(Accountancy)

Notes 1

Date: 08/12/21

accounting
Nature of Accounting “Accounting is the


It is a process,
It is an art,
language of
 Also a service activity.

Aspects of accounting
business.”
Warren Buffett
Recording Classifying
• Writing down of business transactions • Sorting similar and related business
chronologically in the books of account transactions into the three categories of
Summarizing
as they aspire. Interpreting
assets, liabilities, and owner’s equity.

• Preparing the financial statements from • Representing the qualitative and

the transactions recorded in the books quantitative financial information about
of account that are designed t meet the the business transactions in a language
information needs of its users. comprehensible to the users of financial
statements.
Aicpa & picpa
Definition of Accounting
• An art of recording, classifying, and summarizing in a significant manner and in terms of
money, transaction, and events which are in part at least of a financial character, and
interpreting the result thereof. (American Institute of Certified Public Accountant)
• A service activity to provide quantitative information, primarily financial in nature, about
economic entities, that is intended to be useful in making economic decisions.
(Philippine Institute of Certified Public Accountant)
 ACCOUNTANTS
Financial Accountants Managerial Accoutants Cost Accountants
Provide information to external Provide information to internal Provide information to both
parties: users: internal and exteral users:

• Investors • Managers • Product cost information

• Creditors
• Regulators

Other Branches of Accounting

government Accounting
 The financial records of all transactions involving receipt and
disposition of government funds and property.
 Commission of Audit (COA), Department of Budget and
Management (DBM), and Bureau of Treasury (BTr) are
responsible in performing government accounting functions.

auditing
 Examination and review of accounting reports in order to ascertain the
fairness, propriety, and reliability.
 Independent auditor’s opinion provides reasonable assurance that
fairly present the company’s financial position and results of operation
in accordance with the GAAP.

TAX Accounting
 Accountants work closely with clients in order to avoid tax problems.
 Tax services provided by accountants include the preparation of
monthly value added tax, percentage tax, expanded with holding tax
returns, quarterly and annua tax returns and any other taxes
application to business.

Accounting Education
 It involves planned grading and formal teaching in an educational
institution.

Accounting research
 Conducts study to discover and interpret facts, revise accepted
theories in the light of new facts, or apply all of these for the
generation’s new knowledge.
 It includes collecting information for the creation of new standards in
accounting, being updated on events that might affect the profession
or discovering new theories that will have an impact on existing
accounting knowledge.
Users of financial information

Provides financial resources

Stockholders
to keep the business going.
(Investors/Owners)
Internal Users
Organizational
• Primary users of financial
managers use
information who are directly Management financial information
involved in managing the
company’s daily operations. to set goals for their
companies.
• Decision makers who make the
strategic and operational
decisions for the company.
They have the rights to
Employees know the financial
information of the
company to determine
if they have a future in
the company.

Financial institutions use financial

Creditors
information before extending
credit to determine the solvency of
External Users the business.

• Secondary users of financial

Financial information is
information who are parties
outside the company. Government important for tax
purposes and in
• Their decisions may checking of compliance
significantly affect the state of with SEC requirements.
the business even though they
are not directly involved in the
company’s operations.
Company’s financial
Potential Investors history if also essential
for potential investors or
creditors to decide
whether they will invest
or not.