Introduction

to Accounting
ACCOUNTING 104

What is Accounting?
IDENTIFIES
RECORDS
COMMUNICATES

Economic events of an
organization to interested
users

IDENTIFIES
Recognize
Describe
Discover
Distinguish
Name
Determine

Differentiate

ECONOMIC EVENTS
NON-ECONOMIC EVENTS

What is an event?
Something

that happens at a
given place and time
A special set of
circumstances
A phenomenon that follows
and is caused by a previous
phenomenon (or may cause a
future phenomenon)

Pre, may event daw

dun sa may SMX,
nood tayo.

What makes an event an

economic event?
What makes an event a noneconomic event?

Illustration: Subway
First event.

A student buys a sub worth

P99 at 8:15 A.M.

Illustration: Subway
Second event.

Subway, through its store

clerk, orders additional 5
pounds of cheese worth P300
from a supplier, gets the
cheese and pays for it in cash.

Illustration: Subway
Third event.

The store clerk gets hungry,

takes a piece of bread from
the stock room and eats it.

Illustration: Subway
Fourth event.
A customer arrives and asks
about catering services. The
store clerk explains to the
customer for 5 minutes and
the customer promises to
call back in a day.

Illustration: Subway
Fifth event.

The store clerk sees some

spilled soda on the floor
right at the door and
diligently cleans up the
mess.

Illustration: Subway
First event.

A student buys a sub worth

P99 at 8:15 A.M.

Illustration: Subway
Second event.

Subway, through its store

clerk, orders additional 5
pounds of cheese worth P300
from a supplier, gets the
cheese and pays for it in cash.

Illustration: Subway
Third event.

The store clerk gets hungry,

takes a piece of bread from
the stock room and eats it.

Illustration: Subway
Fourth event.
A customer arrives and asks
about catering services. The
store clerk explains to the
customer for 5 minutes and
the customer promises to
call back in a day.

Illustration: Subway
Fifth event.

The store clerk sees some

spilled soda on the floor
right at the door and
diligently cleans up the
mess.

So, what then is an

economic event?

TRANSACTION

So what is an
economic event or
TRANSACTION?

BEMV
Business
Exchange
Monetary
Value

BEMV
BE = Business Exchange - it must be
an exchange that is relevant to the
business
AND
MV = Monetary Value - it must be
measurable in terms of monetary
amounts

 For

a SPA business, a masseuse gives a

customer a Swedish massage and charges him
P250 for the service.
For a FOOD SERVICE business, the store
manager sees that they are running low on
cooking oil, he personally goes to the nearby 711 and purchases a gallon of Canola Oil for
P325.
For a LODGING business, a customer asks the
receptionist to add an extra bed to her
reservation and irrevocably uses her credit card
to charge P500 for this request.
For a CASINO business, a poker dealer rakes in
5% of the P1,000,000 bet in one poker table to
cover the costs of hosting the game.

 In

a RESORT business, the owner comes and

goes for a swim at the pool while nobody is
watching.
In a BAR business, the bartender, quietly slips a
bottle of pale pilsen worth P25 into his bag
while nobody is looking. The accountant later on
finds out one bottle is missing but cannot
pinpoint where it went.
At a TOUR OPERATIONS business, a tourist
guide is invited to dinner by a foreigner after
the tour and pays for everything. The bill
amounted to P15,000.

RECORDS
Accounting is a way to provide a history of
the companys transactions. It keeps a
systematic chronological diary of events
measured in monetary amounts - Pesos,
Dollars, etc.

COMMUNICATES
Accounting communicates. this is the
product of accounting, financial
statements. reports. two elements are
very important in the communication
phase:
1. Preparation
2. Analysis

REFERENCE
Hospitality Financial Accounting
Second Edition
Weygandt Kieso Kimmel DeFranco