WHAT IS ACCOUNTING ?

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THAT WILL BE ALL FOR

THIS SEMESTER !

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YOU !
ACCOUNTING - is an art of
analysing, recording, classifying
summarizing, journalizing
business transaction in a
systematic manner and
interpreting the result thereof.
WHAT IS BUSINESS?
BUSINESS - is an entity in which
the skills, energy and enterprise
of owners and partners linked
with money, its source and
investment , and its sucess is
measured by wealth, or profit
the business gets.
WHAT IS FINANCE ?
FINANCE - is an art and science of
managing money, concerned with
the process, institution, markets,
and instruments involved in the
transfer of money among
individuals, business, and
government.
FINANCIAL SERVICES - is the area
of finance concerned with the
design and delivery of advice and
financial product to individualss,
business, and government.
*TYPES OF BUSINESS
ACTIVITIES*

•A SERVICE BUSINESS
•A MERCHANDISE BUSINESS
•A MANUFACTURING BUSINESS
 FORMS
OF
BUSINESS
ORGANIZATION
•SOLE/SINGLE PROPRIETORSHIP
•PARTNERSHIP
•CORPORATION
SOLE/SINGLE
PROPRIETORSHIP
is a business owned by one
person who operates it for his or
her own profit.
ADVANTAGES
• Owners received all profits
• Low organization cost
• Independence
• Secrecy
• Ease of Dissolution
DISADVANTAGES
• Owners has unlimited liability total
wealth can be taken to satisfy debts
• Limited fund-raising power tends to
inhibit growth (small collateral)
• Proprietorship must be jack of all trade
• Difficult to give employees long run
career opportunities
• Lacks continuity when proprietor dies
PARTNERSHIP
Consist of two or more
owners doing business
together for profit.
ADVANTAGES
• Can raise more funds than sole
proprietorship
• Borrowing powers enhanced by more
owners
• More available brain power and
manegerial skills
DISADVANTAGES
• Owners had unlimited liability and may
have to cover debtsof other partners
• Partnership is dissolve when a
partnership dies
• Difficult to liquidate or transfer
partnership
CORPORATION
Is an artificial being created by law,
often called a “legal entity”, a
corporation has the power of an
individual in that it can sue and be sued,
make and be party to conract, and
acquire property in its own name.
ADVANTAGES
• Owners have limited liability which
guarantees that they cannot lose more than
they invested
• Can achieved large size via sale of stock
• Owners stock readily transferable
• Long life of firms
• Can hire professional managers
• Have better access to financing
• Receive Tax Advantages (Exemotion)
DISADVANTAGES
• Tax generally higher, because corporate
income is taxed, and dividends paid to
owners are also taxed
• More expensive to organized than other
business form
• Subject to greater government regulations
• Lacks, secrecy beacuse stocks holders must
receive final reports
TERMINOLOGIES
• INTEREST - is the charge for the privilege of
borrowing money.
• INTEREST RATE - is the amount a lender charges for
the use of assets expressed as a percentage. The
interest rate is typically noted on an annual basis
known as the annual percentage rate (APR).
• INVENTORY - is an itemized list of everything you
have, a detailed list of all the items in stock.
• CHECK - a written order directing the bank to pay
money
• PROMISSORY NOTE - is a legal document in which
a person or institution promises to pay a debt. A
promise to pay a specified amount on demand or
at a certain time.
• DEBIT - an accounting entry acknowleding sums
that are owing.
• CREDIT - an accounting entry acknowleding
income or capital items.
• LEDGER - a record in which commercial accounts
are recorded.
• MONEY - the most common medium of
exhange , functions as legal tender, the
official currency issued by a government or
national bank.
• CASH - money in form of bills or coins
• CASHIER - a person responsible for receiving
payments for goods and services
• BOOKKEEPER - someone who records the
transactions of a business
DIVIDEND - the part of the earning of a corporation
that is distributed to its shareholders.
BUYOUT - acquisition of a company by purchasing a
controlling percentage of its stock.
BALANCE SHEET - is a financial statement that
represents all the assets, liabilities and equity of a
firm.
INCOME STATEMENT - measures the profit and loss
that the organization has made over a set period of
time.
• CORPORATORS - are all the persons composing of
corporation.
• BOARD OF DIRECTORS - is the governing body of a
corporation has a sole authority to determine the
policy and conduct the ordinary business of the
corporation.
• WORKING CAPITAL - is the portion of the firm capital
continuosly considered into cash fund
• CASH FLOW - is the continual movement of money
throughout the enterprise during any period of time.
• ACCONTS RECEIVABLE - are money borrowed to
a business from the sale, on the credit of goods
or services in the normal case of the business.
• OPEN ACCOUNT - is an arrangement under
which goods on credit are sold to a customer on
credit with no formal contract.
• DISCOUNT PERIOD - is the number of days
during which a discount for prompt payment is
available to the buyer.
• CREDIT PERIOD - is the period between the
date that the buyer invoiced and the date
when payment is due.
• CAPITAL EXPENDITURES - refers to cash outlay
intended to lessen cost and increase income
of the firm for long term such as purchase of
fixed assets.
• BUILDING - the purest and most basic form of
corporate ownership
 FIELDS IN ACCOUNTING
• PUBLIC ACCOUNTING - is a professional career offering
professional services like auditing, accounting tax
management and consultancy service to the public. For
auditing account services and related service asure that
the practitioner passed the certified public accountant
licensure examination given by the PRC

• PRIVATE ACCOUNTING - is another career field where a

CPA is employed in a private enterprise as accountant,
controller, budget officer, internal auditor and other
position in the accounting and treasury department.
• THE ACCOUNTANT - is a person who hold a degree
in accountancy and passed the government
licensure exam whose duties includes general or cost
accounting supervision. They are responsible on the
general record and preparation of financial
statements of the company.
• THE BOOKKEEPER - is a person with substantial
knowledge of accounting. They does the routine
work of recording, classifying and summarizing.
• THE CONTROLLER - is in charge of all ccounting
activities and function as the chief accounting officer
of the company whose work includes checking the
financial report, performance report budgets,
controls and tax studies and other related
undertaking.
• THE INTERNAL AUDITOR - is a person who assist the
higher management of the organization internal
control with the goals ensuring efficient operations,
compliance with company policies and protection of
company’s resources.
• A BUDGET OFFICER - helps in the information of plan
or lineup of activities expressedin terms of money
division or unit in order that ones goal and objectives
may be accomplished.
• CHIEF INFORMATION OFFICER - is in charge of the
information and communication technology
department whose function is to oversee the
electronic data processing operation to ensure its
efficient performance maintenance and control.
• A TAX OFFICER - handles tax planning, prepares tax
returns and advises management on the effect of taxes
on its various plans and project.
• RESEARCH AND EDUCATION - is another professional
field where the accountant assumes the role of
researcher, teacher and reviewer.
• COST ACCOUNTING - is another area of accounting
that deals with recording, classifying, and summarizing
the details of materials, ;abor and factory overhead
necessary to produce and sell the product or services.