Review of

Basic
Accounting
Definitions of Accounting
ACCOUNTING 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
DECISIONS.

- Accounting Standards Council (ASC)

Definitions of Accounting
ACCOUNTING is the ART of RECORDING,
CLASSIFYING, and SUMMARIZING in a
significant manner and IN TERMS OF
MONEY, TRANSACTIONS and EVENTS which
are in and part at least of a FINANCIAL
character INTERPRETING the results thereof.

- American Institute of Certified Public

Accountants (AICPA)
Definitions of Accounting
ACCOUNTING is the PROCESS of
IDENTIFYING, MEASURING and
COMMUNICATING economic INFORMATION
to permit INFORMED JUDGMENT and
DECISIONS by USERS of the information.

- American Accounting Association (AAA)

Definitions of Accounting
ACCOUNTING is the LANGUAGE of
BUSINESS.

- Warren Buffet (Chairman/CEO of Berkshire

Hathaway)
Definition of Business
The term "business" refers to the organized
efforts and activities of individuals to
produce and sell goods and services either
to generate a profit, fulfill a charitable
mission or further a social cause.

- investopedia.com (modified definition)

Forms of Business Organizations
Sole Proprietorship – a form of business organization
that is owned and “usually managed” by an
individual known as the “Sole Proprietor”

Partnership – a contract between two or more

persons who bind themselves to contribute money,
property, or industry to a common fund, with the
intention of dividing the profits among themselves.

Corporation - an artificial being created by

operation of law, having the right of succession and
the powers, attributes, and properties expressly
authorized by law or incidental to its existence
Types of Business Operations
Service – offers services (professional or non-
professional) to clients in exchange for a fee

Merchandising – buys and resells goods without

changing its substance

Manufacturing – buys raw materials and

converts them, through the application of labor
and incurrence of overhead, into finished
products for sale
Practice Fields/ Areas of the
Accountancy Profession

Private Accounting

Government Accounting

Public Accounting

Education/ Academe
Generally Accepted Accounting Principles

GAAPS represent rules, procedures, practice

and standards followed in the preparation
and presentation of financial statements

PHILIPPINE FINANCIAL REPORTING STANDARDS

(GAAP in the Philippines) include:
1. PFRS (IFRS)
2. PAS (IAS)
3. Philippine Interpretations (IFRIC and SIC)