FABM1

ACCOUNTI
NGTERMI
NOLOGI
ES

Accountisafor malrecor
dthatr
epresents,i
nwor ds,
moneyorotheruni
tofmeasur
ement ,
cer
tainresources,cl
aimstosuchresources,t
ransact
ionsorot
herevent
sthatr
esul
tinchanges
tothoseresourcesandclaims

Accounti
ngistherecordi
ngandrepor
tingoffi
nanci
alt
ransact
ions,i
ncl
udingt
heori
ginat
ionof
thetr
ansact
ion,i
tsrecogni
ti
on,pr
ocessing,
andsummar i
zati
onintheFINANCIALSTATEMENTS

Account
ingequat
ioni
sasset
sequal
sli
abi
l
iti
espl
usequi
ty.(
A=L+E)

Account
ingper
iod/yeari
saper
iodof12consecut
ivemonthschosenbyanent
it
yasi
ts
ACCOUNTINGper i
odwhichmayormaynotbeacal endaryear
.

AccountsPay
abl
eist
heamountowedt
oaCREDI
TORf
ordel
i
ver
edgoodsorcompl
eted
ser
vices

Accountsrecei
vabl
eareamount
scoll
ect
iblefr
om i
tscust
omers.I
tist
heclai
m agai
nsta
DEBTORf oranuncoll
ect
edamount
,general
lyfr
om acomplet
edtr
ansact
ionofsal
esorser
vices
render
ed.

Adj
ust
ingjournalent
ri
esareaccount
ingent
ri
estoaccountf
oraper
iodschanges,
omi
ssi
onsor
ot
herf
inancialdatar
equi
redtobereport
ed"i
nthebooks"

Adj
ust
edTr
ial
Bal
ancer
efl
ect
stot
alsaf
tert
headj
ust
ingent
ri
esar
epost
edt
othegener
all
edger
.

Assetr
epr
esent
sfut
urebenef
itt
othecompanywi
thr
eli
abl
emeasur
ement
Account
ingManual
isadocumentpreparedtopr
ovidebookkeeper
swi
thdi
rect
ionandgui
dance
i
nconnecti
onwitht
hosebookkeepi
ngrequir
ementsofenti
ti
es

Balanceist
heSum ofDEBI
Tentri
esmi
nust
heSUM ofCREDITent
ri
esi
nanACCOUNT.I
f
positi
ve,
thedi
ff
erencei
scal
ledaDEBI
TBALANCE;
ifnegat
ive,
aCREDI
TBALANCE

Bal
anceSheetr
epor
tst
hef
inanci
alposi
ti
onatapoi
nti
nti
me(
endoft
hequar
terory
ear
).

Bookkeepingistherecordi
ngofall
financialt
ransact
ionsunder takenbyabusiness(oran
i
ndividual
).Abookkeeper(orbook-
keeper),sometimescal l
edanaccount ingcl
erkintheisa
personwhokeepst hebooksofanor ganizati
on.Theor ganizat
ionmi ghtbeabusiness,achar
it
y
orevenal ocalspor
tsclub

Businessist
hesoci
alsci
enceofmanagingpeopletoorgani
zeandmaint
aincol
l
ect
ive
producti
vi
tyt
owardaccompli
shi
ngpart
icul
arproducti
vegoals,
whichi
susual
lyt
ogenerat
e
profi
t

Capi
tal
iscal
l
edequi
ty.

Cashusual
l
yref
erst
omoneyi
nthef
orm ofl
i
qui
dcur
rency
,suchasbanknot
esorcoi
ns.

CashPay mentsJour
nal i
sabookusedtorecordal
lpay
mentsmadei ncashsuchasf
or
accountspayabl
e,merchandi
sepur
chases,andoper
ati
ngexpenses;
alsoter
medcash
di
sbursementsjour
nal

CashRecei
ptsJournal
sisabookusedtorecor
dallcol
lect
ionsmadei
ncashsuchasf
or
account
srecei
vabl
e, mer
chandi
sesol
d,andint
eresti
ncome.
Char
tofAccount
sisasy
stemat
icl
i
sti
ngofal
laccount
susedbyanent
it
y.

Cl
osi
ngent
ri
esar
epr
epar
edaf
tert
hef
inanci
alst
atement
shav
ebeencompl
eted.

Cor
por
ati
on-i
saf
orm ofdoi
ngbusi
nesspur
suantt
oachar
tergr
ant
edbygov
ernment
.

Credi
t(cr
)-meansanentr
ytotherighthandsideofanaccount.Entr
yontheri
ghtsi
deofa
DOUBLE-ENTRYBOOKKEEPINGsy stem t
hatrepresentsther
educt
ionofanASSETorexpense
ortheaddi
ti
ontoaLI
ABILITYorREVENUE.( SeeDEBI T.)

Debi
t(dr
)-meansanentr
ytothel
efthandsideofanaccount.Entr
yonthel
eftsi
deofa
DOUBLE-ENTRYBOOKKEEPI
NGsystem thatrepr
esentstheaddi
ti
onofanASSETorexpenseor
t
hereducti
ontoaLI
ABILI
TYorREVENUE.( SeeCREDIT.)

Depreci
ati
onistheprocessofall
ocati
ngt
hecostofpr
oper
ty,
plantandequi
pmentasset
stot
he
per
iodsthatwil
lbenefi
tfrom i
tsuse

Di
videndincomei
sincomereceivedfr
om owner
shipshar
esinacor
por
ati
on.Adi
vi
dendi
sa
di
stri
buti
ontoacorpor
ati
onsstockhol
der
susuall
yincash;

Document
sarebasesofrecor
dingtransacti
onsi
nbookkeepi
ng.Thi
smayi
ncl
udebutnot
l
imit
edtosal
esi
nvoiceandoffi
cial
receipts.

Dr
awi
ngi
swhenabusi
nesspr
opr
iet
ordr
awsmoneyf
orper
sonal
needs

Equi
tyr
epr
esent
sther
esi
dual
clai
msofowner
s

Expensesrepr
esentt
heout
fl
owofasset
s(ori
ncr
easesi
nli
abi
l
iti
es)duet
oacompany
’s
operat
ingacti
vi
ti
es.
Financialst
atementsreportt
hebusinessact i
vit
iesduri
ngthey earandthefinanci
alcondi
ti
onat
theendoft heyear.I
tisalsothepresentat
ionoff i
nanci
aldataincludi
ngBALANCESHEETS,
I
NCOMESTATEMENTSandSTATEMENTSOFCASHFLOW, oranysuppor t
ingstatementt
hati
s
i
nt endedtocommuni cateanentit
y'
sf i
nancialposit
ionatapointintimeandi t
sresult
sof
oper at
ionsforaperi
odt henended.

Gener
all
yaccept
edaccount
ingstandar
ds(GAAP)det
erminewhatt
orecor
d,whentorecor
d,and
amounttor
ecord.I
tisal
sotherul
es,andpr
ocedur
esnecessar
ytodef
ineaccept
edaccount
ing
pr
acti
ceataparti
cul
arti
me.

Gener
alJour
nal
ist
hemostbasi
cofj
our
nal
s.I
tisachr
onol
ogi
cal
li
stoft
ransact
ions.

GeneralLedgeri
sthecoll
ecti
onofal
lASSET,LI
ABI
LITY,ownersEQUITY,REVENUE,and
expenseaccounts.Thi
sisabookofaccount
sinwhi
chdat af
rom tr
ansacti
onsrecor
dedin
j
ournalsarepost
edandt her
ebycl
assi
fi
edandsummar i
zed.Al
socalledl
edger.

I
ncomeistheinf
lowofREVENUEduri
ngaperi
odofti
me.Thi
salsomoneyr
ecei
vedbyaper
son
oror
gani
zati
onbecauseofef
for
t(wor
k),
orfr
om r
etur
noninvest
ment
s.

IncomeSt at
ementshowst
hecomponentsofneti
ncomei
ndet
ail
.Iti
sthesummar
yoft
he
effectofREVENUESandexpensesov
eraperi
odofti
me.

I
ncomeTaxesPay
abl
eisi
ncomet
axesduei
ncl
udi
ngcur
rentpor
ti
onofdef
err
edt
axes.

I
nter
estI
ncomei
ncl
udesamount
sfr
om i
nter
estonal
li
nter
est
-bear
ingdeposi
tsandaccount
s.

I
nter
nalContr
oli
sthepr
ocessdesi
gnedt
oprovidereasonabl
eassur
anceregarding
achi
evementofv
ari
ousmanagementobj
ect
ivessuchast her
eli
abi
li
tyoff
inancialr
epor
ts.
I
nvent
ori
esar
epr
oduct
sonhandf
orsal
etocust
omer
s.

Jour
nal
isabookwher
eal
ltr
ansact
ionsar
eini
ti
all
yrecor
ded.

Journalentryaretheloggingofbusinesstransact
ionsandthei
rmonet aryv al
ueintothet-
accountsoft heaccounti
ngj our
nalaseitherdebit
sorcredi
ts.Ajournal entryisusuall
ybacked
upwi t
hapi eceofpaper ;arecei
pt,
abi l
l,aninvoi
ce,orsomeotherdirectr ecordofthe
tr
ansaction;makingthem easytorecor dandt omaintai
ntr
aceabil
i
tyf oreacht ransacti
on.

Jour
nal
i
zet
ransact
ionsi
sthepr
ocessofr
ecor
dingabusi
nesst
ransact
ioni
naj
our
nal
.

Ledgerisatoolusedforclassi
fyi
ngandsummar i
zi
ngi
nfor
mat
ionabouti
ncr
eases,
decr
eases,
andbalancesofitemsinthechartofaccount
s.

Li
abil
i
tyrepr
esent
sobli
gations,
payabl
esordebtsowed.DEBTSorobli
gati
onsowedbyone
ent
it
y(DEBTOR)toanotherenti
ty(
CREDITOR)payabl
einmoney,goods,orser
vices

LoansPay
ablei
stheaccountti
tl
eusedt
orecor
damount
stobepai
dforbor
rowedmoney
.Thi
s
i
salsocal
ledNot
esPayable.

NotesPayabl
eistheaccountt
it
leusedtorecor
damountstobepai
dforbor
rowedmoneyand
evi
dencedbyapromissorynot
e.Thisi
salsocall
edLoansPay
abl
e.

Of
fi
cial
recei
ptsi
sadocumenti
ssuedt
oacknowl
edger
ecei
ptofcash.

Partnershi
pisafor
m ofent
it
ywi t
ht woormoreowner
s.Rel
ati
onshi
pbetweent
woormore
personsbasedonawr i
tt
en,oral
,orimpli
edagr
eementwher
ebytheyagr
eetocarr
yonat
radeor
businessforpr
ofi
tandshar
ether esul
ti
ngprof
it
s.
Phi
li
ppi
neFinanci
alReport
ingStandardsof
tenknownasPFRSareasetofaccount
ing
st
andar
ds.TheyareissuedbytheFinanci
alRepor
ti
ngStandar
dsCounci
l
.[FRSC]
.

PostCl
osi
ngTr
ial
Bal
ancei
sbal
ancesheeti
ntr
ial
bal
ancef
orm.

Prel
i
minaryTri
alBalanceisali
sti
ngoftheaccount
sint
hegeneral
ledgerandt
heirbal
ancesas
ofaspeci
fieddate.Atri
albal
anceisusual
lypr
epar
edattheendofanaccount
ingperi
odandis
usedtoseeifaddit
ionaladj
ust
mentsarerequi
redt
oanyofthebal
ances.

Post
ingi
sthepr
ocessoft
ransf
err
ingf
igur
esf
rom t
hej
our
nal
tot
hel
edgeraccount
s

Pr
oper
tyPl
antandEqui
pmentar
easset
susedi
nthepr
oduct
ionofgoodsandser
vices

Purchasei
nvoi
ceisabi
l
lfr
om av endorf
orspecif
icmater
ial
sorsuppl
iesf
urni
shedorser
vices
render
ed.I
tiscal
l
edsal
esinv
oicefrom t
hepointofvi
ewofthesell
er.

Pur
chasesJournal
.Thisisapayablesyst
em i
nvol
vesaPur
chasesJour
nal
--i
nwhi
chal
l
i
ncomingmerchandiseinvoi
cesarerecor
ded.

Rat
ioAnalysi
sist
hecompari
sonofactual
orproj
ecteddataforaparti
cul
arcompanyt
oot
her
dat
aforthatcompanyori
ndust
ryi
nordertoanal
yzetrendsorrel
ati
onshi
ps

Recei
vabl
esar
eamount
sofmoneyduef
rom cust
omer
sorot
herDEBTORS

Rentexpensei
stheexpendi
tur
emadet
ocov
ert
her
ent
alf
ort
hepr
emi
ses.

Rentincomeismoneyr
ecei
vedbyaper
sonoror
gani
zat
ionf
rom r
ent
alofpr
emi
sesand/
or
otherasset
s.
Retai
nedEar
ningsarepr
ofi
tsoft
hebusi
nesst
hathav
enotbeenpai
doutt
otheowner
sasof
thebal
ancesheetdat
e.

Revenuerepresentst
heinfl
owofasset
s(ordecreasei
nliabi
li
ti
es)dueoper
ati
ngact
ivi
ti
es.Thi
s
mayincludesalesofproduct
s,mer
chandi
se,andservi
ces;andearni
ngsfr
om I
NTEREST,
DIVI
DEND, rents.

Rout
inejour
nal
entri
esRecurri
ngf
inanci
alact
ivi
ti
esr
efl
ect
edi
ntheaccount
ingr
ecor
dsi
nthe
nor
mal cour
seofbusiness.

Sal
ari
es/wagesexpenseisanaccountt
it
leusedt
orecor
dsal
ari
es,
wages,
andbenef
it
san
employeer
eceiv
esfrom anemployer
.

Sal
esJour
nalThisi
sarecei
vabl
essyst
em i
nvol
vesaSal
esJour
nal
--i
nwhi
chal
li
nvoi
ces
out
goi
ngtocustomersar
erecor
ded.

Sal
esi nv
oiceisadocumentissuedbyavendorf
orspeci
fi
cmater
ial
sorsuppl
iesfurni
shedor
ser
vicesrendered.I
tiscal
l
edpurchasei
nvoi
cefr
om thepoi
ntofv
iewofthesell
er.

SolePropri
etor
shi
pisaf
orm ofent
it
ywi
thoneownerandt
hesi
mpl
estpossi
blef
orm of
business.

Stat
ementofCashFl owr eport
ssour cesandusesofcash.Thisisoneoft hebasicfinancial
stat
ement st
hatarerequiredaspartofacompl et
esetoff i
nancialstatementspreparedi n
confor
mitywithgeneral
lyacceptedaccounti
ngprincipl
es.I
tcategorizesnetcashpr ovidedor
usedduringaperi
odasoper at
ing,i
nvesti
ngandfinanci
ngactivi
ties,
andr econci
lesbegi nning
andendingcashandcashequi val
ents

StatementofChangesi
nEqui
tyexpl
ainst
hechangesi
ncont
ri
but
edcapi
tal
andr
etai
ned
earningsdur
ingt
heperi
od.
Subsidi
aryLedgerisagroupofsubsidi
aryaccountsthesum ofthebal
ancesofwhi
chi
sequal
tothebalanceoftherel
atedcont
rolaccountinthegeneral
ledger

Transact
ionsandevent
sarerecordedast
heyoccur
,recor
dedev
eni
fcashi
snotr
ecei
vedor
paidandaffect
stheaccount
ingequati
on.

Tr
ial
bal
anceconf
ir
mst
hataccount
sar
est
il
li
nbal
ance.

Uti
l
iti
esex
pensei
sanaccountt
it
leusedt
orecor
damounti
ncur
redonheat
,li
ght
,wat
er,
and
power.

Voucher
sisawr
it
tenr
ecor
dofexpendi
tur
e,di
sbur
sement
,orcompl
etedt
ransact
ion.

Worksheeti
sadocumentorschedul
einwhi
chabookkeeperusest
ogat
heri
nfor
mat
iont
o
subst
anti
ateanaccountbal
ance.