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BASIC ACCOUNTING
This document provides an overview of accounting as an information system. It discusses key topics such as the definitions of accounting and information systems, the differences between financial and management accounting, the users of accounting information, and the accounting cycle. It also covers accounting principles, concepts, and conventions like accrual, going concern, consistency and conservatism. The purpose of accounting is to provide quantitative financial information to help users make informed economic decisions. Accounting acts as an information system that collects, processes, and communicates useful data to both internal and external parties.
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BASIC ACCOUNTING
- 1. Prepared By: MarkJohn Bolatin Accounting: The Language of Business
- 2. TOPICS • Accounting Asinformation System • Accounting and Information System definitions • Financial accounting and Management accounting • Accounting as an aid in decision making • Users of Informartion • Accounting System / Cycle • RA 9298 • CPA as a profession
- 3. TOPICS • Accounting Principles,Conventions and Concepts • Definition and Differences • Concepts • Conventions
- 4. ACCOUNTING AS ANINFORMATION SYSTEM
- 5. WHAT IS “ACCOUNTING” •PFRSC(Formerly ASC)- Accounting is a service activity. Its function is to provide quantitative information primarily financial in nature, about economic entities that is intended to be useful in making economic decision. • American Accounting Associations defines accounting as the process of identifying, measuring, and communicating economic information to permit informed judgment and decision by users of information. PURPOSE of accounting CPA’s Primary Purpose
- 6. INFORMATION SYSTEM • Theinformation system is defined as an integrated set of methods, procedures and means used in order to collect, transmit and process data, analyze, store, disseminate and capitalize information and knowledge to users of informations.
- 7. FINANCIAL AND MANAGEMENTACCOUNTING • The major distinction between financial and management accounting is the users of the information. • Financial accounting serves external users. • Management accounting serves internal users, such as top executives, management, and administrators within organizations.
- 8. ACCOUNTING AS ANAID TO DECISION MAKING • Accounting information is useful to anyone who makes decisions that have economic results. • Investors • Lenders • Creditors or suppliers • Government • Customers • Employees • Managers and owners External Internal
- 9. ACCOUNTING AS ANAID TO DECISION MAKING • Fundamental relationships in the decision-making process: Event Accountant’s analysis & recording Financial Statements Users
- 10. ACCOUNTING SYSTEM /CYCLE • Analyzing • Journalizing • Summarizing • Un-adjusted Trial Balance • Adjusting Entries • Adjusted Trial Balance • Financial Statements • Closing Entries • Reversing Entries
- 11. RA 9298 • Alsoknown as the Accountancy Act of 2004 • ACCOUNTANCY has developed as a profession attaining a status equivalent to that of law and medicine
- 12. CPA AS APROFESSION • CPA’s in Public Practice • CPA’s in Private Institution • CPA’s in Government • CPA’s in Academe
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- 14. • Concepts • Arethe basic notions or fundamental premises on which accounting process is based. • Conventions • Guidelines that arise from practical applications of accounting principles. Conventions are not legally- binding practice, rather it is generally accepted based on customs and is designed to help accountants overcome practical problems. ACCOUNTING PRINCIPLES
- 15. CONCEPTS •ACCRUAL •GOING CONCERN •ACCOUNTING ENTITY •MONETARYUNIT •TIME VALUE CONVENTIONS •CONSERVATISM •CONSISTENCY •OBJECTIVITY •COST PRINCIPLE •MATERIALITY •MATCHING PRINCIPLE PRINCIPLES
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- 17. ACCOUNTING CONCEPTS (AGAMTA) •GOING CONCERN
- 18. ACCOUNTING CONCEPTS (AGAMTA) •ACCOUNTING ENTITY
- 19. ACCOUNTING CONCEPTS (AGAMTA) •Monetary Unit Common unit
- 20. ACCOUNTING CONCEPTS (AGAMTA) •TIME PERIOD / ACCOUNTING PERIOD
- 21. ACCOUNTING CONVENTIONS • MATCHINGPRINCIPLE
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- 25. ACCOUNTING CONVENTIONS • COSTPRICIPLE
- 26. ACCOUNTING CONVENTIONS • Materiality •Strict adherence to GAAP is not required when the items are not significant enough to affect or influence the decision of users.
- 27. ACCOUNTING CONVENTIONS • CostOver Benefit •Benefit > Cost •Benefit < Cost
- 28. REFERENCE'S: Financial Accounting- ValixPeralta Theory of Accounts (CPA Reviewer) – Atty. Conrado Valix, Christian Valix Various website sources THANK YOU……..