MODULE (FABM 22) FUNDAMENTAL OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 1

CHAPTER 2- BRANCHES OF ACCOUNTING

Objectives:

1. Define the branches of accounting

2. Explain the New Government Accounting System and
General Appropriations Act (GAA)
3. Differentiate the branches of accounting

BRANCHES OF ACCOUNTING
1. Financial information supplied to external users still has a dominant influence on
internal management information;
2. Other information specialists have been reluctant to become involved in detailed
accounting matters; and
3. Accountants have been quick to absorb new methods and techniques into their
work.
The branches of accounting and their descriptions are discussed as follows:
Bookkeeping
 Is a mechanical task involving the collection of basic financial data. The data are
first entered in the accounting records or the books of accounts, and then
extracted, classified and summarized in the form of income statement, balance
sheet and cash flows statement.
Financial Accounting
 Is focused on the recording of business transactions and the periodic preparation
of reports on results of operations, changes in equity, financial position and cash
flows. Financial accountants accord importance to generally accepted to
accounting principles (GAAP).
Management Accounting
 Is a profession that involves partnering in management decision-making, devising
planning and performance management systems, and providing expertise in
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financial reporting and control to assist management in the formulation and

implementation of an organization’s strategy.
Cost Accounting
 Is the collection, allocation, and control of the costs to produce or supply a product
or service. This accumulation and explanation of actual and prospective cost data
is important to control current operations and to plan for the future.
Financial Management
 The widely accepted objective of the entity is to maximize the value of the firm for
its owners, that is, to maximize shareholder wealth. Decisions cover investment
decision, financing decisions, distributing profits back to investors, and risk
management.
Government Accounting
Definition and Objectives. There are three types of governmental organizational units
in our country, namely: national government local government and government
corporations. They maintain their own accounting systems.
New Government Accounting System (NGAS). NGAS is a simplified set of accounting
concepts guidelines and procedures designed to ensure correct, complete and timely
recording of government financial transactions and production of accurate and relevant
financial reports.
Accounting responsibility. Accounting responsibility emanates from the Constitution,
laws, policies, rules and regulations. The officers charged with the responsibility are the
Commission of Audit (COA), the Department of Budget and Management (DBM), the
Bureau of Treasury (BTr), and the government agencies discharging the functions of the
government to enable it to attain its commitment to the Filipino people.
The Commission of Audit (COA) is an independent constitutional commission that
keeps the general accounts of the government, promulgate accounting rules and
regulations, and submits to the President and Congress an annual report of the
government.
The Department of Budget and Management (DBM) shall be responsible for the
formulation and implementation of the National Budget with the goal of attaining our
national socio-economic plans and objectives.
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The Bureau of Treasury (BTr) is the principal custodian of all national governments
funds. The BTr receive and keep government funds, manage and control the
disbursements.
National Budget. The national budget is the government’s estimate of its income and
expenditures. It is what the government plans to spend for its program and projects and
where the funds will be sourced, whether from revenues or borrowings.
General Appropriations Act (GAA). The GAA is the approved national budget for the
year. This is a consonance with Section 29 (1), Article VI of the 1987 Constitution, “No
money shall be paid out of the Treasury except n pursuance of an appropriation by law.”

Auditing
 is a systematic process of objectively obtaining and evaluating evidence regarding
assertions about economic actions and events to ascertain the degree of
correspondence between those assertions and established criteria and
communicating the results to interested users.
Taxation
 are the lifeblood of the government and their prompt and certain availability are an
imperious need. Taxation is the process or means by which the sovereign, through
its lawmaking body, raises income to defray the necessary expenses of the
government.
Accounting Education
Accountancy research
 Accountancy research is the systematic process of collecting and analyzing
information to increase one’s understanding of the functions of a professional
accountant and contribute of the solution of problems besetting the practice of the
profession.
Forensic Accounting
 Or fraud examination, has been labeled by the AICPA as one of the “sizzling”
career areas in accounting. This practice includes fraud detection, fraud
prevention, litigation support, business valuations, expert witness services and
other investigative services.
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ROLE OF ETHICS IN BUSINESS

Definition
Ethics is concerned with right and wrong and how conduct be judged to be good or bad.
It is about how we should live our lives and, in particular, how we should behave towards
other people. It is therefore relevant to all forms of human activity.
Ethical Dilemma
 Is a situation in which there is no obvious right or wrong decisions but rather a right
or right answer. Business is a good source of ethical dilemmas because its primary
purpose is to make a profit.

Some other ethical dilemmas follows:

 White collar crime is a fact of business life, so be on the lookout for it. Big sums
of money are lost annually due to fraud, embezzlement, theft of equipment and
supplies, false insurance claims, bribery, kickbacks, and other schemes.
 Whistle-blowing refers to going to the authorities or the media with proof that a
company is engaged in wrong-doing. Some people see whistle-blowers as
“squealers,” while others see them as heroes.
 Conflicts of interest arise when a person must play two conflicting roles in a
situation. For example, if the purchaser of a telecommunications company is part-
owner of a company bidding to supply the needs of the telecom firm, then there is
a conflict of interest.
 Fiduciary responsibilities are typically those that an attorney, CPA, financial
advisor, or executor of an estate have toward a client. In a fiduciary relationship,
the professional must put the client’s interests ahead of his own because the client
has placed significant trust in him and his professional abilities.
 Sexual harassment is defined as unwanted repeated or aggressive sexual
commentary or advances of a sexual nature toward another person. It is wrong,
and it can amount to professional suicide.
 Discrimination based on race, religion, ethnicity, gender, age, marital status, or
sexual preference is to be avoided on both legal and ethical grounds.
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For further discussion please refer to the link provided: BRANCHES OF ACCOUNTING
https://www.youtube.com/watch?v=RtC1f29mEKM
For further discussion please refer to the link provided: Government Accounting
https://www.youtube.com/watch?v=SZBvINYMs4U

Reference:
Fundamentals Of Accountancy Business Management 1
Win Ballada,CPA,CBE,MBA Top 2,CPA Board, Author, Basic
accounting 20th Edition
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