Week 001

Introduction to
Accounting
Week 006: Accounting for Corporation

Coverage of the Module

History of Accounting
Definition, nature, scope, objectives of accounting
Branches of Accounting
Stewardship
Users of Accounting Information
Accounting concepts and principles
Professional ethics and values
Career opportunities of the accounting profession https://www.google.com.ph/search?q=intro+to+acco
unting+images+and+photos
Retrieved: August 13, 2017
Week 006: Accounting for Corporation

Learning Objectives
After studying this module, the students are
expected to be able to
•Learn to discuss the brief history of accounting.
•Understand the accounting definition, nature,
scope, and objectives.
•Identify the different branches of accounting.
•Identify the users of accounting information.
•Understand some of the main accounting concepts
and principles.
•Identify the different career opportunities of the
accounting profession.
•Enumerate and understand the professional ethics
and values
Week 001: Introduction to Accounting
History of Accounting

• Florentine approach of reporting –

Double-entry bookkeeping
• Venetian approach of reporting – records
in bilateral form; debits on the left side
and credits on the right side
• Luca Pacioli – father of modern accounting
Week 001: Introduction to Accounting
History of Accounting(continued)

• Code of Savary- 1673 Commercial Code of

France; historical cost as the basis of
valuation.
• Code of Napoleon; Code of Commerce –
assets at fair market value and not on
historical cost.
Week 001: Introduction to Accounting
History of Accounting(continued)
• Era of industrial revolution (late18th and early
19th century)
• Introduction of new accounting practices such as
Depreciation, Overhead allocation,
Inventory accounting,
Accounting advancements for sole proprie-
torship, partnership, and corporation
New tax accounting systems and procedures
Week 001: Introduction to Accounting
History of Accounting(continued)
Arrival of Income Taxation and Conflict with
Financial Reporting
• First income tax: Emperor Wang Fang , Xin
dynasty, China, AD 10; 10% flat rate
• First Graduated income tax system: Britain, 1798;
William Pit; 8.335% to 10%
• United States: July 1861, 3% of all income over
US$600
https://www.google.com.ph/search?biw=1242&bih=602&tb
• Philippines: March 31, 1913, creation of the first m=isch&sa=1&q=taxation+and+accounting+images+and+
photos
income tax law Retrieved: August 13, 2017
Week 001: Introduction to Accounting
Definition of Accounting

• Service Activity
• Function: to provide quantitative financial
information for decision-making purposes.
• Accounting: an art of recording,
classifying, summarizing, in a significant
manner and in terms of money,
transactions and events, which are in part
at least of a financial character and
interpreting the results thereof.
Week 001: Introduction to Accounting
Scope of Accounting
• Accounting is used by
Professionals, Social Institutions, Business
Organizations
Non-trading Institutions like hospitals,
schools, cooperative, etc.
• New Areas of Accounting:
Human Resource Accounting, Social
https://www.google.com.ph/search?biw=1242&bih=602&tbm

Accounting =isch&sa=1&q=areas+of+accounting++images+and+photos
Retrieved: August 13, 2017

National Accounting, Forensic Accounting

Week 001: Introduction to Accounting
Nature of Accounting

• Accounting is a process.
• Accounting is an art.
• Accounting is a means not an end.
• Accounting does business with financial
business transactions and information
only which are quantifiable in terms of
monetary unit.
https://www.google.com.ph/search?biw=1242&bih=60
• Accounting is an information system. 2&tbm=isch&sa=1&q=nature+of+accounting++images
+and+photos
Retrieved: August 13, 2017
Week 001: Introduction to Accounting
Objectives of Accounting

• Records business transactions and end up

summarizing them with their balances.
• Provides the financial information that
serves as the basis of business managers’
decisions and accountability.
• Aids in corporate planning.

https://www.google.com.ph/search?biw=1242&bih=60
2&tbm=isch&sa=1&q=objectives+of+accounting++ima
ges+and+photos
Retrieved: August 13, 2017
Week 001: Introduction to Accounting
Branches of Accounting

Major Branches:
• Financial Accounting- for the needs of
external users.
• Management Accounting- caters the needs
of internal users.
• Cost Accounting- determines the costs of
products, processes and services. https://www.google.com.ph/search?biw=1242&bih=60
2&tbm=isch&sa=1&q=majorbranches+of+accounting+
+images+and+photos
Retrieved: August 13, 2017
Week 001: Introduction to Accounting
Branches of Accounting (continued)
Other fields of accounting are
• Tax Accounting- involves internal revenue
rules and regulations.
• Fund Accounting- for non-profit
organizations including government.
• Auditing- examination and verification of a
firm’s accounts and internal control
system.
https://www.google.com.ph/search?biw=1242&bih=6
02&tbm=isch&sa=1&q=other+fields+of+accounting++
images+and+photos
Retrieved: August 13, 2017
Week 001: Introduction to Accounting
Branches of Accounting (continued)

• Social Accounting- corporate social

responsibility of any business
organization.
• National Accounting- measures the
economic activities of a country.
• Human Resource Accounting- identifying
and measuring data on human resources.
https://www.google.com.ph/search?biw=1242&bih=60

• Forensic Accounting- using accounting in 2&tbm=isch&sa=1&q=national+accounting++images+

and+photos
Retrieved: August 13, 2017

litigation cases.
Week 001: Introduction to Accounting
Concept of Stewardship

• Accountants act as stewards for the

owners’ of the business
• Present trustworthy financial information
about the firm’s assets and obligations.
• Stewardship governance of the executives
to protect the interest of the
shareholders, https://www.google.com.ph/search?biw=1242&bih=602&t
bm=isch&sa=1&q=stewardship+and++accounting++imag

to make decisions in behalf of the owners es+and+photo

Retrieved: August 13, 2017
Week 001: Introduction to Accounting
•Users of Accounting Information
• Internal Users (Primary Users)
Business Owners
Business Managers
Employees and Labor Unions
• External Users (Secondary Users)
Prospective Investors
Creditors
Government Agencies
Consumers and the General Public
Week 001: Introduction to Accounting
Accounting Concepts and Principles
• Accrual Principle- income and expense recognition in
the accounting period when they are actually earned
and incurred.
• Conservatism Principle- expenses and liabilities
should be recorded as soon as they are incurred and
revenues and assets when they will surely happen.
• Matching Principle- charging of expenses incurred by
the firm to the income statement for a particular
period in which the revenues related to them
(expenses) are earned.
Week 001: Introduction to Accounting
Accounting Concepts and Principles (continued)
• Consistency Principle- consistent application of
accounting principles to aid comparison of the firm’s
financial statements over different accounting periods.
• Cost Principle- a business organization should record
assets, liabilities, and equity at their original purchase
costs.
• Going Concern Principle- financial statements are
prepared on the basis of the continuity of operations of
the business in the future.
Week 001: Introduction to Accounting
Accounting Concepts and Principles (continued)
• Economic Entity Principle- the business transactions of an
entity be separated from the owner’s personal transactions
and other businesses.
• Full Disclosure Principle- the business should include in its
financial report all the necessary information that will help
the reader or user understand the contents of the
statements.
• Materiality Principle- Information is material if its omission
or misstatement could influence the economic decisions of https://www.google.com.ph/search?biw=1242&bih=602&tb
m=isch&sa=1&q=economic+entity+principle+of++accounti
users taken on the basis of the financial statements (IASB ng++images+and+photos
Retrieved: August 13, 2017

Framework).
Week 001: Introduction to Accounting
Accounting Concepts and Principles (continued)
• Monetary Unit Principle- only
transactions that can be expressed in
monetary currency should be recorded.
• Reliability Principle- business transactions
or information that can be verified by the
users should be recorded.
• Revenue Recognition Principle- revenue
recognition using the accrual concept.
Week 001: Introduction to Accounting
Accounting Concepts and Principles (continued)
• Time Period Principle - application of an
accounting period to report and evaluate the
performance and position of the business.
• Substance over Form- business transactions and
events must be recorded in its economic
substance instead of just its legal form .
• Duality Principle- fundamental basis for double-
entry accounting system https://www.google.com.ph/search?biw=1242&bih=602
&tbm=isch&sa=1&q=duality+principle+of++accounting+
+images
Retrieved: August 13, 2017
Week 001: Introduction to Accounting

Career Opportunities in the Accounting Profession

• Private accountants - the presence of an

employer-employee relationship.
• Public Accountants -rendered services to
the general public in exchange for
professional fees.
• Accounting Education – Accountants as
teachers .
Week 001: Introduction to Accounting

Basic Professional Values and Ethics

Values:
Credibility
Professionalism
Quality of Services
Confidence
Week 001: Introduction to Accounting

Basic Professional Values and Ethics (continued)

The fundamental principles are:

Integrity
Objectivity
Professional Competence and due Care.
Confidentiality
Professional Behavior
Technical Standards
Thank you very
much…
God bless
everyone!