Financial acctg- external users target

manaement accounting - internal users, for managerial purposes

does not conform to standards
ggov acctg - taxes
auditingg - fs are used, auditing starts where acctg ends
tax acctg - computation of taxes and filing, tax consultants for tax advice
cost acctg - it is the intersection of financial acctg and mangmt accounting.
mngmnt acctg analyzes fin accounting to achieve a goal
acctg educ - acctg prof that decide to teach
acctg research -
how improve business and develop accounting theories

Forms of business orgs

proprietorship = ownership
Sole
advantage - all profit go to owner
dis - konting capital
unlimited liability- creditors can claiim your personal property
Partnership
necessary to have partnershiip agreement to avoid conflict
adv - more capital than sole
diis - partners are prone to disaggreement

Corporatiion
stocks or shares - form of ownershiip
shareholder - when you buy stocks from the company
board of directors - elected shareholders which act as managing body
adv - biggest capital
transfer of ownership=unlimited life
dis - many government reqs and restriictions
double taxation

Type of business acts

Main difference - how they get revenue of business

Service - earn income by giving service

merchandising - aka trading. businesses by products and sell them with mark-up
without altering the form
e.g. sari-sari store, dept. store
Manufacturing - from raw materials to finish product. the finish product is what
you sell
e.g. furniture factory

Accounting concepts and principles

Separate entity Concept - cannot merge business transactions with personal
expenses
used to actually know how much the business has earned
historical cost - aka cost principle. record acquisition cost
going concern - accountin assumption. we assume that buisiness will operate in the
foreseeable future.
backed up by entriies (prepayments, advance payments)
matching concept - cost of sales(example) PPE (from assets become expenses)
accrual basis of accounting - kailan nangyari and not kailan nakatangap ng pera
Prudence - conservatism(aka)
beingg careful and cautious in business activities
pick alternative that has least affect ot equity
better understated than over
Time Period - you will not see the performance of business until the end of acctgg
period
annual presntation of financial statements
interim financial statements - quarterly, semi-annually...
Stable mometary unit - quantifiability of event or iinterms of unit of measure
materiiality concept - material or immaterial
material ang amount if ommision is makakaepekto sa decisions ng company
materiality is relativity because material amoutn for one may be immaterial for
another
Cost benefit - your benefiit should always be greater than the cost you incur
hard to measure, reliies on professional judgment of CPA
FUll DIsclosure principle - supports completeness. iinformation is reliable if it
is complete
COnsistency Concept - embraces comparability. if accountacy policies are consistent
comparing would be easier

Adjusting ENtries
Accrued expense -