FORMS OF BUSINESS ORGANIZATIONS

Sole Proprietorship – a business organization has a single owner called the proprietor who
generally is also the manager. Sole proprietorships tend to be a small service-type (Physicians, lawyers,
accountants), business, and retails establishments. The owner receives all profits, absorbs all losses and
is solely responsible for all debts of the business. From accounting viewpoint, the sole proprietorship is
distinct from its proprietor. Thus, the accounting records of the sole proprietorship do not include the
proprietor’s personal financial records.

Partnership – by the contract of partnership, two or more persons.

Corporation – owned by stockholders. It is an artificial being created by operation of law, having

Maximum of 100 sa partnership. OPC. Shareholder’s equity.

Small – Assets above 3M to 15M; 10 to 99 employees;

Medium – Assets above 15M to 100M; 100 to 199 employees;

What if more than 100M na or hires atleast 200 employees?

Financing – Need funds sang businesses nu kay indi man usually kaya sang savings lang to put up
business so gapangutang. Need funds to produce products or services. Ang Financing Activities class amo
na ang pag obtain sang funds for business nga usually thru creditors, like banks and suppliers. Sometimes
nu, magbakal supplies ang companies, utang lang na class. So muna ang financing activities. Ang
pagbayad sa creditors class is also a financing activity. So, borrowing and repaying of funds.

Investing – Ang gin utang mo class nga funds sa financing diin mo gamiton? Pambakal assets,
usually ano ang unahon mo bakal? Land, equipment, building and other resources nga need mo for
operating your business. That’s what we call investing. Amo na class ang investing activities, gin invest
mo imo funds sa mga assets nga gamiton mo for operation.

Operating – READ SA BOOK. So, basically class everything that you do para maka produce
products or provide services amo na imo operating activities. From production class asta mabakal na ni
customer imo products amo na class ang sakop sang operating activities.

PURPOSE AND PHASES OF ACCOUNTING

Ang accounting function class is just one of many functions sa isa ka business. It handles the
financial operations of the business, and it also provides information and advice to other departments.
So meaning, it works closely with other departments. HR, IT, Sales, Purchasing Dept, Billing Dept. Tanan
na class gina providan ni accounting department sang information.

So diba may mga business transactions, ang pag record sang business transactions class amo na
ang gina tawag nga accounting. For example, nag invest ka cash sa business, need mo na e record. Nag
bakal ka assets, need mo na e record, nag baligya ka products/services need mo na e record, nagbayad
ka utang, need mo na e record, nag pa sweldo ka sa employees, need mo na e record. So basically, tanan
ina guys nga mga need e record, gina record ni accounting department. Diba gani sa definition number
2? Ano gani ang definition number 2 snag accounting? It is an art? Art of recording, classifying, and
summarizing. Muna na class ang na mean sang art of recording, gina record ang business transactions.

So ano imo mga need nga info mag record ka? Ano ang pinaka importante nga info mag record
ka? Amounts. Sa aton definition, 1-3 diba class always gina mention nga accounting is quantitative in
nature. Because of amounts derived from transactions. Ano ang financial denominator? Ano ang gina
gamit mag transact business? MONEY.

So may amounts ka na, nag record ka na. What’s next? Class ang gina record nga business
transactions everyday indi lang isa or duha, it could be up to hundred of transactions per day. Meaning,
damo2 ka records, overwhelming na class. Magamuhan ka. What will you do? Ano ang next after art of
recording? Classifying? E classify mo class, e group mo ang similar items.

Next, na group mo na nu. After mo e group, e summarizes mo na. Amo na ina class ang FS.
Summarized report sang tanan mo nga gin record nga business transactions.
 Ang FS amo na ina ang gamiton sang USERS of information para sa ila decision making. Sa FS
class, dira ta makita ang Assets, Liabilities and Equity. Income and Expense (write this on the board). Da
ta ma check ang liquidity (ability to pay short term debts), profitability and solvency (ability to pay long
term debts).

Pacioli’s Double Entry Bookkeeping

This is simply Debit and Credit class. Transactions are always at least two-way. For example,
Purchases and Sales (kung may nagbakal, may nagbaligya); Receivables and Payables (kung may utang,
may gin-utangan) (kung may nagbayad, may gin bayaran);

Since double entry class, dapat at the end of the month Balanse ang amounts sang Debit and
Credit.

9/17 FUNDAMENTAL CONCEPTS

CRITERIA FOR GAAP

BASIC PRINCIPLES

ACCOUNTANCY IN THE PHILIPPINES

ACCOUNTANCY ACT OF 2004 – scope of Practice

PRBOA/QUALIFICATIONS/EXAMS

BRANCHES OF ACCOUNTING