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Gensantos Foundation College Inc. Buaong Extention, General Santos City

The Foremost Outcome of Mastering the Fundamentals of Accounting 1

Prepared by:

Cancer,Kimberly Cloi T. Sing, Jeffrey G.

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Table of Contents

I.

Introduction

3

II.

Photographic Evidence

4

III.

Questions and Answers

6

IV.

Recommendation

12

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V.

References

Introduction

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Whenever we hear the word “accounting” we often associate it with figures and then relate it to business. We failed to realize that accounting is not for business alone. Actually, nearly everyone practices accounting in one form or another every day. Whenever we go and everything we do which involves decision-making, accounting is present. Whether we are at home, in school or anywhere else, accounting has always been a part of our daily struggle for survival, this makes accounting to have a universal existence.

Even in professions which we may think their fields of studies are not related to business like engineering, architecture, law, medicine, etc-they too need a working knowledge of accounting in pursuit to the practice of their professions.

Accounting is often called the “language of business”; the language we often hear in business conversation. But how can we participate actively and communicate effectively in the business community if we don’t speak the same language. It’s the way business people sets goal, measure results and evaluate performance.

In today’s business world, learning and understanding the art of accounting is not just an uphill climb, but rather it’s a survival skill.

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Photographic Evidence

Learning and understanding the art of accounting is not just an uphill climb but rather a
Learning and understanding the art of accounting is not just
an uphill climb but rather a survival skill

Basic accounting equation

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Bridging communication through Financial Statements

Questions and Answers

1. Why do need to study accounting? Answer:

Simply put, Accounting is the language of business. It is the

means by which relevant and reliable financial information can

be communicated to the users who can analyze that information

to

make

business

decisions.

Think of all of the different groups of people that use

financial information. Current and potential investors analyze a firm's financial statements to determine growth potential, how

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effectively a firm has been using its resources and how profitable

it is. Similarly, creditors use them to determine how liquid a firm

is

(how

likely

it

is

that

the

firm

can

meet

its

short-term

obligations)

or

may

be

how

solvent

the

firm

is.

 

Managers use different financial information to make

decisions

about

various

costs

to

the

firm.

Furthermore,

accounting allows

firms

to

analyze the tax impacts

of their

various

business

 

decisions.

 

Even if you do not choose to accounting as a course of

study, you will very

likely need to

be able to use information

prepared by accountants if you find yourself in any position in

which you are required to make business decisions. That is not to

say that financial information

is

the only

factor that should

influence your decisions; but it is a tool that it often works to

your advantage to use.

a. What knowledge is required in the study of accounting? Answer:

Firstly,

it

is

our analytical ability that counts most;

ability to analyze transactions and situational problem requirements. As a beginner, the most difficult part is the determination of the correct accounts and amounts to be debited and credited- the theory of what you received and what you gave away in return. Learning ability can be developed sometimes as one gets mature. However there’s no room for waiting an accountancy student to get mature before realizing the importance of the subject. With what is happening in the academe right now, where there are schools which are tightly screened the students before admission to the said course. And some schools require an 85% cut-off in all accounting subjects.

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Secondly, it is our stacked knowledge in arithmetic and not mathematics that are needed. Of you know the process of addition, subtraction, multiplication, division and the reasons why these are applied. Thirdly, there is a psychological factor behind. Many students shy away from accounting subject because of the impression that accounting is very difficult subject. Lastly, change a little study habit. Spend more time in your studies now. What is five years of sacrifices, then a life time harvest! Think of your future. Regrets will come at last.

  • b. Where we start with our study in accounting? Answer:

We should start our study in accounting from:

1 st

business

Portraying

the

role

as

accountant

in

2 nd Study the Generally Accepted Accounting Principles

3 rd Study the Basic Accounting Assumptions

4 th

Study

the

Financial

(Accountant’s report)

2. How do accounting differ from:

  • a. Bookkeeping

Answer:

Statements

Bookkeeping is a procedural and largely concerned with development and maintenance of accounting records. It is the “how” of accounting. While, accounting

is conceptual and is concerned with the why, reason or justification for any adopted. Bookkeeping is a procedural element of accounting as arithmetic is a procedural element of mathematics.

  • b. Auditing Answer:

In

a broad sense, accounting embraces auditing.

Auditing is one of the areas of accounting specialization.

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In a limited sense, accounting is essentially constructive in nature. Accounting ceases when financial statements are already prepared. On the other hand, auditing is analytical. The work of an auditor begins when the work of the accountant ends. After the financial statements are prepared, the auditor will begin to perform his task. The auditor examines the financial statements to ascertain whether they are conformity with the generally accepted accounting principle.

3. Why did accounting define as a process of:

  • a. Identifying

Answer:

Accounting is a process of identifying because it is

the recognition and nonrecognition of business

transactions as “accountable” events. An event is accountable or quantifiable when it has an effect on assets, liabilities and equity. In other words, the subject matter of accounting is economic activity or the measurement of economic resources’ and economic obligations. Only economic activities are emphasized and recognized in accounting.

  • b. Measuring and; Answer:

This is an accounting process in assigning

of Peso

amounts to the accountable economic transactions and events. If the accounting information is to be useful, it

must be expressed in terms of a common financial denominator. Financial statements without monetary amounts would be largely unintelligible or incomprehensible. The Philippine Peso is the unit of measuring accountable economic transactions. The

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measurement bases are historical cost, current cost, realizable value and present value. c. Communicating Answer:

Communicating

is

a process of preparing and

distributing accounting reports to potential users of accounting information. Identifying and measuring are pointless if the information contained in accounting records cannot be communicated to the potential users , like investors, owners, managers, creditor and other interested parties. Actually, it is for this reason that accounting has been called the “universal language of business”

4. What are the career opportunities of an accountant? Answer:

Once

we become an accountant, there we find several

opportunities to grab with. We can be employed and worked in

various fields of endeavor such as being a Public Accountant in a way that we are in a public practice. And as a public practitioner, we are able to render services to the public for a fee. We are not an employee of the client company under audit but assume the role as “independent entity” vested with the

freedom to exercise our own judgment carrying out

the

engagement requiring our independence and impartiality of the report we prepared. We can be also become a Government

Accountant, under this field, we are able to render services to the government. This widens the job opportunities of

accountants. Once we choose this

field, we

will become a

member of the Government Association of CPAs GACPA) sector.

We

can

also be

a

Private

Accountant in which we will gain

 

employment in

private

firms

and

hold

positions

as

Chief

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Accountant, Accounting Manager, Internal Auditor, Finance Manager or the highest accounting officer of an enterprise which known as the “Comptroller”. Lastly, we can also become an Accounting Instructor in a way that some CPAs join in the academe and sacrifice the high income generating profession for the sake of love in accounting education.

5. How accounting made a big leap towards globalization? Answer:

Globalization has resulted in business enterprises entering into transactions that extend beyond the borders of their home country as evidence by multinational corporations which have grown widely with their subsidiaries and affiliates located in other parts of the world. It has also awakened the need for accounting principles and standards to have international acceptability. As the Accounting Law of 2004’s declaration of policy provided that “the state recognizes the importance of accountants in nation building and development. Hence, it shall develop and nurture competent, virtuous, productive and well-rounded professional accountant whose standards of practice and service shall be excellent, qualitative, world class and globally competitive through regulatory measures, programs and activities that fasten their professional growth and development.” As the saying goes, “think globally, act locally” for a moment while waiting for this phenomenon to make a full blast.

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Recommendation

Accounting is designed to be self-contained. As an accounting students we want to expand our knowledge beyond that we can cover in this subject matter or who want more in-depth explanations in reading this book, Fundamentals of Accounting that geared towards BSA and BSAT students.

If you want a spontaneous success in business, you should know about the Fundamentals of Accounting. No matter how skilled you are at creating a product, providing services, or even marketing your wares, the money you earn will slip between your fingers if you don’t know how to efficiently collect it, keep track of it, save it and spend or invest it wisely.

This Book report is recommended for those people who are highly engaged in business and also for the students with little or no prior background in basic accounting that want to improve their accounting literacy. There are no academic prerequisites for this subject matter. Although we will work with numbers, the only required math knowledge is addition, subtraction, multiplication and division.

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References

Lopez, Rafael Jr. Fundamentals of Accounting, MS Lopez Printing and Publishing, 1 st October Street, Don Julian Village Ma-a, Davao City, Philippines,2013

Valix, Conrado, Peralta, Jose and Valix, Christian Aris. Financial Accounting Volume one, GIC Enterprise & Co., Inc., 2017 C.M. Recto, Manila, Philippines

Carter, Willam. Cost Accounting (14 th Edition), MG Reprographics, Manila, Philippines

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