MODULE 1: INTRODUCTION TO ACCOUNTING

INTEGRATED ACCOUNTING FUNDAMENTALS (ADVANCE NOTES)

BS ACCOUNTANCY| MATT HARDY G. EVITE| ACT223| 1ST YEAR 1ST TERM

DEFINITIONS OF ACCOUNTING

● It is a service activity (Accounting Standards COuncil)

● The art of recording, classifying, and summarizing in a significant manner
(American Institute of CPA)
● The process of identifying, measuring, and communicating economic
information to permit informed judgment and decision by users.
○ Identifying - analysis and identification of accountable events.
○ Measuring - assigning monetary values the accountable events.
○ Communicating - summary of the information processed.

PURPOSE OF ACCOUNTING
Accounting is a special kind of language used to communicate to its users. It
is a tool that enables accountants to communicate date users information about the
financial activities of the business.
● Financial Reports - prepared and presented at least once a year.
● Financial Statements - used to communicate common information to users.
● Accounting could provide the following information:
1. Statement of Financial Position (Balance Sheet) - types and value of
assets and liabilities.
2. Income Statement - results of operation/ profit and loss.
3. Cash-Flow Statement - operating, financing and investing activities.
4. Statement of Change in Owner’s Equity - Why owner’s equity changed.

USERS OF ACCOUNTING INFORMATION

1. Internal Users - people directly involved in managing and controlling the
business.
2. External Users - people not directly involved in the management of business.

BRANCHES OF ACCOUNTING AND THEIR USES.

Branch of Accounting Types of Accounting Users of Service

 Service

Financial Accounting ● Record keeping ● All business

● Preparation of provides this to be
financial used by other
statements branches.

Managerial Accounting ● Preparation of ● Reports are needed

specific by the
management management.
reports.

Government Accounting ● Record keeping of ● Required by

government government for
agencies for annual transparency of
budget and audit funds.
report.

Tax Accounting ● Compliance to tax ● Required to all for

code that includes paying government
registration, filing, taxes.
payment and
updating of
revenues and
expenses.

Cost Accounting ● Refers to analyzing ● Used for pricing

the cost incurred in strategy, meeting
providing goods or competitions and
services. other financial
policies.

Accounting Education ● Teaching of ● For business

accounting and students.
related courses.

Accountancy Research ● Creation of ● Required for

research papers interested studies.
and other similar

Sources: NU Laguna Learning Module for IAF

 endeavors.

Audit ● Financial ● Businesses that are

examination of required to be
financial audited by
statements. independent CPA.
*Tagatingin ng kumpanya
without bias kung kumikita o
hindi*

Sources: NU Laguna Learning Module for IAF