Introduction to

Accounting
 Objectives
● Explain the importance of Accounting and
distinguish between financial and managerial
accounting.
● Identify users of accounting and how they
apply information.
● Describe the different types of business
organization and their activities.
Why this topic matters?
 ACCOUNTIN
G Financial Accounting measures
the financial performance of the
IS THE PROCESS OF ORGANIZING, organization using standardized
ANALYZING AND system to prepare and distribute
COMMUNICATING FINANCIAL reports.
INFORMATION THAT IS USED FOR
DECISION MAKING.
Financial matters typically prepared by
accountants.
Managerial Accounting uses both
financial and non- financial reports as
the basis of decisions for the
Accounting serves as “the
organization.
language of business”
 Definition of
ACCOUNTIN “the process of identifying, measuring
G and communicating economic
information to permit informed
“Accounting is the art of recording, judgments and decisions by users of
classifying, and summarizing in a information”.
significant manner and in terms of American, Accounting Association (AAA, 1966)

money, transactions, and events which

are, in part at least, of financial character,
and interpreting the results thereof. “
Accounting is also a science because
American Institute of Certified Public Accountants of the principles that will serves as
(AICPA,1941) guides in accomplishing data and
preparing reports.
 Users of
Accounting
Owner Creditors

Management Employees
Prospective investors-
K’s Government
 Source of
Financial
Information

TRANSACTIONS OR
BUSINESS
ACTIVITIES OR
UNDERTAKINGS
 PHASES OF
ACCOUNTING
1
RECORDING
Transactions are recorded systematically
and chronologically.
Technically it is called “Bookkeeping”
 2
CLASSIFYING
Sorting and grouping of items per category-asset
account, liability account, capital account,
revenue account and expenses account.
3
SUMMARIZIN
G
Data recorded and classified are made in brief
through reports called financial statement
 4
INTERPRETIN
G
Impression given by authorized personnel from the
financial reports made.
Only a Certified Public Accountant can interpret the
accuracy of the reports.
Fields of Accounting

A. Public Accounting
a professional services rendered
by Certified Public Accountant
and his employees to the public
for fee.
Fields of Accounting

B. Private Accounting

A professional service provided for

private business enterprises. The
number of accountants in the firm
depends on the size and needs of
the business.
Fields of Accounting
E. International Accounting

C. Government F. Social Accounting

Accounting

D. Accounting
Education
 Classes of Business
Activities as to nature
• Service Concern Business
• Trading and Merchandising
Concern
• Manufacturing Concern
• Extractive Concern
• Others
Classes of Business
as to Ownership
Accounting Elements Asset
or Values Economic resources
owned by the business

Liabilities
Debts or obligations of the
business to other party

Capital
Represent the owner’s
equity and investment
ASSETS
Current Asset Non- Current or Fixed Asset
Cash Property, Plant and Equipment
Receivables Machine
Account Receivable Equipment
Note Receivable ` Building
Inventories Furniture and Fixtures
Raw Materials Land
Goods in Process Vehicle
Merchandise Inventory or Jewelries
Finished Goods
Office Supplies
Prepaid Expenses
Liabilities Capital
Current or Short-term Liabilities Owner’s Equity
Owner’s Investment
Payables Proprietorship
Account Payable
Note Payable EXPENSES
Accrued Expenses Salaries
Unearned Income Taxes
Short-term loan Rent
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Fixed or Long-term Liabilities
REVENUE(INCOME)
Mortgage Payable Service Income
Bonds Payable Repair Income
Notes Payable due beyond one year Dental income
Admission Fee
Tuition fee
Thank YOU