Intermediate Accounting Reviewer

WHAT IS ACCOUNTING?
 Accounting is the process of identifying, measuring and communicating
economic information to permit informed judgement and decision by users of the
information. ( American Association of Accountants)
 Accounting Standards Council (ASC) defines 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.
ACCOUNTING INFORMATION SYSTEM
 It is the system of collecting and processing transaction data and
disseminating financial information to interested parties.
MANAGEMENT INFORMATION SYSTEM
 A set of data gathering, analyzing, and reporting functions designed to provide
management with the information needs to carry out its functions.
a. Accounting information system
b. Personnel information system
c. Logistics information system
COMPONENTS OF ACCOUNTING INFORMATION SYSTEM
1. Personnel
2. Accounting policies and standards
3. Procedures
4. Equipment and devices
5. Records and reports
THE ACCOUNTING CYCLE
Represents the steps of procedures used in recording transactions and preparing
financial statements.

1. Identifying and Analyzing The transactions are analyzed by examining source

documents
2. Journalizing The identified accountable events are recorded in the journals
3. Posting The journal entries are posted to the ledger.
4. Preparation of Unadjusted Trial Balance
5. Preparing the adjusting entries. The data needed to adjust the accounts are
assembled
6. Preparation of worksheet The equality of debits and credits are
rechecked after adjustments are made
7. The Financial of Statements are prepared.
8. The closing entries are journalized and posted to the ledger
9. A post closing trial balance is prepared.
10. The reversing entries are journalized and posted to the ledger.
SYSTEM OF RECORDING TRANSACTIONS
1. Double Entry System
Each transactions is recorded in two parts – DEBIT and CREDIT
a. Duality – each transactions has a two fold effect on values – value
received, and value parted.
 Intermediate Accounting Reviewer

b. Equilibrium – each transactions to be recorded in terms of equal debit

and equal credit.
2. Single Entry System
Each transaction is recorded though narrative.

JOURNALIZING
The process of recording transactions in the journal by means of journal entries

TYPES OF JOURNALS
a. General Journal – a book of original entry use to record transactions other than
those that are recorded in the special journals
b. Special Journal – a book of original entry used to record transactions of a similar
nature.

Sales Journal, Purchase Journal, Cash Receipts Journal, Cash Disbursements Journal

TYPES OF JOURNAL ENTRIES

a. Single Journal Entry

b. Compound Journal Entry
c. Adjusting Entries
d. Closing Entries
e. Reversing Entries
f. Correcting Entries
g. Reclassifications Entries