BUSINESS &

ACCOUNTING
PURPOSE OF BUSINESS ACTIVITIES
• Provides GOODS & SERVICES to the people.
• Provides JOBS for the people.
• Contribute to the WEALTH OF THE COUNTRY
 TYPES OF BUSINESS ACTIVITIES
• SERVICE BUSINESS
 Render services to the clients and/or customers for a fee
• MERCHANDISING BUSINESS
 Engaged in the buying and selling of merchandise for a profit.
• MANUFACTURING BUSINESS
 Engaged in the processing of raw materials into finished products which are then
sold for a profit
NEEDS WANTS

• These are goods and services that • These are goods and services not
are necessary for survival. necessary for survival but which we
wish to have.
 Where do you get the money to start a new
business?
• Personal Savings
• Loan from a Family members/friends
• Bank Loans
• Trade Credit from Suppliers
 What is trade credit from suppliers?
• You get your goods first and pay your suppliers later.

• Why does the entrepreneur not have enough money to pay the suppliers?
• Customers do not settle their debts on time.
• Sales fluctuate depending on the seasons of the year.

• Calculate the loan interest

Interest = Php Amount borrowed x Interest Rate/100 x Duration of loan.
 Competition

Direct Indirect
• Sells same/similar products • Sells products that meet the same
needs of customers
 Non-profit organizations
• Churches
• Hospitals
• Public Schools
• Libraries
• Other charitable & social welfare units of the government
 Types of Business Ownership
• Single Proprietorship
• Form of organization which is owned by only one person known as the single or sole proprietor.
• Partnership
• Form of organization where two or more individuals agree to contribute money, property, or
industry to a common fund for the purpose of going into business and then dividing the profits
between/among themselves.
• Corporation
• Form of organization where five or more individuals agree to go into business and cause the
creation of a juridical entity that is vested by law with rights, attributes, and powers necessary to do
business
 Single proprietorship
• Most common type of business organization
• Simplest to organize and operate
• Only one person takes charge of obtaining the resources required to start the
business and manage operations.
• The profit or loss from business operations belong solely to the proprietor.
• But the owner has unlimited liability for the debts of the business
• In a case of bankruptcy, creditors may go after the personal assets of the owner.
 Partnership
• Resources and skills of the partners are pooled and invested in a business
venture.
• Each partner has unlimited liability for business debts.
• Has limited life
• If one partner withdraws or a new partner is admitted, the existing partnership is
dissolved and a new partnership is formed.
 Corporation
• Ownership is evidenced by certificate of stocks that is transferable from one
stockholder to another
• Liability of stockholders is limited only up to the amount of their
investments
• Supervised by rules and regulations of the Securities and Exchange
Commission (SEC) and need to comply strictly with all its requirements
 Definition of Accounting
• Is actually a system of preparing and using financial records
• Is the art of measuring, communicating, and interpreting financial activity
• Is defined as a service activity whose function is to provide quantitative
information, primarily financial in nature, about economic entities that is
intended to be useful in making economic decisions.
 Accounting as the Language of Business
• Because it provides management with financial records that will be useful in
making decisions about buying or selling, about pricing policies and so on.
Accounting Bookkeeping
• Is amore complex process which • Recording of business transactions
includes the design and installation in books of accounts
of financial information systems; • Information processing function of
the analysis and interpretation of accounting
financial statement for business
decision; audits; forecasting,
planning, and controlling; and other
accounting advisory services.
 Basic Financial Statements
Most important in accounting

• Balance Sheet
• Income Statement
• Statement of changes in financial position
 Balance Sheet
• Is that statement which gives information about the financial condition of
the business as of a given date.
• Tells how much assets the business own, how much liabilities it owes and
how much equity the owner has in the business.
 Income Statement
• Is the statement which gives information about the results of business
operations for a given period
• Shows the amount of income earned and the amount of costs and expenses
incurred, which data are used to determine if operations resulted in a net
income or a net loss
Statement of Changes in Financial Position
• Summarizes the sources and uses of funds for the given period
• Gives information about the funds provided and used in operations and for
other purposes.
 Users of Accounting Information
• Owners – to know how much return is earned on capital invested
• Management – to know how efficient they have been in using available resources
• Banks or creditors – to determine the ability of borrowers to pay their loans on
maturity
• Government or its agencies – to determine compliance by businesses of tax and
business requirements (e.g. BIR, SEC, etc.)
• Others (e.g. prospective investors, employees, consumers, etc.)
 Fields of Accounting work
• Public Accounting
• Commerce and Industry
• Government Accounting
• Accounting Education
 Professional Accountant
• Chief Accountant
• Internal Auditor
• Budget Officer
• Cost Accountant
• Controller/Finance Vice President (or President)
 Field of Government Accounting
• Commission on Audit (COA) • Department of Finance
• National Treasury • Central Bank of the Philippines
• Bureau of Internal Revenue • Philippine Charity Sweepstakes
• Bureau of Customs Office

• Department of Budget and

Management
 Accounting Standards in the Philippines
• ASC
• Accounting Standards Council
• Consists of 8 Filipino CPAs
• IASC
• International Accounting Standards Council
Accounting Applications