ACCT11__1_Introduction to Accounting.pptx
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Introduction to Accounting
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ACCT11__1_Introduction to Accounting.pptx
- 1. ACCT 11 Module Title: Introduction to Accounting Developer: Mrs. Sarah Joy D. Martin
- 2. Introduction to Accounting 1 Analyze the value received and value parted with 2 Analyze the documents using rules of debit and credit 3 Journalize the different kinds of business transactions of a Single Proprietorship 4 Prepare ledger 5 Post journal entries to the ledger 7 Summarize trial balance 6 List account titles and transfer balances from the ledger 8 Prepare financial statements of single proprietorship
- 3. 1 Need for accounting 2 Why need to study accounting 3 Definition of accounting 4 Four phases of accounting 5 Business Organizations 6 Business accounting as an accounting equity 7 Accounting Elements or Values
- 4. OWNER business improved? additional investments? MANAGEMENT resources of the business? debts? Expenses? business earn? expenses to sales? Prospective Investors money grow in this business? CREDITORS business meet its obligations? study of the accounting reports of the business
- 5. appreciate and understand the financial reports of the business; and data are gathered and recorded
- 6. the art of recording, classifying, and summarizing in a significant manner and in in terms of money, transactions and events events which are, in part part at least of financial financial character, and and interpreting the results thereof. -American Institute of Accountants the language of business Through the accounting data prepared, the business communicates to the different interested parties the result its operation and its financial condition. science in a way that here are accounting principles that serve as guide in accomplishing data and preparing reports.
- 7. Recording business transactions are recorded systematically and chronologically in the proper accounting books. Single Entry Double Entry DEBIT or CREDIT DEBIT and CREDIT
- 8. Classifying Similar items are classified under the same name. sorted grouped LIQUID or NON LIQUID OPERATING or NON OPERATING REAL or NOMINAL
- 9. After each accounting period, data recorded are summarized through financial statements. SUMMARIZING
- 10. Usually, due to the technicality of accounting reports, the accountant’s interpretation on the financial statement is needed. In this case, analysis reports are submitted together with the financial statements INTERPRETING
- 11. CLASSIFYING business transactions RECORDING 1. Identifying transactions and events – Source of Documents JOURNAL 2. Journalizing Transactions Groupings 3. Posting to the ledger- General Ledger 4. Trial Balance LEDGERS SUMMARIZING Financial Statement 5. Adjusting journal entries 6. Preparing the worksheet 7. Preparing financial statements 8. Closing Entries TRIAL BALANCE BALANCE SHEET INCOME STATEMENT INTERPRETING Meaning or significance for users PROFITABILITY- How much is the increase in capital as a result of business operation 9. Post-Closing Trial Balance 10. Reversing entries LIQUIDITY- Are there available funds to finance the business operation SOLVENCY – Can the business pay its long- term obligations to other? NOTE: Steps 1 to 10 is the ACCOUNTING CYCLE
- 12. OWNERSHIP NATURE OF BUSINESS Owned only by one person Single or Sole Proprietorship Two or more persons | partner Partnership Not Less than 5 persons | operation of law Corporation Rendering of Service Service Concern Buying and Selling of Goods Trading or Merchandising Purchase of Raw materials | converting finished product Manufacturing Concerns
- 13. exchange of value for value Records in the accounting books value received value parted with Money, property or service
- 15. 3. Complete repair work for S. Martin Received cash Transaction Value Received Value Parted with 1. Purchased tools for cash Tools cash 2. Purchased office supplies on credit supplies debt/obligation 4. Completed repair work for Receivable Services C. Santos on credit 5. Paid for advertising in Advertising services Cash Local paper bill Services Cash 6. Paid the account in number 2 Cancellation of debt Cash 7. Received payment from C. Santos Cash Cancellation of receivable 8. Paid the monthly Salary of secretary Services Cash 9. Paid the rent of shop space Right to occupy the space Cash 10. Paid monthly telephone bill Services Cash
Editor's Notes
- SPECIFIC LEARNING OBJECTIVES: At the end of this module you MUST be able to:
- SPECIFIC LEARNING OBJECTIVES: At the end of this module you MUST be able to: Analyze the value received and value parted with Analyze the documents using rules of debit and credit Journalize the different kinds of business transactions of a Single Proprietorship Prepare ledger Post journal entries to the ledger List account titles and transfer balances from the ledger Summarize trial balance Prepare financial statements of single proprietorship
- SPECIFIC LEARNING OBJECTIVES: At the end of this module you MUST be able to:
- Need for Accounting Human beings have limitations. Everyday transactions cannot be retained in the human brain for quite a period of time without confusions and complications. To avoid these, transactions and other important events should be recorded. Such written records serve as reference for future recall. In business, several parties are interested to its records to seek answers to their questions and bases for their decisions. These parties can be classified into direct users or those who have direct interest to business records and indirect users or those who are indirectly interested to the accounting information of the business. Among the direct users are the following: 1. Owner. Questions like "Has the business improved? Is it wise to make additional investments? Is there a need for it? May be asked by the owner of a firm. He is interested to know whether the business should be maintained, increased, decreased, or disposed of completely. Further, he is interested to know whether he is getting a fair return of his investment. 2. Management. The management may ask questions such as "What are the resources of the business? How much is its debts? What are the expenses which can be minimized? Did the business earn? What is the proportion of the expenses to sales? Is there a need for expansion?" To the management, financial information serves as a measure for making future financial decisions and a measure of its effectiveness. 3. Prospective Investors. Will my money grow in this business?" an investor may ask. An investor is interested in the financial statement to determine whether to acquire ownership in the firm. 4. Creditors. A creditor may ask the following questions before granting loans: Can the business meet its obligations?" Creditors use financial statements as a basis to answer such question. All of these questions and many others can be answered and wise decisions can be made only after a thorough study of the accounting reports of the business. Like Wise, to the employees and labor unions such information is useful for negotiating raise in wages and conducive working conditions; and to the government, accounting records are needed to regulate businesses and for tax collection purposes.
- Definition of Accounting The Committee on Terminology, American Institute of Accountants defined accounting as the art of recording, classifying, summarizing in a significant manner COMPUTER SECRETARIAL ACCT 11 Principle of Accounting Bulacan Polytechnic College Date Developed: June 2020 Date Revised: July 2020 Page 5 of 10 Document No. 50-ACCT 11 Developed by: Sarah Joy Dumalay Martin Revision # 02 and in terms of money, transactions and events, which are in part, at least, of financial character and interpreting the results thereof. Accounting is an art. It is "the language of business Through the accounting data prepared, the business communicates to the different interested parties the result its operation and its financial condition. Aside from this, the accountant's opinion and estimation are needed in preparing accounting data and reports. Accounting, however, is not only an art but also a science in a way that here are accounting principles that serve as guide in accomplishing data and preparing reports
- Recording - This is technically called bookkeeping. Some people contuse bookkeeping and accounting as one and the same. However, bookkeeping is only a part of accounting-the recording phase. In this phase, business transactions are recorded systematically and chronologically in the proper accounting books. There are two kinds of bookkeeping: the single entry bookkeeping and the double entry bookkeeping. Single entry bookkeeping does not show the two-fold effects of business transactions. It shows only the debit or the credit of each transaction. The double entry bookkeeping, however, reflects the two-fold effects of business transactions. It has debit and a credit. In this book the double entry bookkeeping will be dealt.
- Classifying - In this phase, items are sorted and grouped. Similar items are classified under the same name. They may be classified as liquid or non-liquid, operating or non-operating, real or nominal. This classification is useful to the needs of the management.
- Summarizing - After each accounting period, data recorded are summarized through financial statements. These reports are submitted to the management at the end of each accounting period or as the need arises.
- Interpreting - Usually, due to the technicality of accounting reports, the accountant’s interpretation on the financial statement is needed. In this case, analysis reports are submitted together with the financial statements
- Based on the definition, accounting has four phases namely: recording, classifying, summarizing, and interpreting. Recording - This is technically called bookkeeping. Some people contuse bookkeeping and accounting as one and the same. However, bookkeeping is only a part of accounting-the recording phase. In this phase, business transactions are recorded systematically and chronologically in the proper accounting books. There are two kinds of bookkeeping: the single entry bookkeeping and the double entry bookkeeping. Single entry bookkeeping does not show the two-fold effects of business transactions. It shows only the debit or the credit of each transaction. The double entry bookkeeping, however, reflects the two-fold effects of business transactions. It has debit and a credit. In this book the double entry bookkeeping will be dealt.
- Business Organizations Business organizations can be classified into two: (1) according to ownership from the point of view of ownership, the following are the types of and (2) according to the nature of the business. Ownership. From the point of view of ownership, the following are the types of business. Single or sole proprietorship. This type of business is owned only by one person. Usually the owner is also the manager of the business. He usually supplies the capital or borrow funds from the banks or other lending institutions. Partnership. This is a business organization owners with two or more person called partners, agree on the capital contributions, management of the firm, distribution of profits and losses, and other matters pertaining to the operation of the firm. Corporation. This is a business organization of not less than five persons. It is organized by operation of law. Nature of business. According to nature of the business, the following are the types of business organizations: Service concern. This deals with the rendering of services to the customers such as tailoring shops, beauty shops, firms of CPAs, lawyers, doctors and others. Trading or Merchandising. This type of business deals with t the buying of goods and selling the same goods in the same form for profit, Example are Sari-sari stores, department stores, grocery stores, etc. Manufacturing Concerns. This involves purchase of raw materials and converting these raw materials into finished products. Examples are textile manufacturing firms, candy manufacturing firms, etc.
- Interpreting - Usually, due to the technicality of accounting reports, the accountant’s interpretation on the financial statement is needed. In this case, analysis reports are submitted together with the financial statements
- Interpreting - Usually, due to the technicality of accounting reports, the accountant’s interpretation on the financial statement is needed. In this case, analysis reports are submitted together with the financial statements
- Interpreting - Usually, due to the technicality of accounting reports, the accountant’s interpretation on the financial statement is needed. In this case, analysis reports are submitted together with the financial statements