Professional Documents
Culture Documents
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1.
Personal life involves financial problems hence the need for accounting
Professional level involves problems having financial impact in your
work/profession/employment
Feasibility, profit determination, credit risk assessment, cost benefit
analysis, liquidity issues depending on the user of info
Business level capital requirements, profit determination, break even
point, taxes, information is needed to make decisions and financial
information play a pivotal role.
Assets, liabilities, debit, credit
2.
a. Business economic activity of buying and selling to obtain profit,
economic unit that obtains and controls resources and then engages in
buying and selling of goods or services with a view of enhancing
resources
b. Motives profit, philanthropy, service
c. Sources of capital, primary (owner), return on/of capital, secondary
sources of capital (lenders)
3.
a. Business organizations- sole prop, partnership, corp
b. Business operations-service, merchandising, manufacturing
c. Business activities financing, operating, investing
4.
a. Management art of managing and directing people and resources as
efficiently as possible with a view of accomplishing the goal of the
organization
b. Efficient, effective
c. Planning, Organizing, Directing, Controlling
5.
a. Accounting
i. to be effective must have sound knowledge of accounting before
reading the fs
ii. it is also the process of identifying, measuring, and
communicating economic information to permit informed
judgment and decision.
iii. A service activity which function is to provide quantitative
information, primarily financial in nature, about economic
entities that is intended to be useful in economic decisions
b. Users
i. Owner/investor financial position, performance
ii. Manager PODC, decision making (INTERNAL)
iii. Lender ability of business to pay on maturity date, solvency
iv. Supplier liquidity; pay on time
v. Government taxes and other statutory requirements
vi. Employee wages, benefits
vii. Customer continuity of supply
viii. ** all are direct and external except Manager
6. Accounting Information Principles
a. Control Principle must possess internal control or methods and
procedures necessary to monitor activities of business to ensure
efficient operations
b. Cost Benefit Principle advantages enjoyed by installing the system
must outweigh its cost
c. Compatibility custom fit for the unique characteristics of the
company
d. Relevance Principle information must be reported on time and that
information is useful to make a decision
e. Flexibility system changed when required to come up with timely info
7. Financial statements
a. Financial position
b. Financial performance
c. Cash flows
Chapter 3
Basic Elements of Accounting - ALC, RE
Assets, Liabilities, Capital/Net Worth/Net Assets/Equity
Basic Accounting Equation A = L+C or 10 = 5 + 5
Business Transactions Exchange of values between two parties expressed in
monetary terms 3 Characteristics, 1. exchange of values, 2. Between two parties, 3.
In terms of money
Chapter 4
Income Recognition R-E
Realization Principle, Matching Principle
Accrual, Cash Concept
A-L=C+R-E IS THE SAME AS A=L+C+R-E
Chapter 5
ACCOUNTING CYCLE
SOURCE DOCUMENTS- RECORD-POSTING-TRIAL BAL-WORKSHEET-ADJUSTINGADJUSTED T/B-F/S-CLOSING ENTRIES-POST CLOSING T/B-REVERSING
BAD DEBTS
DIRECT WRITE OFF only when certain uncollectible
ALLOWANCE METHOD bad debts during the period sale of service is
rendered, estimation
AFDA ACCOUNT CONTRA ASSET ACCOUNT to get NET
REALIZABLE VALUE
% of revenue
BDE determination
% of outstanding a/r
AFDA determination
Aging
AFDA determination
DEPN Straight line method
Cost Scrap/UL= depn
ACC DEPN contra asset account to get Book Value
WORKSHEET
Columnar paper starting with TB, AJ,ATB,IS,BS