Basic Accounting
Basic Accounting
Basic Accounting
Accounting
Accounting
• Language of business
• The 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 a financial
character, and interpreting the results
thereof.
• To provide quantitative information,
primarily financial in nature, about economic
entities that is intended to be useful in
making economic decisions.
Accounting as an Information
System for Business Decisions
BUS
INE DECISION MAKERS
SS
TRA
NSA
CTI Information Needs
ON Informatio
S n
PROCESSING
MEASUREMENT Accomplished by COMMUNICATION
Accomplished by storage and Accomplished by
recording of data preparation of reporting
data
ELEMENTS OF ACCOUNTING
1. ASSETS
• Are the economic resources a business owns that are expected to be of benefits in the future.
2. CLASSIFYING
• Under this function, similar and interrelated transactions and event are sorted or grouped
together into their respective classes.
3. SUMMARIZING
• At the end of a certain period of time, which can be a month, a quarter, a semester or a year,
owners of the business or other interested users of accounting data ask the accountant
information about the condition of the business.
4. INTERPRETING
• Due to technical and specialized nature of accounting, reports submitted by the accountant
require further interpretation for the guidance of management and other users.
USERS OF ACCOUNTING
INFORMATION
BUSINESS TRANSACTIONS
ACCOUNTING
1.Service Business
• This type of business provides various forms of services, not intangible
products, to its customers or clients.
2. Merchandising Business
• This type of business entity is in the “buy and sell” business.
3. Manufacturing Business
• Unlike a trader or merchandiser, a manufacturer, also called a fabricator or
producer or processor, is in the normal business of producing the products
that he sells.
Forms of Business Organizations
1.Sole Proprietorship
• Is a business owned by one person.
2. Partnership
• As defined in Article of the Partnership Law: “By the contract of a partnership, two or
more persons bind themselves to contribute money, property or industry to a common
fund, with the intension of dividing the profit among themselves”.
3. Corporation
• Section 2 of Batas Pambansa 68, otherwise known as the Corporation Code of the
Philippines, provides “ A corporation is an artificial being, created by operation of law,
having the right of succession and the powers, attributes and properties expressly
authorized by law or incident to its existence,”
Activities in Business
Organizations
1. Financing Activities
• Are activities that obtaining resources from and returning resources to owners as well
as obtaining resources through borrowings and repayments of the amounts borrowed.
2. Investing Activities
• Includes the acquisition and disposition of property, plant and equipment and other
long-term assets and debt and equity instruments of other enterprises that are not
considered cash equivalent or held for dealing or trading purposes.
3. Operations Activities
• are principal revenue-producing activities of an enterprises and include delivering or
producing goods for sale and providing services.
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