Financial accounting is primarily concerned with recording business transactions and preparing general purpose financial statements for internal and external users. It focuses on reports such as the statement of financial position and income statement. Managerial accounting also prepares financial statements but they are for internal users only. Both financial and managerial accounting are needed to develop accounting information and maintain controls for effective business management.

1. Financial
Accounting
BSCM-2A

2. Financial Accounting
O Financial accounting is primarily concerned
with the recording of business transaction and
the eventual preparation of financial
statements.
O Financial accounting focuses on general
purpose reports known as financial
statements intended for internal and external
users.
O While managerial accounting focuses on
special purpose financial statement, where
reports are for internal users only.
O Financial accounting is one of the areas of
the accounting that emphasizes reporting to
creditors and investors.

3. Financial Accounting
O Financial accounting is a specific branch
of accounting involving a process of
recording, summarizing, and reporting the
myriad of transactions resulting from
business operations over a period of time.

4. Why Management Students
need to learn Financial
Accounting

5. Cooperatives Management
O Cooperatives management implement the
cooperative business policies set by the
board of directors. They are the one who
initiate and adopt short-range plans of the
cooperative.
O General Manager are the one who manages
the operations of the cooperative.
O When it comes to management of
operations, the right accounting skills are
needed to maintain accuracy and
efficiency.

6. O BUSINESS OPERATIONS
1. An entry-level manager will need to
understand accounting processes and how
to interpret financial statements.
2. Mangers are expected to have demonstrated
problem-solving skills, which will help them deal
with basic accounting issues, and strong
organizational skills, which will help them
prioritize and manage workloads.
3. Managers will most likely collaborate with
accounting managers, but they should still
proactively take ownership of employee errors
and business problems.

7. O MANUFACTURING OPERATIONS
1. In managing daily production operations
and their associate accounting activities,
operations manager should establish and
enforce proper accounting methods
and expense reporting.
2. They monitor and evaluate financial data
from purchasing, shipping, production
and processing viewpoints and will
formulate financial reports for the upper
management.

8. All managers need strong accounting
skills and knowledge of internal controls so
they can maintain controls and identify
areas for process improvement initiatives.

9. Questions
1. Financial Accounting is concerned with
a. General purpose reports on financial
position and financial performance.
b. Specialized reports for inventory
management control
c. Specialized reports for income tax
computation
d. General purpose reports on changes in
share prices and future estimate of
market position

10. Questions
2. Financial accounting can be broadly defined
as the area of accounting that prepares
a. General purpose financial statements to be
used by parties internal to the entity
b. Financial Statements to be used by
investors
c. General purpose financial statement to be
used by parties both internal and external to
the entity
d. Financial statements to be used primarily
by management

11. Questions
3. Managerial accounting is the area of
accounting that emphasizes
a. Reporting financial information to external
users
b. Reporting to the SEC
c. Combining accounting knowledge with an
expertise in data processing
d. Developing accounting information for
use within an entity

12. Questions
4. General purpose financial statements are
the product of
a. Financial Accounting
b. Managerial accounting
c. Both financial and managerial accounting
d. Neither financial nor managerial
accounting

13. Reviewing Basic Accounting
O Accounting is an art of recording, classifying,
and summarizing in a significant manner and in
terms of money transactions and events which are
in part, at least, of financial character, and
interpreting the results thereof.
O Recording- journalizing
O Classifying- sorting or grouping similar items
O Summarizing- determining balances of each account
in the ledger and preparation of financial statement
O Interpreting- analytical phase – involves giving
meanings to the amounts, ratios, trends and other
information derived from financial statement.

14. Users of General Purpose
Reports Information
1. Primary users-
a. Existing and potential investors
b. Lenders and other creditors
2. Other users
a. Employees
b. Customers
c. Governments and their agencies
d. Public
e. Unions

15. Different types of Business
Organization
1. Sole proprietorship- simplest form of
organization; owned by only one person
2. Partnership- formed by two or more
persons; created by mere agreement of
partners
3. Corporation- not less than 5, not more than
15 persons; an artificial being created by
operation of law
4. Cooperative- at least 15 persons; operates
similar to corporation

16. Some of the accounting
principles
1. Cost Principle – requires that assets should
be recorded initially at original acquisition
cost.
2. Income Recognition Principle- income
should be recognized when earned rather
than when cash is received
3. Matching principle- all cost and expenses
incurred in earning revenue should be
reported in the same period
4. Accrual- income is recognized when earned
regardless of when received and expense is
recognized when incurred regardless of
when paid

17. Accounting Assumptions or
Postulates
Accounting Assumptions- basic notions or fundamental
premises on which accounting process is based.
1. Going Concern or continuity- viewed the accounting entity
as continuing in operation indefinitely
2. Economic Entity or Accounting Entity- business is treated
as separate entity from that of its owners, managers and
employees.
3. Monetary unit- entities include in their accounting records
only transaction data can be measured in terms of money.
4. Time period/ periodicity
1. Calendar year- a twelve month period starts at January
and ends December
2. Fiscal year- a twelve month period starting any month of
the year.

18. O Quantitative information reported in the
statement of financial position and income
statement.
O There are the account titles and their
corresponding amounts
O Assets, Liabilities, Equity, Income and
Expenses
O A = L+E
Accounting Elements

19. Questions

20. Financial Statements
1. Statement of Financial Position
2. Income Statement/ Statement of
Comprehensive Income ( Statement of
Performance)
3. Statement of Changes in Equity
4. Statement of Cash Flow
5. Notes to Financial Statement

21. Statement of Financial
Position
O A formal statement showing financial
position of an enterprise as of a particular
date
O Used to evaluate such factors as liquidity ,
solvency, financial structure and the need
of the entity for additional financing.
O Liquidity- ability of the company to meet
currently maturing obligations.
O Solvency- availability of cash over the longer
term to meet maturing obligations
O Financial structure- indicates how much is
the equity of the creditors and how much is
the equity of the owners

22. O The elements directly related to financial
position are assets, liabilities and equity
which are called real accounts.
O They are called real accounts because
their usefulness continues throughout the
life of the business and that their year end
balances is forwarded to the next
accounting period.

23. Statement of Financial
Position
Components : Presentation:
a. Name of business Capanang Foods Corporation
b. Name of the Financial
Statement
Statement of Financial Position
c. Specific Date As of December 31, 2021

24. Some of the questions that the
financial position can answer
O How much is the total assets of the
business?
O How much is the total cash of the business?
O How much is the liabilities of the business?
O How much is the current liabilities of the
business?
O How much is the equity of the owners?
O How much is left for the business?
O Can the business pay its obligation as they
mature?

25. Answer: Question #1
A. General purpose reports
on financial position and
financial performance

26. Answer: Question #2
C. General purpose financial
statement to be used by
parties both internal and
external to the entity

27. Answer: Question #3
C. General purpose financial
statement to be used by
parties both internal and
external to the entity

28. Answer: Question #4
A. Financial Accounting