Introduction

to
Accounting

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 Definition of Accounting
• Accounting is a process of identifying,
recording and communicating economic
information that is useful in making
economic decisions.

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 IDENTIFYING

• The accountant analyzes each business transaction and

identifies whether the transaction is an “accountable
event” or “non-accountable event.” This is because
only “accountable events” are recorded in the books
of accounts. “Non-accountable events” are not recorded
in the books of accounts.

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 RECORDING

• The accountant recognizes (i.e., records) the

“accountable events” he has identified. This process is
called “journalizing.” After journalizing,
the accountant then classifies the effects of the event on
the “accounts.” This process is called “posting.”

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 COMMUNICATING

• At the end of each accounting period, the accountant

summarizes the information processed in the
accounting system in order to produce meaningful
reports. Accounting information is communicated to
interested users through accounting reports, the most
common form of which is the financial statements

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 Nature of Accounting
Accounting is the process with the basic
purpose of providing information about
economic activities intended to be useful
in making economic desicions.

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 Types of Information
provided by accounting
1.Quantitative information- expressed in
numbers, quantity or unit.
2.Qualitative information- expressed in words or
descriptive form.
3.Financial information- expressed in money

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 Functions of Accounting
in Business
1.To provide external users with information that is
useful in making investment and credit decisions;
and
2.To provide internal users with information that is
useful in managing the business.

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 Brief history of accounting
• Accounting can be traced as far back as the prehistoric
times, perhaps more than 10,000 years ago.

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 Brief history of accounting
• Archaeologists have found clay tokens as old as 8500 B.C.
in Mesopotamia which were usually cones, disks, spheres
and pellets.These tokens correspond to commodities like
sheep, clothing or bread.They were used in the Middle
West in keeping records. After sometime, the tokens were
replaced by wet clay tablets. During such time,experts
concluded this to be the start of the art of writing.
(Source:http://EzineArticles.com/456988)
PREPARED BY: IVY BEATRICE A. ALIAS, CPA
Brief History of Accounting
• Double entry records first came out during 1340 A.D. in
Genoa.
• In 1494, the first systematic record keeping dealing with
the “doubleentry recording system” was formulated by Fra
Luca Pacioli , a Franciscan monk and mathematician.
The“double entry recording system” was included
inPacioli’s book titled “Summa di Arithmetica Geometria
Proportioni and Proportionista ,” published on November
10, 1494 in Venice. PREPARED BY: IVY BEATRICE A. ALIAS, CPA
 Brief History of Accounting
• The concept of “double entry recording” is being used to
this day. Thus,Fra Luca Pacioliis considered as the father of
modern accounting.

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Common Branches of Accounting

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Common Branches of Accounting

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Common Branches of Accounting

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Common Branches of Accounting

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Users of Accounting Information
1.Internal users – those who are directly involved in managing the
business Examples: Business owners who are directly involved in
managing the business, Board of directors, Managerial personnel
2.External users – those who are not directly involved in managing
the business.
Examples: Existing and potential investors (e.g., stockholders who are
notdirectly involved in managing the business), Lenders (e.g., banks)
and Creditors (e.g., suppliers), Non-managerial employees, Public

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Forms of Business Organization

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Advantages & Disadvantages

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Advantages & Disadvantages
Advantages & Disadvantages
Advantages & Disadvantages

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Advantages & Disadvantages

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Advantages & Disadvantages

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Advantages & Disadvantages

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Types of Business According to Activities
• Service
• Merchandising/ Trading
• Manufacturing

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Advantages & Disadvantages

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Advantages & Disadvantages

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

Advantages & Disadvantages

PREPARED BY: IVY BEATRICE A. ALIAS, CPA

 REFERENCE
• Ballada, W. & Ballada, S. (2019). Basic financial accounting and
reporting. Manila: DomDane Publishers
• Millan, Z.V.B. (2018). Financial accounting and reporting
(Fundamentals).Baguio: Bandolin Enterprise

PREPARED BY: IVY BEATRICE A. ALIAS, CPA