Fundamentals of Accountancy,

Business and Management 1

FABM1

Jeffrey R. Jampolina
Instructor
Binalbagan Catholic College
 GRADING SYSTEM (SHS)
WRITTEN WORKS 60%
PERFORMANCE TASKS 40%
TOTAL 100%
 GRADING SYSTEM (College)
EXAM 30%
QUIZZES 40%
CLASS STANDING/OUTPUT 30%
TOTAL 100%
Course Description

▪ This is an introductory course in

accounting, business, and management
data analysis that will develop students’
appreciation of accounting as a language
of business and an understanding of
basic accounting concepts and
principles that will help them analyze
business transactions.
 Course Contents
1. Introduction to Accounting
Define accounting
Describe the nature of accounting
Explain the function of accounting in
business
Narrate the history/origin of accounting
2. Branches of Accounting
Differentiate the branches of accounting
Explain the kind/type of services
rendered in each of these branches.
 Course Contents
3. Users of Accounting Information
Define external users and give examples
Define internal users and give examples
Identify the type of decisions made by
each group of users.
Describe the type of information needed
by each group of users
4. Forms of Business Organizations
Differentiate the forms of business
organizations.
Identify the advantages & disadvantages.
 Course Contents
5. Types of Business According to Activities
Compare and contrast the types of
business according to activities
identify the advantages, disadvantages,
and business requirements of each type
6. Accounting Concepts and Principles
explain the varied accounting concepts
and principles
solve exercises on accounting principles
as applied in various cases
 Course Contents
7. The Accounting Equation
Illustrate the accounting equation
Perform operations involving simple cases with the
use of accounting equation
8. Types of Major Accounts
Discuss the five major accounts
Cite examples of each type of account
Prepare a chart of accounts
9. Books of Accounts
Identify the uses of the two books of accounts
Illustrate the format of a general and special
journals
Illustrate the format of a general and subsidiary
ledger
 Course Contents
10. Business Transactions and Their Analysis As
Applied to the Accounting Cycle of a Service
Business
Describe the nature and give examples of
business transactions
Identify the different types of business
documents
Analyze common business transactions
using the rules of debit and credit.
Solve simple problems and exercises in
the analyses of business transaction
 Course Contents
11. Business Transactions and Their Analysis As
Applied to the Accounting Cycle of a Service
Business
Records transactions of a service
business in the general journal
Posts transactions in the ledger
Prepare a trial balance
Prepare adjusting entries
Complete the accounting cycle
 Course Contents
12. Accounting Cycle of a Merchandising Business
Describe the nature of transactions in a
merchandising business
Records transactions of a merchandising
business in the general and special journals
Posts transactions in the general and
subsidiary ledgers
Prepare a trial balance
Completes the accounting cycle of a
merchandising business
Prepare the Statement of Costs of Goods
Sold and Gross Profit
 Fundamentals of Accountancy,
Business and Management 1

01 - Introduction to Accounting

Jeffrey R. Jampolina
Instructor
Binalbagan Catholic College
Learning Objectives

1. Define Accounting.
2. Describe the nature of Accounting.
3. Explain the functions of Accounting in
Business.
4. Narrate the history/origin of Accounting.
Definition of Accounting

ACCOUNTING is the process of

Identifying,
Recording, and
Communicating

economic events of an organizations to

interested users. (Weygant, J. et. al.)
Definition of Accounting

IDENTIFYING involves selecting economic

events (or transactions) that are relevant to a
particular business transaction.
Examples of economic events:
Sales bread and other bakery products
Purchases of flour that will be used for
baking
Purchases of trucks needed to deliver
the products
Definition of Accounting

RECORDING involves keeping a

chronological diary of events that are
measured in pesos. (Journals and Ledgers)

COMMUNICATING – occurs through the

preparation and distribution of financial and
other accounting reports.
Nature of Accounting

▪ Service activity
▪ Process
▪ Art and Discipline
▪ Deals with Financial Information and
Transactions.
▪ Information System
Function of Accounting

▪ Provide information for managers and

owners to use in operating the business.
▪ Accounting information allows business
owners to assess the efficiency and
effectiveness of their business operations.
▪ Accounting helps the users of the
financial reports to see the true picture of
the business in financial terms.
 Fundamentals of Accountancy,
Business and Management 1

02 - Branches of Accounting

Jeffrey R. Jampolina
Instructor
Binalbagan Catholic College
Learning Objectives

1. Differentiate the branches of accounting.

2. Explain the kinds/types of services
rendered in each of these branches.
 Branches of Accounting

1. Financial Accounting
2. Management Accounting
3. Government Accounting
4. Auditing
5. Tax Accounting
6. Cost accounting
7. Accounting Education
8. Accounting Research
Financial Accounting

▪ Financial Accounting is the broadest branch and

is focused on the needs of external users.
▪ Financial accounting is primarily concerned with
the recognition, measurement and
communication of economic activities.
▪ This information is communicated in a complete
set of financial statements.
▪ It is assumed under this branch that the users
have one common information need.
▪ Financial accounting conforms with accounting
standards developed by standard-setting bodies.
Management Accounting

▪ Management Accounting emphasizes the preparation

and analysis of accounting information within the
organization.
▪ The objective of managerial accounting is to provide
timely and relevant information for those internal users of
accounting information, such as the managers and
employees in their decision-making needs.
▪ Oftentimes, these are sensitive information and is not
distributed to those outside the business - for example,
prices, plans to open up branches, customer list, etc.
▪ Managerial accounting involves financial analysis,
budgeting and forecasting, cost analysis, evaluation of
business decisions, and similar areas.
Government Accounting

▪ This branch of accounting deals with how

the funds of the government are recorded
and reported.
▪ What are the sources of income of the
government?
▪ Where do these income go?
AUDITING

▪ Internal and External.

▪ External Auditing refers to the examination of
financial statements by an independent CPA
(Certified Public Accountant) with the purpose of
expressing an opinion as to fairness of presentation
and compliance with the generally accepted
accounting principles (GAAP).
▪ Internal Auditing focuses on evaluating the
adequacy of a company's internal control structure
by testing segregation of duties, policies and
procedures, degrees of authorization, and other
controls implemented by management.
TAX Accounting

▪ Tax accounting helps clients follow rules

set by tax authorities. It includes tax
planning and preparation of tax returns.

▪ It also involves determination of income

tax and other taxes, tax advisory services
such as ways to minimize taxes legally,
evaluation of the consequences of tax
decisions, and other tax-related matters.
Cost Accounting

▪ Sometimes considered as a subset of management

accounting, cost accounting refers to the recording,
presentation, and analysis of manufacturing costs.
▪ Cost accounting is very useful in manufacturing
businesses since they have the most complicated
costing process.
▪ Cost accountants also analyze actual and standard
costs to help managers determine future courses of
action regarding the company's operations.
▪ Cost accounting will also help the owner set the
selling price of his products.
Accounting Education

▪ This branch of accounting deals with developing

future accountants by creating relevant accounting
curriculum.
▪ Accounting professionals can become faculty
members of educational institutions.
▪ Accounting educators contribute to the development
of the profession through their effective teaching,
publications of their research and influencing students
to pursue careers in accounting.
▪ Accounting teachers share their knowledge on
accounting so that students are informed of the
importance of accounting and its use in our daily
Accounting Research
▪ Accounting research focuses on the search for new
knowledge on the effects of economic events on the
process of summarizing, analyzing, verifying, and reporting
standardized financial information, and on the effects of
reported information on economic events.
▪ Researchers typically choose a subject area and a
methodology on which to focus their efforts.
▪ Academic accounting research "addresses all aspects of the
accounting profession" using a scientific method.
▪ Practicing accountants also conduct accounting research
that focuses on solving problems for a client or group of
clients.
▪ The Accounting research helps standard-setting bodies
around the world to develop new standards that will address
recent issues or trend in global business.
 Fundamentals of Accountancy,
Business and Management 1

03 - Users of Accounting Information

Jeffrey R. Jampolina
Instructor
Binalbagan Catholic College
 Learning Objectives

1. Define external users and give examples.

2. Define internal users and give examples.

3. Identify the types of decisions made by each

group of users.

4. Describe the type of information needed by

each group of users.
Internal Users

▪ Internal users of accounting information are

those individuals inside a company who plan,
organize, and run the business.

▪ These users are directly involved in managing

and operating the business. These include
marketing managers, production supervisors,
finance directors, company officers and owners.
Internal Users
▪ Management:
Information Need: income/earnings for the period,
sales, available cash, production cost.
Decision Supported: analyze the organization's
performance and position and take appropriate
measures to improve the company results.
sufficiency of cash to pay dividends to stockholders;
pricing decisions.
▪ Employees:
Information Need: profit for the period, salaries.
Decision Supported: job security, consider staying
in the company or look for other employment
opportunities.
Internal Users
▪ Owners:
Information Need: income/earnings for the
period, resources or assets of the business,
liabilities of the business.
Decision Supported: considerations regarding
additional investment, expanding the business,
borrowing funds or financing.

▪ Accounting information is presented to internal

users usually in the form of budgets, forecasts and
financial statements. This information will support
whatever decision of the internal users.
External Users
▪ External users are individuals and organizations outside a
company who want financial information about the
company.
▪ These users are not directly involved in managing and
operating the business.
▪ The two most common types of external users are potential
investors and creditors.
▪ Potential Investors use accounting information to make
decisions to buy shares of a company.
▪ Creditors (such as suppliers and bankers) use accounting
information to evaluate the risks of granting credit or
lending money.
▪ Also included as external users are government regulatory
agencies SEC, BIR, DOLE, SSS, and LGUs.
 Fundamentals of Accountancy,
Business and Management 1

04 - Forms of Business Organizations

Jeffrey R. Jampolina
Instructor
Binalbagan Catholic College
 Learning Objectives

1. Differentiate the forms of business

organizations by nature of ownership.

2. Identify the advantages and disadvantages of

each form.
 Forms of Business Organizations

1. Sole Proprietorship - owned by a single owner

2. Partnership - owned and operated by two or
more persons who bind themselves to
contribute money, property, or industry to a
common fund, with the intention of dividing
profits among themselves.
3. Corporation - owned by stockholders.
4. Cooperative - owned by members with a
common bond of interest, voluntarily joining
together to achieve their social, economic, and
cultural needs.
 Sole Proprietorship

1. Advantages:
The owner keeps all the profits.
The owner makes all the decisions.
Easy to form and operate.
2. Disadvantages:
Life of the business is limited to the life
of the owner.
Limited capital.
 Partnership

1. Advantages:
Higher capital than sole proprietorship.
Easy to operate.
2. Disadvantages:
Profits are divided among partners.
A partner can be held liable for the acts
of the other partners.
Unlimited liability.
 Corporation

1. Advantages:
Ease of capital generation.
Limited liability.
2. Disadvantages:
Complicated to setup.
Higher degree of regulations.
 Cooperatives

1. Advantages:
Enjoys certain tax exemption privilege.
Promotes the concept of sharing resources.

2. Disadvantages:
Limited distribution of surplus.
Requires continuous education program for
members.
Members should have active and direct
participation.
Fundamentals of Accountancy,
Business and Management 1

05 - Types of Business
According to Activities

Jeffrey R. Jampolina
Instructor
Binalbagan Catholic College
Learning Objectives

1. Review the types of business according

to activities.
2. Describe a service entity and give
examples.
3. Describe a merchandising entity and
give examples.
4. Describe a manufacturing entity and
give examples.
Service Business

▪ Offers professional skills, advice, and

consultations.
▪ Examples:
Barber shops
Beauty parlors
Repair shops
Banks
Accounting and Law firms
Merchandising Business

▪ This business buys goods that are ready

for sale and then sell these to customers.
▪ Examples:
Book store
Auto Dealers
Hardware stores
Clothing stores
Supermarkets
Manufacturing Business

▪ Buys raw materials and uses them in

making a new product.
▪ Examples:
Paper mills
Steel mills
Car manufacturers
Drug manufacturers
Mobile phone and other technological
products manufacturer
Fundamentals of Accountancy,
Business and Management 1

06 - Accounting Concepts
and Principles

Jeffrey R. Jampolina
Instructor
Binalbagan Catholic College
Learning Objectives

1. Enumerate the different principles in

accounting.
2. Differentiate each principle.
3. Apply the accounting principle in a
business setting.
Definitions and Examples

▪ Business Entity
▪ Going Concern
▪ Time period
▪ Monetary unit
▪ Objectivity
▪ Historical Cost
▪ Matching
▪ Adequate Disclosure
▪ Conservatism