountable”
events FINANCIAL STATEMENTS - report financial
When it has an effect on assets, information about an entity to decision makers
liabilities, and equity.
OVERALL OBJECTIVE OF
2. Measuring = technical
Assigning peso amounts to the
ACCOUNTING
To provide quantitative financial information
accountable economic transactions and
about a business that is useful to statement
events
users in making economic decisions
The Philippine peso is the unit of
measuring accountable economic
transactions. THE ACCOUNTANCY
Historical cost - most common PROFESSION
measurement BOARD OF ACCOUNTANCY - authorized by
law to promulgate rules and regulations
3. Communicating = formal affecting the practice of the accountancy
Preparing and distributing accounting profession in the Philippines; preparing and
reports to potential users of accounting grading the Philippine CPA examination
information
Why accounting has been called the 3 MAIN AREAS OF PRACTICING
‘language of business.’
ACCOUNTANCY PROFESSION
1. Public accounting - render financial
CLASSIFICATIONS OF services to the public
TRANSACTIONS Auditing - expressing an opinion as
1. External transactions (exchange to the fairness of financial statements
transactions) - involving one entity and Taxation - preparation of annual
another entity income tax returns; determination of
2. Internal transactions - involving the entity tax consequences
only (i.e. production and casualty loss) Management advisory services -
Production - resources transformed into matters of accounting, finance,
transactions business policies, etc.
Casualty – sudden, unanticipated loss
from natural calamities 2. Private Accounting - assisting
management in planning and controlling
the entity’s operations
IMPLICIT IN THE ACCOUNTING Controller - highest accounting
PROCESS officer
3. Government Accounting - analyzing, Formulate and publish in the public
classifying, summarizing and interest accounting standards
communicating involving government For the improvement and harmonization
funds and property of regulations, accounting standards and
procedures s
CONTINUING PROFESSIONAL
DEVELOPMENT
Acquisition of knowledge, skill, proficiency and
ethical and moral values after initial
registration of Certified Public Accountant
*Exemption for renewal: age of 65
ACCOUNTING VS AUDITING
Broad sense, auditing is one of the areas of
accounting
Limited sense, accounting is essentially
constructive
*The work of an auditor begins when the work
of the accountant ends.
ACCOUNTING VS BOOKKEEPING
Bookkeeping = procedural; accounting =
conceptual
Bookkeeping = how; accounting = why
ACCOUNTING VS ACCOUNTANCY
Accountancy – profession of accounting
practice
FINANCIAL VS MANAGERIAL
Financial accounting – reporting to
creditors and investors
Managerial accounting – for internal
users only
GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
Rules, procedures, practice and standards
followed in financial statements
FINANCIAL REPORTING
STANDARDS COUNCIL
Accounting standard setting body by the
Professional Regulation Commission to assist
Board of Accountancy
INTERNATIONAL ACCOUNTING
STANDARDS COMMITTEE
Independent private sector body, achieving
uniformity in the accounting principles
