College Department

College of Business Administration

Ritchel John H. Arellano, CPA, LPT
Mobile Number: 09399182946/09772442912
Email: rjharellano@gmail.com
Consultation hour: Every Monday, 1:00PM to 3:00PM
August 24, 2020

Dear Student,

Please find enclosed the course materials for the course titled:

ACCTG 1&2: Basic Accounting

We are pleased that you have chosen to study with us here at the College of Business Administration of
Assumption College of Nabunturan. It is our hope that we will be able to provide the support and
information you need to succeed in this course.

I am the instructor of this course and will be your primary point of contact in relation to any academic
matters concerning your study in this course. My contact details are shown above. I look forward to
communicating with you, particularly by email or text messages. I also expect your full participation in our
incoming discussions in google classroom. If you have doubts with the concepts presented, feel free to
ask for clarification by posting questions in the dialog box.

I suggest also that you take time to support your classmates by reading their posts and leaving comments
if you agree with their views and ideas on the topic discussed. By then we will be able to build a supportive
learning community in this course which is essential for the completion of this course.

Once again let me welcome you. I look forward to working with you throughout the semester.

Yours sincerely,

Ritchel John H. Arellano, CPA, LPT

College Part-Time Instructor
 ACCTG 1&2: BASIC ACCOUNTING
Course Outline

Instructor: Ritchel John H. Arellano, CPA, LPT

Semester: 1st Semester AY 2020-2021
Course Credit: 6 Units

Course Description:

This course provides an introduction to accounting within the context of business and business decisions.
Students obtain basic understanding of the principles and concepts of accounting as well as their
applicability and relevance in the national context and learn how to use various types of accounting
information found in financial statements and annual reports. Emphasis is placed on understanding the
reasons underlying basic accounting concepts and providing students with an adequate background on
the recording, classification, and summarization functions of accounting to enable them to appreciate the
varied uses of accounting data.

Contact Hours: 4 hours online and 2 hours consultation per week.

Course Objectives:

At the end of the course, learners are expected to:

1. Live the gospel values of Christ;

2. Effectively communicate orally and in writing using both the English or Filipino language;
3. Explain and describe the nature, functions, scope, and limitations of accounting, its various users
and its relationship with other disciplines and its professional status;
4. Discuss the logic of double entry bookkeeping and the nature and significance of each step in the
accounting cycle;
5. Apply the concept of double entry bookkeeping system and the process of identifying, analyzing,
recording, classifying and summarizing typical business transaction of a single proprietorship
engaged in service or merchandising concern;
6. Analyze business transactions and prepare the correct journal entries and posting it to the ledgers;
7. Identify, compare, and contrast computerized and manual accounting systems, components of
financial statements, internal control, business documents and forms, their design and uses, and
relationships between accounting records and reports;
8. Design his/her own chart of accounts for a sole proprietorship business engaged in merchandising
and service concern;
9. Prepare, in good forms, properly classified financial statements and its components for a sole
proprietorship business engaged in service or merchandising business;
10. Use correctly common technical terms applicable to accounting for a service or merchandising sole
proprietorship business.
11. Evaluate the role of accounting in business.
Course Content:

1. Introduction to Accounting and Its Importance in Business

2. Branches of Accounting
3. Users of Accounting Information
4. Forms of Business Organization
5. Accounting Concepts and Principles
6. The Basic Accounting Equation and The Rules of Debit and Credit
7. Accounting Information Systems and Business Transactions
8. The Accounting Cycle: Journalizing Transactions
9. The Accounting Cycle: Posting and Trial Balance Preparation
10. The Accounting Cycle: Worksheet and Creation of Financial Statements
11. The Accounting Cycle: Adjusting Entries
12. The Accounting Cycle: Closing Entries and Post-Closing Trial Balance
13. Introduction to Merchandising Concern
14. The Accounting Cycle: Merchandising Concern
15. Special (Combination Journals)
16. Subsidiary Ledgers
17. Comprehensive Examination/Practice Set

Course Requirements:

1. Completed Online Exercises

2. Activity Outputs
3. Timely Submission of Assignments
4. Weekly Quizzes and Periodic Examinations

Grading System:

1. Assignments: 25%
2. Quizzes: 30%
3. Periodic Examinations: 45%
4. Total: 100%
Lesson 1: Introduction to Accounting and Its Importance in Business

OBJECTIVES:

At the end of the lesson, you will be able to:

a. Define Accounting;
b. Describe the nature of accounting;
c. Explain the functions of accounting in business; and
d. Narrate the history of accounting;

INTRODUCTORY ACTIVITY:

For two minutes, answer this question in a one-half sheet of paper: Is accounting important to
you? Keep your answers for we will use it after our discussion.

INSTRUCTION:

OBJECTIVE 1a: Define accounting.

Accounting has different definitions but the following are commonly used:

According to the American Institute of Certified Public Accountants (AICPA), “accounting is

the art of recording, classifying, and summarizing in a significant manner and in terms of
money, transactions and events which are, in part at least, of financial character, and
interpreting the results thereof.”

On the other hand, the American Accounting Association (AAA) defines accounting as “the
process of identifying, measuring and communicating economic information to permit
informed judgments and decisions by users of information.”

Lastly, the Accounting Standards Council (ASC) gives the following definition. “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
decision.”

Summarizing these definitions, the following words can be highlighted:

1. IDENTIFYING - this involves selecting economic events that are relevant to a particular
business transaction
2. RECORDING - this involves keeping a chronological diary of events that are measured
in pesos.
3. COMMUNICATING - occurs through the preparation and distribution of financial and
other accounting reports.
OBJECTIVE 1b: Describe the nature of accounting in business.

After our discussion about the definitions of accounting, we will now proceed to the basic
features and nature of accounting in business enumerated below:

1. Accounting is a service activity. Accounting provides assistance to decision makers by

providing them financial reports that will guide them in coming up with sound decisions.
2. Accounting is a process. A process refers to the method of performing any specific job
step by step according to the objectives or targets. Accounting is identified as a process,
as it performs the specific task of collecting, processing and communicating financial
information. In doing so, it follows some definite steps like the collection, recording,
classification, summarization, finalization, and reporting of financial data.
3. Accounting is both an art and a discipline. Accounting is the art of recording,
classifying, summarizing and finalizing financial data. The word ‘art’ refers to the way
something is performed. It is behavioral knowledge involving a certain creativity and skill
to help us attain some specific objectives. Accounting is a systematic method consisting
of definite techniques and its proper application requires skill and expertise. So by
nature, accounting is an art. And because it follows certain standards and professional
ethics, it is also a discipline.
4. Accounting deals with financial information and transactions. Accounting records
financial transactions and data, classifies these and finalizes their results given for a
specified period of time, as needed by their users. At every stage, from start to finish,
accounting deals with financial information and financial information only. It does not deal
with non-monetary or non-financial aspects of such information.
5. Accounting is an information system. Accounting is recognized and characterized as
a storehouse of information. As a service function, it collects processes and
communicates financial information of any entity. This discipline of knowledge has
evolved to meet the need for financial information as required by various interested
groups.

OBJECTIVE 1c: Explain the functions of accounting in business.

Why is accounting considered as the “language of business?”

Accounting is the means by which business information is communicated to business owners

and stakeholders. The role of accounting in business is to provide information for managers and
owners to use in operating the business. In addition, accounting information allows business
owners to assess the efficiency and effectiveness of their business operations.

As our part of our discussion on the functions of accounting, consider this situation:

Mr. Juan is a retired government employee who is good at baking. One day he decides to put
up a bakery shop in your barangay. He renovates a portion of his house to serve as the area for
the production of bread. He purchases baking equipment and raw materials to produce five
different types of bread. Mr. Juan also hires Jose to help him with the baking and, at the same
time, to be in-charge of sales. Mr. Juan pays Jose on a weekly basis. Every day, Mr. Juan’s
wife deposits the daily cash sales in their bank account at XY Savings Bank. With the help of
accounting, what possible decisions or questions of Mr. Juan can accounting provide an answer
to?

OBJECTIVE 1d: Narrate the history of accounting.

Accounting is as old as civilization itself. It has evolved in response to various social and
economic needs of men. Accounting started as a simple recording of repetitive exchanges. The
history of accounting is often seen as indistinguishable from the history of finance and business.

Following is the evolution of accounting:

• The Cradle of Civilization

Around 3600 B.C., record-keeping was already common from Mesopotamia, China and India to
Central and South America. The oldest evidence of this practice was the “clay tablet” of
Mesopotamia which dealt with commercial transactions at the time such as listing of
accounts receivable and accounts payable.

• 14th Century - Double-Entry Bookkeeping

The most important event in accounting history is generally considered to be the dissemination
of double entry bookkeeping by Luca Pacioli (‘The Father of Accounting’) in 14th century
Italy. Pacioli was much revered in his day, and was a friend and contemporary of Leonardo da
Vinci. The Italians of the 14th to 16th centuries are widely acknowledged as the fathers of
modern accounting and were the first to commonly use Arabic numerals, rather than Roman, for
tracking business accounts. Luca Pacioli wrote Summa de Arithmetica, the first book
published that contained a detailed chapter on double-entry bookkeeping.

• French Revolution (1700s)

The thorough study of accounting and development of accounting theory began during this
period. Social upheavals affecting government, finances, laws, customs and business had
greatly influenced the development of accounting.

• The Industrial Revolution (1760-1830)

Mass production and the great importance of fixed assets were given attention during this
period.

• 19th Century – The Beginnings of Modern Accounting in Europe and America.

The modern, formal accounting profession emerged in Scotland in 1854 when Queen Victoria
granted a Royal Charter to the Institute of Accountants in Glasgow, creating the profession
of the Chartered Accountant (CA). In the late 1800s, chartered accountants from Scotland
and Britain came to the U.S. to audit British investments. Some of these accountants stayed in
the U.S., setting up accounting practices and becoming the origins of several U.S. accounting
firms. The first national U.S. accounting society was set up in 1887. The American Association
of Public Accountants was the forerunner to the current American Institute of Certified Public
Accountants (AICPA).
In this period rapid changes in accounting practice and reports were made. Accounting
standards to be observed by accounting professionals were promulgated. Notable practices
such as mergers, acquisitions and growth of multinational corporations were developed.

A merger is when one company takes over all the operations of another business entity
resulting in the dissolution of another business. Businesses expanded by acquiring other
companies. These types of transactions have challenged accounting professionals to develop
new standards that will address accounting issues related to these business combinations.

• The Present - The Development of Modern Accounting Standards and Commerce.

The accounting profession in the 20th century developed around state requirements for
financial statement audits. Beyond the industry's self-regulation, the government also sets
accounting standards, through laws and agencies such as the Securities and Exchange
Commission (SEC). As economies worldwide continued to globalize, accounting regulatory
bodies required accounting practitioners to observe International Accounting Standards. This is
to assure transparency and reliability, and to obtain greater confidence on accounting
information used by global investors. Nowadays, investors seek investment opportunities all
over the world. To remain competitive, businesses everywhere feel the need to operate
globally. The trend now for accounting professionals is to observe one single set of global
accounting standards in order to have greater transparency and comparability of financial data
across borders.

ACTIVITY(ASSIGNMENT): Create a timeline narrating the history of accounting by using MS

Word or Canva App. You can do additional research or look for additional sources of
information. You may upload your outputs in our Microsoft Teams under Assignments tab.

ENRICHMENT:

We will now discuss your answer to the question that was asked in our introductory activity.

EVALUATION:
Open Microsoft Teams Link for your Quiz. Answer the quiz within the allotted time limit.