FAR Prelim For Printing PDF

Welcome
to
Class ACC 13 !!!
Financial Accounting
& Reporting
8/21/2020 ACC 13 BNC 1

Course Overview:
■ This course provides a reinforcement of basic accounting, within
the contents of business and business decisions. Students
obtain additional knowledge of the principles and concepts of
accounting as well as their application that will enable them to
appreciate the production of accounting data. Emphasis is
placed on understanding the reasons underlying basic
accounting concepts and providing learners with an adequate
background on the recording of transactions, their classification
and reporting functions of accounting in service and trading
concerns through the preparation of Statement of Financial
Position, Income Statement, Statement of changes in Equity,
and Cash Flows Statement. Exposure thru use of practice sets,
either manual or computerized system in recording and
reporting transactions for service or trading firms is a
requirement in this course.
8/21/2020 ACC 13 BNC 2

■ Credits: 3 Units
■ Time : 3:30 to 5:00
■ MW
■ Pre Req: none
■ Instructor: Mrs. Benilda N. Castaneda, CTT, CPA
■ References:
Suggested Textbook: Financial Accounting & Reporting Fundamentals
2018-2019 ed. Balatbat, et. al
GIC Enterprises & Co., Inc
CM Recto, Manila
Accounting Fundamentals Made Easy 2019 5th ed

Ballada, et. al.
DomDane Publisher & Made Easy Books
8/21/2020 ACC 13 BNC 3

Course requirements
– 1. Regular Attendance in class/Doing assigned tasks
– 2. Periodical Examination
– 3. Assignments/Quizzes/Long Test
– 4. Recitation/Practical Skill Demo (if F2F is permitted)
– 5. Group Activity/Group Discussion (if F2F is permitted)
– 6. Project/Journals
– Note: Topics will be given in advance. For effective and

efficient interactive class discussion your advance reading
for the topics is a MUST.
8/21/2020 ACC 13 BNC 4

Look at the picture…Any idea? Let’s find out as we explore this course
through out this semester.
8/21/2020 ACC 13 BNC 5

Which one are YOU?
Good Luck!!!
8/21/2020 ACC 13 BNC 6
Thank you…
■ Assignment:
– Read on Topic: Basic Business Environment
■ Supplies needed for this semester
– 4 columns columnar pad
– 10 or 12 columns columnar pad
– Long folder with fastener
– Calculator
– Intermediate paper in lieu of QUIZ Notebook
– Commitment to learn
■The end..
8/21/2020 ACC 13 BNC 7
LESSON 1:
BASIC BUSINESS
ENVIRONMENT
•Concepts of Business
▪Types of Business:
•Legal Forms of Business Organization:
•Categories of Business Activities:
•Business Stakeholders:
•Taxes:
8/21/2020 ACC 13 BNC 8

Learning Objectives:
■ After studying this lesson, you must be able to:
– Explain the nature of business.
– Enumerate and discuss the four factors of production
– Explain the objectives of business
– Describe the nature of business activities
– Understand the legal form of business organization
– Describe the business activities involved in
■ Financing
■ Investing
■ Operating
– Enumerate and explain the interest of the different business
stakeholders
– Explain the impact of taxes and interest on the operation of a
business enterprise
8/21/2020 ACC 13 BNC 9

What is Business?
• Business is the process of producing (manufacturing) goods (products)
and services then distributing to those who desire or need them for a profit.
Production Distribution
Profit
Goods/services Selling
8/21/2020 ACC 13 BNC 10

8/21/2020 ACC 13 BNC 11
Objective of business firm:
“to produce goods and services to meet the needs and desires of
customers and to do so at a profit”
8/21/2020 ACC 13 BNC 12

8/21/2020 ACC 13 BNC 13
Legal Forms of Business Organization:
8/21/2020 ACC 13 BNC 14

What is Sole Proprietorship?
8/21/2020 ACC 13 BNC 15

Sole Proprietorship
8/21/2020 ACC 13 BNC 16

8/21/2020 ACC 13 BNC 17
8/21/2020 ACC 13 BNC 18
8/21/2020 ACC 13 BNC 19
8/21/2020 ACC 13 BNC 20
Categories of Business
Activities
8/21/2020 ACC 13 BNC 21

Business Stakeholders
Is a person or entity that has an interest in the
economic performance of the business.
8/21/2020 ACC 13 BNC 22

8/21/2020 ACC 13 BNC 23
8/21/2020 ACC 13 BNC 24
8/21/2020 ACC 13 BNC 25
Interest Rates
8/21/2020 ACC 13 BNC 26

End of lesson 1
■ Assignment:
– Definition of accounting
– Objective of Accounting
– Types of Accounting Information
– Users of Accounting Information
– Professional Values and Ethics of Accountants
– Bookkeeping vs Accounting
■ Answer : Exercises Code: L1E -01 to L1E-03

Write your answers in your QUIZ note book
■ Prepare for a QUIZ
8/21/2020 ACC 13 BNC 27

Exercise L1E-01
■ Suzy Davao owns and operates a jewelry store. During the
month, she sold a necklace to a customer for Php 15,000.00.
Suzy paid Php 10,000.00 for the necklace.
■ Required:
– What type of business does Suzy own (manufacturer,
wholesaler, retailer, etc) Explain how you determined your
response.
– Calculate gross profit on the sale of the necklace.
– Identify four costs besides the 10,000.00 cost of the
necklace that Suzy might incur in the operation of her
jewelry store
8/21/2020 ACC 13 BNC 28

Exercise L1E-02
■ Presented below are the three basic forms of business organization, followed
by some of the advantages and disadvantages relating to those forms of
business:
■ a. sole proprietorship b. partnership c. corporation
_____ 1. Owner has total control _____ 11. Greater Mgt expertise
_____ 2..Greater business continuity _____ 12. Has less access to capital
_____ 3. Easy transfer of ownership _____ 13. Greater tax burden
_____ 4. Limited liability _____ 14. Limited Mgt expertise
_____ 5. Greater access to capital _____ 15. Unlimited liability
_____ 6. Easy and inexpensive to establish _____ 16. Absentee ownership
_____ 7. Few Government regulations _____ 17. Must share profits
_____ 8. Easy to dissolve _____ 18. Greater govt regulation
_____ 9. No special income taxes _____ 19. Often difficult to dissolve
_____ 10. No sharing of profits _____ 20. Potential ownership conflicts
■ Required: Match the letter next to each form of business with the
appropriate advantage.
8/21/2020 ACC 13 BNC 29

Exercise L1E-03
■ Professor Keanna Sotto is opening a publishing company to
publish and distribute accounting textbooks throughout the
NCR. She feels this will be a successful venture because the
textbooks will be based upon a revolutionary new format of
accounting education. Sotto has extended an invitation to all her
students to invest in her new business, She is offering shares of
stock for a mere Php 1,000.00 each.
■ Required:
– A. What form of business is Prof. Sotto proposing?
– B. Briefly explain four advantages of doing business in
such a form.
8/21/2020 ACC 13 BNC 30

ACCOUNTING AS A
LANGUAGE OF
BUSINESS
Lesson 2
8/21/2020 ACC 13 BNC 31

Learning Objectives
■ can define accounting and explain it’s role in business
■ describe the nature of accounting
■ describe the principles of accounting
■ can explain the function of accounting in business
■ apply accounting skills in real life situations
■ explain how accounting information links economic
activities to decision making
■ users and uses of Accounting information
■ relationship between bookkeeping and accounting
8/21/2020 ACC 13 BNC 32
What is Accounting?
■ Accounting is the information system that measures business

activities, processes that information into reports and
communicates the results to decision makers.
■ Is the language of business. The information about the business
activities are communicated to the users through the financial
statements.
■ Is a service activity. Its function is to provide quantitative
information, primarily financial in nature, about economic entities
that is intended to be useful in making economic decision.
8/21/2020 ACC 13 BNC 33

What is the nature of accounting?
■ Accounting is the systematic recording of financial transactions
and the presentation of related information to appropriate
persons. According to Accounting Theory (https://
accountingtheory.weebly.com/nature-and-scope-of-
accounting.html)
■ Note: Accounting is the language of business. It is used to
communicate important financial information to decision
makers.
8/21/2020 ACC 13 BNC 34

Accounting is…
■ An information system
■ A process
■ A service activity
■ Both an art and discipline
■ Deals with financial information and transactions
8/21/2020 ACC 13 BNC 35

■ Accounting is -an information system

■ Accounting is recognized and characterized as storehouse
of information. As a service function, it collects processes
and communicates financial information of entity. This
discipline of knowledge has evolved to meet the need for
financial information as required by various interested
groups.
8/21/2020 ACC 13 BNC 36

■ Accounting is - a process (American Accounting Association)
■ Accounting is identified as a process, as it performs specific
task of collecting, processing and communicating financial
information. In doing so, it follows some definite steps like the
collection, recording, classification, summarization,
finalization, and reporting of financial data.
8/21/2020 ACC 13 BNC 37

■ Accounting is - a service activity (Accounting Stand

Council)
Its function is to provide quantitative information, primarily
financial in nature, about economic entities, that is intended
to be useful in making economic decision. Accounting
provides assistance to decision makers by providing them
financial reports that will guide them in coming up with sound
decisions.
8/21/2020 ACC 13 BNC 38

• Accounting is - both an art and discipline (Communication on

Accounting Theory of AICPA)
• Accounting is an art of recording, classifying, summarizing
and finalizing financial data. The word “art” refers to the way
something is performed. It is a behavioral knowledge
involving a certain creativity and skill to help us attain some
specific objectives. Accounting is a systematic method
consisting of definite techniques and its proper application
requires skill and expertise. So by nature accounting is an
art. And it because it follows certain standards and
professional ethics, it is also a discipline.
8/21/2020 ACC 13 BNC 39

■ Accounting -deals with financial information and transactions

■ Accounting records financial transactions and data,
classifies these and finalizes their results given for a specific
period of time, as needed by their users. At every stage,
from start to finish, accounting deals with financial
information only. It does not deal with nonmonetary or non
financial aspects of such information
8/21/2020 ACC 13 BNC 40

What is the function of accounting in business?
• Accounting is the language of business. WHY?
• Accounting is the means by which business information is
communicated to business owners and stakeholders. The role of
accounting in business is to provide information to managers and
owners to use in operating the business. In addition, accounting
information allows business owners to assess the efficiency and
effectiveness of their business operations. Prepared accounting
reports can be compared with industry standards or a leading
competitor to determine how the business is doing. Business
owners may also use historical financial accounting statements to
create trends for analyzing and forecasting future sales.
• Accounting help the users of these financial reports to see the true
picture of the business, In order for the business to survive, it is
important that the business owners or managers be well informed
8/21/2020 ACC 13 BNC 41
8/21/2020 ACC 13 BNC 42
Financial Statements
The major end product of accounting
The following are the types of financial statement – each type of Financial
Statements provides specific information about economic entity:
• Statement of Comprehensive Income (SCI) –also known as Profit or
Loss Statement/Income Statement. It shows the result of company’s
performance as a result of operations at a particular period of time.
• Statement of Financial Positions (SFP)- also known as Balance Sheet. It
presents it’s asset, liabilities, and capital at a given point in time. It provides
info about the financial condition or position in the business.
• Statement of Changes in Equity (SCE)- provides information about the
financial and investing activities of the entity
• Statement of Cash Flow (SCF)-provides information about the entity’s
cash inflow and cash outflow from its operation, investment and financing
from the beginning until the end of the period.
• Notes to Financial Statements – are found at the end of the financial
statements, provide additional information to help explain specific items in
the record. They also provide a comprehensive assessment of the financial
condition of the business entity.
8/21/2020 ACC 13 BNC 43
Types of Accounting Information
 A. Financial accounting- which is concerned with the supply of
information to the owners of an entity
◦ Financial accounting information is designed primarily to assist
investors and creditors in deciding where to place their scarce
resource investment resources.
 . Management accounting – which concerned with the supply of
information to the managers of entity.
◦ A company’s manager and employees constantly need such information
in order to run and control daily business operations.
◦ Management accounting information often includes evaluations of
nonfinancial factors, such as political and environmental considerations,
product quality, customer satisfaction, and worker productivity.
8/21/2020 ACC 13 BNC 44

8/21/2020 ACC 13 BNC 45
Category of Users
8/21/2020 ACC 13 BNC 46

Category of Users:
 Users of the financial information in a company can be
categorized into two:
◦ EXTERNAL USERS: people outside the company.

They do not work in the company and are not directly
involve in its operations
◦ INTERNAL USERS: are people within the company

who are directly involved in the business operations.
8/21/2020 ACC 13 BNC 47

Category of Users:
 EXTERNAL USERS: people outside the company. They do not
work in the company and are not directly involve in its
operations. They are:
 CREDITORS
 INVESTORS
 GOVERNMENT & TAX AUTHORITIES
 REGULATORY AGENCIES
 CUSTOMERS & CONSUMERS
 COMPETITORS
 LAWMAKERS AND ECONOMIC PLANNERS
8/21/2020 ACC 13 BNC 48
Category of Users:
■ Users of the financial information in a company can be

■ EXTERNAL USERS: people outside the company. They
do not work in the company and are not directly involve
in its operations. They are:
■ CREDITORS – decide and determine whether or
not they should loan money or deliver supplies
to a company.
■ Examples: banks, suppliers
8/21/2020 ACC 13 BNC 49
Category of Users:
■ EXTERNAL USERS: people outside the company. They do not
■ INVESTORS –These are the people who utilize their
own money and resources to invest into a company.
They want to know the financial status and progress of
a business to ensure the safety and security of their
investment.
■ They are also called: Shareholders
8/21/2020 ACC 13 BNC 50

Category of Users:
■ GOVERNMENT & TAX AUTHORITIES – They are
interested to determine how much a business earns
in order to assess its tax liabilities. They use
accounting information to calculate how much taxes a
company should paying and if it is paying the correct
amount of tax. Examples: Bureau off Internal Revenue
8/21/2020 ACC 13 BNC 51

Category of Users:
■ REGULATORY AGENCIES –Use the company’s financial
information to determine if the business’s disclosure
off financial statements is in accordance with the
rules and regulations that protect the stakeholders’
interest.
■ Example: Security and Exchange Commission
8/21/2020 ACC 13 BNC 52
Category of Users:
■ CUSTOMERS & CONSUMERS – they assess accounting
information to acquire a picture of the longevity and
continuity of a business, especially when there is a
potential long-term engagement and interaction
between the customers and the business enterprise
8/21/2020 ACC 13 BNC 53

Category of Users:
■ COMPETITORS – These are individual or organizations
that offer the same type of service to the same group
of customers. They would want to access to the
financial information of a business so they would know
if that business can handle competition.
8/21/2020 ACC 13 BNC 54

Category of Users:

■ LAWMAKERS AND ECONOMIC PLANNERS – Their access
to financial information can help them determine if
there is a need to make changes in the existing laws
of the country. Ultimately, this can result in the
betterment of the economy and the society.
8/21/2020 ACC 13 BNC 55

Category of Users:
 INTERNAL USERS: are people within the company who are
directly involved in the business operation. They are:
◦ OWNERS
◦ MANAGERS
◦ EMPLOYEES & TRADE UNIONS
8/21/2020 ACC 13 BNC 56

Category of Users:
◦ OWNERS - what makes the owner considered as internal
users it is because the business is their primary source of
income. An owner depends on financial information to
determine the profitability and longevity of his business, so
that he can decide whether to pursue or maintain the business
or not.
8/21/2020 ACC 13 BNC 57

Category of Users:
◦ MANAGERS – they use the financial information as a tool for
planning in improving the business. This allows them to
identify the areas which require more attention and the
procedures that need to be checked. They also use the
information to assess the performance of the business under
their guidance.
8/21/2020 ACC 13 BNC 58

Category of Users:
◦ EMPLOYEES & TRADE UNIONS - Employees or trade unions –
earning capacity is important to employees and trade unions
because their wages and bonus depends on it.
8/21/2020 ACC 13 BNC 59

Types of Information- needed by External Users
 Statement of Comprehensive Income (SCI)– shows financial performance of the
business for a certain period of time. It tells how much a business has earned or lost.
 Statement of Financial Position (SFP) – tells what the company owns (asset) and owes
(liabilities) after a specific period.
 Statement off Changes in Owner’s Equity (SCE)-tells how much the company’s net
income, which is shown in the balance sheet, is reinvested in the business.
 Statement of Cash Flows (SCF)-indicates who or what the entity source of cash is and
where it is being used/utilized.
8/21/2020 ACC 13 BNC 60

Types of Information – needed by Internal Users
 Audited Financial Statements – validated Financial Statements

which verified the accuracy of data presented. These ensure the
owners and managers that the accounting procedures were
conducted efficiently and the resulting data are at correct and
factual
 Income Tax Returns – allows manager and owners and even
employees, to determine if proper payment of their taxes has
been secured by the company and has been examined by BIR. It
guaranties of no pending tax obligations
 Purchase and Costs Reports – basis in calculating profits or
losses of the entity for a period of time.
8/21/2020 ACC 13 BNC 61
Type Category Decisions to Make Information Needed
External Creditors Approve, grant or decline Financial Statements

Lenders loans to business owners (SCI & SFP) and
Debtors Income Tax Return
External Investors Decide whether or not to All types of Financial

invest and/or buy shares Statements
of a company
External Government Assess the tax liabilities of Financial Statements

the company – SCI & SFP
SUMMARY – EXTERNAL USERS

8/21/2020 ACC 13 BNC 62
External Regulatory Check if the company All types of Financial

agencies companies with or violates Statements
the set rules and regulations
to protect its stakeholders
External Customers Determine how long Financial
and customers/consumers can Statements
consumers depend on the business for (Statement
its products and services Comprehensive
and if they are being Income & Statement
rightfully charged with the of Financial
appropriate fees in exchange Position)
of the products or services
they receive
SUMMARY - EXTERNAL USERS
8/21/2020 ACC 13 BNC 63
External Competitors Assess the strategies used by All types of

the business in contending Financial
with its competitors and Statements
financial status of the
business compared to its
business compared to its
business
External Lawmakers and Determine the changes to be All types of
Economic made on existing laws to Financial Staments
Planners
attain economic stability and
improvement

8/21/2020 ACC 13 BNC 64
Type Category Decisions to Make Information
Needed
Internal Owners Decide the goals of the business All types of
based on its profitability and Financial
longevity Statements ,
Internal Manager Decide whether or not the Audited
company is being managed well Financial
under their supervision Statements,
Check what needs to be improved Income Tax
on and/or discontinued from the Returns,
business operations Purchase &
Cost Returns
Internal Employees Evaluate the employment
and Trade conditions and earning capacity of
Unions the company
SUMMARY – INTERNAL USERS

8/21/2020 ACC 13 BNC 65
External Customer Determine how long Financial

s and customers/consumers can Statements
consumer depend on the business for its (Statement
s products and services and if they Comprehensive
are being rightfully charged with Income &
the appropriate fees in exchange Statement of
of the products or services they Financial
receive Position)
External Competitors Assess the strategies used by the All types of
business in contending with its Financial
competitors and financial status of Statements
the business compared to its
business compared to its business

8/21/2020 ACC 13 BNC 66
Professional Values and Ethics of Accountant
■ Users of accounting information – both external and internal –
recognize that the usefulness, reliability of accounting
information is affected by the personal attributes of
competence, professional judgment, and ethical behavior of
accountant,
■ Ethics is a term that refers to a code or moral system that
provides criteria for evaluating right and wrong.
■ Because of the important role of accounting in society,
accountant must maintain high ethical standards.
■ The code of Ethics promulgated by the BOA provides guidelines
for practicing accountants.
8/21/2020 ACC 13 BNC 67

Fundamentals Principles of Accounting
To achieve the objectives of the accountancy profession,
professional accountants must observe the following fundamental
principles similar to core values as discussed.
• Integrity
• Objectivity
• Professional competence and due care
• Confidentiality
• Professional behavior
• Technical standards
8/21/2020 ACC 13 BNC 68

– Integrity- A professional accountant should be
straightforward and honest in performing professional
services,
– Objectivity – A professional accountant should be fair, free
from bias, does not allow others to influence their objectivity in
making decision.
8/21/2020 ACC 13 BNC 69

– Professional competence and due care - Professional
competence means an accountant has a continuing duty to
maintain professional knowledge and skill at a level required to
ensure our client/employer receives the advantage of
competent professional service based on up to date
development in practice, legislation, and techniques
8/21/2020 ACC 13 BNC 70

– Confidentiality- Professional accountant should not disclose
any information to third parties without proper and specific
authority unless there is legal/professional duty to do so.
– Professional behavior – A professional accountant should
comply with relevant laws and regulations and should avoid any
actions that discredit the profession.
8/21/2020 ACC 13 BNC 71

– Technical standards – A professional accountant should
carry out professional services in accordance with the
relevant technical and professional standards. Professional
accountants have a duty to carry out with care and skill the
instructions of the client or employer insofar as they are
compatible with the principles of integrity, objectivity.
8/21/2020 ACC 13 BNC 72

Ethical Issues
■ The Financial Statements produced by accountant have financial
implications for individuals as well as business. These situations generate
considerable pressure on the accountant to “provide the reported
results”. Examples of situations in where the financial implications can
lead to efforts to influence the outcome are:
– A. The amount of taxes to be paid by the business.
– B. The amount of a bonus to be received by top management and
employees
– C. The price to be paid by the customer
– D. The amount to be distributed to a business’s owners.
– Ethical behavior mandates that the accountant ignore these
pressures.
■ Accountants have access to confidential sensitive information. Tax

returns, salary data, details of financial arrangement and proposed price
changes are examples of these type of information.
– Ethical behavior mandates that accountants respect the
8/21/2020
confidentiality information
ACC 13 BNC 73
8/21/2020 ACC 13 BNC 74
End of Lesson 2
• Answer: Exercises L2E-04 to 06

• Prepare for a QUIZ.
• Assignment:
• Read on Topic:
• The Accounting Equation
• Thank you..
8/21/2020 ACC 13 BNC 75
■ Exercise L2E 04 - Match the terms on the left with the descriptions on the right. Each
description should be used only once.
___1.Financial Accounting a. The procedural aspect of accounting that involves keeping

detailed records of business transactions
___2.Management Accounting b. A broad term that describes all information provided to external
users, including but not limited to financial statements
___3.Financial Reporting c. An important quality of accounting information that allows
investors, creditors, management and other users to rely on the
information.
___4.Financial Statements d. The segment of the accounting profession that relates to
providing audit, tax, and consulting services to clients
___5.General Purpose Assumption e. Statement of financial position, Income Statement and Statement
of Cash Flows
___ 6. Integrity f. The fact that the same information is provided to various
external users, including investors and creditors
___7.Public Accounting g. The area on accounting that refers to providing information to
support internal management decisions
___8.Bookkeeping h. The area of accounting that refers to providing information to
support external and credit decisions.
8/21/2020 ACC 13 BNC 76
■ Exercise L2E –05
■ The major focus of accounting information is to facilitate
decision making.
– A. As an investor in a company, what would be your
primary objective?
– B. As a manager of a company, what would be your
primary objective?
– C. Is the same accounting information likely to be equally
useful to you in these two different roles?
8/21/2020 ACC 13 BNC 77

■ Exercise L2E-06
■ Management accounting information is used primarily for
internal decision making by an enterprise’s management.
– A. What are the three primary purposes of management
accounting information?
– B. Which of these are the most general and which is the
most specific?
– C. Give at least 3 examples of the kind of decisions that
management accounting information supports.
8/21/2020 ACC 13 BNC 78

LESSON 3 –
THE ACCOUNTING EQUATION
Nature of Business Transactions
Concept of Accounting Equation
Relationship of Assets, Liabilities & Equity
Significance of Retained Earnings in a Corporation
8/21/2020 ACC 13 BNC 79

Learning Objectives
■ After studying this chapter, you should be able to:
– Describe the nature of a business transaction
– Explain the concept of accounting equation
– Explain the relationship of assets, liabilities and
equity as reflected in the accounting equation
– Define a business entity’s
■ Assets
■ Liabilities
■ Equity
– Explain the significance of retained earning in a
corporation
– State the effect of a business transaction on the
accounting equation
8/21/2020 ACC 13 BNC 80
Accounting Events vs Transactions
 Accounting Event is an economic
occurrence that cause changes in an
enterprise’s assets, liabilities, and/or equity
– Internal – e.g. use of equipment for the production
– External – e.g. purchase of raw materials from
supplier
 Transaction is a particular kind of event that

involves the transfer of something or value
between two entities.
– e.g. acquiring assets from owners, borrowing funds from
creditors, purchasing or selling goods or services
8/21/2020 ACC 13 BNC 81

How do transactions affect the accounting equation?
■ An accounting transaction is an economic event that must
be recorded in the company’s accounting records.
– Any event that affects any of the elements of the
accounting equation – assets, liabilities & owner’s
equity.
■ An accounting transaction affects at least two elements of
the accounting equation, but the accounting must always
remain in balance.
■ Accounting Equation – reflect the relationship of assets,
liabilities & owner’s equity
■ Formula: Assets = Liabilities + Owner’s Equity
8/21/2020 ACC 13 BNC 82

8/21/2020 ACC 13 BNC 83
Stockholder’s Equity -
■ In a corporation, owners’ equity also known as shareholders
equity is represented by the following:
■ A. Contributed Capital which refers to the amount that
shareholders invest in the company – included under the title
ORDINARY SHARE CAPITAL
■ B. Retained Earnings which refers to income (revenues less
expenses) that is not distributed to its shareholders. The
distribution of assets to shareholders is called DIVIDENDS which
reduce retained earnings.
8/21/2020 ACC 13 BNC 84

Illustrative Problem
■ Separate worksheet – EXCEL file

■ (to be discussed in classroom if F2F is permitted)
8/21/2020 ACC 13 BNC 85

End of Lesson..
■ Answer: Lesson 3 QUIZ No. 3 (to be given after discussion)
■ Assignment:
– Read on Topics: Basic Financial Statements
■ Statement of Comprehensive Income
■ Statement of Financial Position
■ Statement of Changes in Equity
■ Statement of Cash Flows
■ Notes to Financial Statements
■Thank you….
8/21/2020 ACC 13 BNC 86

FAR Prelim For Printing PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FAR Prelim For Printing PDF

Uploaded by

Copyright:

Available Formats

Welcome

8/21/2020 ACC 13 BNC 1

8/21/2020 ACC 13 BNC 2

Accounting Fundamentals Made Easy 2019 5th ed

8/21/2020 ACC 13 BNC 3

– Note: Topics will be given in advance. For effective and

8/21/2020 ACC 13 BNC 4

8/21/2020 ACC 13 BNC 5

8/21/2020 ACC 13 BNC 8

8/21/2020 ACC 13 BNC 9

8/21/2020 ACC 13 BNC 10

8/21/2020 ACC 13 BNC 12

8/21/2020 ACC 13 BNC 14

8/21/2020 ACC 13 BNC 15

8/21/2020 ACC 13 BNC 16

8/21/2020 ACC 13 BNC 21

8/21/2020 ACC 13 BNC 22

8/21/2020 ACC 13 BNC 26

■ Answer : Exercises Code: L1E -01 to L1E-03

■ Prepare for a QUIZ

8/21/2020 ACC 13 BNC 27

8/21/2020 ACC 13 BNC 28

8/21/2020 ACC 13 BNC 29

8/21/2020 ACC 13 BNC 30

8/21/2020 ACC 13 BNC 31

■ Accounting is the information system that measures business

8/21/2020 ACC 13 BNC 33

8/21/2020 ACC 13 BNC 34

8/21/2020 ACC 13 BNC 35

■ Accounting is -an information system

8/21/2020 ACC 13 BNC 36

8/21/2020 ACC 13 BNC 37

■ Accounting is - a service activity (Accounting Stand

8/21/2020 ACC 13 BNC 38

• Accounting is - both an art and discipline (Communication on

8/21/2020 ACC 13 BNC 39

■ Accounting -deals with financial information and transactions

8/21/2020 ACC 13 BNC 40

8/21/2020 ACC 13 BNC 44

8/21/2020 ACC 13 BNC 46

◦ EXTERNAL USERS: people outside the company.

◦ INTERNAL USERS: are people within the company

8/21/2020 ACC 13 BNC 47

■ Users of the financial information in a company can be

8/21/2020 ACC 13 BNC 50

8/21/2020 ACC 13 BNC 51

8/21/2020 ACC 13 BNC 53

8/21/2020 ACC 13 BNC 54

■ Users of the financial information in a company can be

8/21/2020 ACC 13 BNC 55

8/21/2020 ACC 13 BNC 56

8/21/2020 ACC 13 BNC 57

8/21/2020 ACC 13 BNC 58

8/21/2020 ACC 13 BNC 59

8/21/2020 ACC 13 BNC 60

 Audited Financial Statements – validated Financial Statements

External Creditors Approve, grant or decline Financial Statements

External Investors Decide whether or not to All types of Financial

External Government Assess the tax liabilities of Financial Statements

SUMMARY – EXTERNAL USERS

External Regulatory Check if the company All types of Financial

External Competitors Assess the strategies used by All types of

SUMMARY – EXTERNAL USERS