Accounting 2

1. Don’t be late in joining the live class.

2. Don’t be absent for no valid reason.
3. Take all exercises, quizzes and monthly exams as
scheduled. If you miss exercises and quizzes without valid
reason and explanation in writing, you will be marked “0”.
4. Finish all subject tasks and projects (usually the ones in the
Assignment tab) on time. Submission past the due date will
have corresponding daily point deductions.
5. Participate in the live classes by reciting. Recitation is
13.33% of your total grade. Turn on your webcam when
reciting or when your batch is called.
Accounting 2
01 Statement of Financial Position (Balance Sheet)

02 Statement of Comprehensive Income (Income Statement)

03 Statement of Changes in Equity

04 Cash Flow Statement

05 Analysis and Interpretation of Financial Statements

06 Accounting Books – Journal and Ledgers

07 Basic Documents and Transactions related to Bank Deposits

08 Bank Reconciliation Statement

09 Accounting Practice Set

10 Income and Business Taxation

 00 ACCOUNTING DEFINITION

ACCOUNTING IS A SERVICE ACTIVITY

01 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.
Review of Accounting

ACCOUNTING IS A PROCESS
02 Accounting is the process of identifying, measuring and communicating economic information to
permit informed judgment and decisions by users of the information.

ACCOUNTING IS AN ART
03 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 in character, and
interpreting the results thereof
 00 PHASES OF ACCOUNTING

Recording Summarizing Interpreting

Review of Accounting

Analyzing Classifying Reporting

 00 USERS OF ACCOUNTING INFORMATION
Review of Accounting
 00 Qualitative Characteristics of Information in the
Financial Statements

1 Understandability
Review of Accounting

2 Relevance

3 Materiality

4 Reliability

5 Faithful Representation
 00 Qualitative Characteristics of Information in the
Financial Statements

6 Substance
Review of Accounting

7 Neutrality

8 Prudence

9 Completeness

10 Comparability
 00 Forms of Business Organization
SOLE PROPRIETORSHIP
Review of Accounting
The simplest
form of business
organization. It is
owned by a single
individual
PARTNERSHIP CORPORATION
This is an This is an artificial
association of two being created by
or more persons to operation of law,
having the right
carry on as co- succession and the
owners of a powers, attributes, and
business for profit. properties expressly
authorized by law or
incident to its
existence.
 00 Comparing the Business Organizations

SOLE
PARTNERSHIP CORPORATION
PROPRIETORSHIP
Review of Accounting

FEATURES

One owner Two or more One or more

Ownership
Capitalization Depends on the needs Depends on the needs Depends on the needs

Life Dependent on the owner Dependent on the partners 50 years and renewable

Managed by one or two of the Managed by the Board of

Management structure Managed by the owner
partners Directors
To partners based on To stockholders based on BOD
Profit Distribution To the sole owner
agreement declaration
A partners pays income tax Pays corporate income tax,
Income Taxation Sole owner pays individual tax
based on share in the profit stockholders pay on dividends

Unlimited liability for general partners, Limited liability of stockholders

Liability to Third Party Unlimited liability of owner limited liability for limited partners
 00 Sole Proprietorship Pros and Cons

Easy to form and less

government requirements
Review of Accounting

Fast decision-making, only Limited source of capital

one person decides

Life may be dependent on the

Flexibility of operations
life of the owner

Suited for small businesses Management capacity is

limited to the owner
 00 Partnership Pros and Cons

Easy to form and less

government requirements
Review of Accounting

Fast decision-making, only Limited source of capital

one person decides

Life may be dependent on the

Flexibility of operations
life of the owner

Suited for small businesses Management capacity is

limited to the owner
 00 Corporation Pros and Cons

Easy to form and less

government requirements
Review of Accounting

Fast decision-making, only Limited source of capital

one person decides

Life may be dependent on the

Flexibility of operations
life of the owner

Suited for small businesses Management capacity is

limited to the owner
 00 Accounting Process

Journalizing
01 Analyze transactions
and record in the Posting
journals.
02
Review of Accounting

Reversing Entries
10 Trial Balance
03
Post-Closing TB
09 Adjustments
04
Closing Entries
08 Adjusted TB
05
Financial Statements
07 Worksheet
06
 00
Review Quiz

The simplest form of business organization and it is

Review of Accounting

also the easiest to form with the fewest regulatory

hurdles.

A Sole Proprietorship B Partnership

C Corporation D Cooperative
 00
Review Quiz

The first step in the accounting

Review of Accounting

process.

A Posting B Journalizing

C Trial Balance D Adjusting Entries

 00
Review Quiz

This is what we call the left side of the

Review of Accounting

accounting entry.

A Credit B Explanation

C Debit D T-account
 00
Review Quiz

Complete the accounting equation

Review of Accounting

____________ = Liabilities + Equity

A Current Assets B Noncurrent Assets

C Assets D Capital
 00
Review Quiz

This is the financial statement that shows the

Review of Accounting

current standing of the business.

A Cash Flow Statement B Income Statement

C Statement of Changes in
Equity D Balance Sheet
 00
Review Quiz

Which of the following will result to an increase

Review of Accounting

in the left side of the accounting equation?

A Buying supplies on
account B Payment of cash for
loans

C Payment of cash for

insurance D Payment of cash on
account
 00
Review Quiz

Which term is used to refer to any business

Review of Accounting

activity that changes the assets, liabilities and

owner’s equity?

A summary B transaction

C prepayments D None of the above

 00
Review Quiz

It is the accounting principle which states that the owner is separate and
Review of Accounting

distinct from the business organization. It also states that if an individual

owns several businesses, transactions of these businesses should be
recorded in their own accounting books.

A Entity Concept B Period Concept

C Matching Concept D Unit of Measure

01 Statement of Financial Position
Balance Sheet (Balance Sheet)
01 Statement of Financial Position
(Balance Sheet)

Indicate the classification of each account by writing A for Assets, L for Liabilities, Eq for Equity, I for
Income and Ex for Expenses.

ACCOUNT CLASSIFICATION ACCOUNT CLASSIFICATION

Cash Land
Balance Sheet

Accounts Payable Owner’s Capital

Inventories Prepaid Rent
Purchases Permits and Licenses
Sales Gas and Electricity
Service Income Office Supplies
Accounts Receivable
Bank Loans
Notes Receivable
Salaries and Wages
Equipment
01 Statement of Financial Position
Balance Sheet (Balance Sheet)
01 Statement of Financial Position
Balance Sheet (Balance Sheet)
01 Statement of Financial Position
Balance Sheet (Balance Sheet)