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    FAR Module 1

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    Fuentes, Ferdelyn F.
    The document is a module on introduction to accounting. It defines accounting as identifying, recording, and communicating economic information to aid in decision making. Accounting provides quantitative and qualitative financial information to internal and external users. Key topics covered include the history of accounting dating back to ancient clay tokens, common branches like financial and management accounting, forms of business organization, and the three main types of businesses based on activities.

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    Download as PDF, TXT or read online from Scribd

    FAR Module 1

    Uploaded by

    Fuentes, Ferdelyn F.
    2K views26 pages
    The document is a module on introduction to accounting. It defines accounting as identifying, recording, and communicating economic information to aid in decision making. Accounting provides quantitative and qualitative financial information to internal and external users. Key topics covered include the history of accounting dating back to ancient clay tokens, common branches like financial and management accounting, forms of business organization, and the three main types of businesses based on activities.

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    FAR module 1

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    The document is a module on introduction to accounting. It defines accounting as identifying, recording, and communicating economic information to aid in decision making. Accounting provides quantitative and qualitative financial information to internal and external users. Key topics covered include the history of accounting dating back to ancient clay tokens, common branches like financial and management accounting, forms of business organization, and the three main types of businesses based on activities.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    2K views26 pages

    FAR Module 1

    Uploaded by

    Fuentes, Ferdelyn F.
    The document is a module on introduction to accounting. It defines accounting as identifying, recording, and communicating economic information to aid in decision making. Accounting provides quantitative and qualitative financial information to internal and external users. Key topics covered include the history of accounting dating back to ancient clay tokens, common branches like financial and management accounting, forms of business organization, and the three main types of businesses based on activities.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 26

    FINANCIAL ACCOUNTING

    &
    REPORTING
    (Fundamentals)

    Module 1: Introduction to Accounting


    (FAR by: Millan)
    Module 1
    Introduction to Accounting
    Learning Objectives
    1. Define accounting.
    2. Describe the nature and purpose of accounting.
    3. Give examples of branches of accounting.
    4. State the function of accounting in a business.
    5. Differentiate between external and internal users of
    accounting information.
    6. Narrate the history/origin of accounting.
    7. State the forms of business organization.
    8. State the types of business according to their
    activities.
    Module 1: Introduction to Accounting
    (FAR by: Millan)
    Definition of accounting
    • Accounting is a process of identifying,
    recording and communicating economic
    information that is useful in making
    economic decisions.

    Module 1: Introduction to Accounting


    (FAR by: Millan)
    Essential elements of the definition
    of accounting
    1. Identifying – The accountant analyzes each business transaction
    and identifies whether the transaction is an “accountable event”
    or “non-accountable event.” This is because only “accountable
    events” are recorded in the books of accounts. “Non-accountable
    events” are not recorded in the books of accounts.
    2. Recording – The accountant recognizes (i.e., records) the
    “accountable events” he has identified. This process is called
    “journalizing.” After journalizing, the accountant then classifies the
    effects of the event on the “accounts.” This process is called
    “posting.”
    3. Communicating – At the end of each accounting period, the
    accountant summarizes the information processed in the
    accounting system in order to produce meaningful reports.
    Accounting information is communicated to interested users
    through accounting reports, the most common form of which is
    the financial statements.

    Module 1: Introduction to Accounting


    (FAR by: Millan)
    Nature of accounting
    • Accounting is a process with the basic
    purpose of providing information about
    economic activities intended to be useful in
    making economic decisions.

    Module 1: Introduction to Accounting


    (FAR by: Millan)
    Types of information provided by
    accounting
    1. Quantitative information
    2. Qualitative information
    3. Financial information

    Module 1: Introduction to Accounting


    (FAR by: Millan)
    Functions of Accounting in Business
    1. To provide external users with information
    that is useful in making investment and
    credit decisions; and
    2. To provide internal users with information
    that is useful in managing the business.

    Module 1: Introduction to Accounting FAR


    by: Millan)
    Brief history of accounting
    • Accounting can be traced as far back as the prehistoric times, perhaps
    more than 10,000 years ago.
    • Archaeologists have found clay tokens as old as 8500 B.C. in
    Mesopotamia which were usually cones, disks, spheres and pellets.
    These tokens correspond to commodities like sheep, clothing or bread.
    They were used in the Middle West in keeping records. After some
    time, the tokens were replaced by wet clay tablets. During such time,
    experts concluded this to be the start of the art of writing. (Source:
    http://EzineArticles.com/456988)
    • Double entry records first came out during 1340 A.D. in Genoa.
    • In 1494, the first systematic record keeping dealing with the “double
    entry recording system” was formulated by Fra Luca Pacioli, a
    Franciscan monk and mathematician. The “double entry recording
    system” was included in Pacioli’s book titled “Summa di Arithmetica
    Geometria Proportioni and Proportionista,” published on November 10,
    1494 in Venice.
    • The concept of “double entry recording” is being used to this day. Thus,
    Fra Luca Pacioli is considered as the father of modern accounting.

    Module 1: Introduction to Accounting


    (FAR by: Millan)
    Common Branches of Accounting

    Module 1: Introduction to Accounting


    (FAR by: Millan)
    Common Branches of Accounting

    Module 1: Introduction to Accounting


    (FAR by: Millan)
    Common Branches of Accounting

    Module 1: Introduction to Accounting


    (FAR by: Millan)
    Common Branches of Accounting

    Module 1: Introduction to Accounting (FAR


    by: Millan)
    Users of Accounting Information
    1. Internal users – those who are directly involved in managing the
    business. Examples:
    • Business owners who are directly involved in managing the
    business
    • Board of directors
    • Managerial personnel

    2. External users – those who are not directly involved in managing


    the business. Examples:
    • Existing and potential investors (e.g., stockholders who are not
    directly involved in managing the business)
    • Lenders (e.g., banks) and Creditors (e.g., suppliers)
    • Non-managerial employees
    • Public

    Module 1: Introduction to Accounting (FAR by: Millan)


    Forms of Business Organizations

    Module 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Module 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Chapter 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Module 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Module 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Module 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Module 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Chapter 1: Introduction to Accounting (FAR by: Millan)


    Types of Business According to
    Activities
    1. Service business
    2. Merchandising (Trading)
    3. Manufacturing

    Module 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Chapter 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Chapter 1: Introduction to Accounting (FAR by: Millan)


    Advantages and Disadvantages

    Module 1: Introduction to Accounting (FAR by: Millan)


    END

    Module 1: Introduction to Accounting


    (FAR by: Millan)

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