accounting overview john v. balanquit johnthecpa.wikispaces.com
TRANSCRIPT
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Accounting Overview
John V. Balanquit
johnthecpa.wikispaces.com
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Objectives
Student will be able to discuss:• The history of accounting• Accounting systems• The forms of business organization• The nature of business operations
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Objectives
Student will be able to :• Define accounting• Summarize the accounting process• Explain the needs of each user of financial
information• Define and identify FS elements
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History of Accounting
Primitive Accounting• Bullae• Code of Hammurabi– Scribe
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History of Accounting
Middle Ages• Fra Luca Pacioli– Father of Accounting
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History of Accounting
Information Age (Modern)• Globalization– The world is becoming a small community due
to the advancement of technology
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Accounting Systems
Manual Accounting System• A system that uses pen and paper only or
any substitute to pen and paper
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Accounting Systems
Mechanical Accounting System• A system that uses simple computing
machines in addition to pen and paper
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Accounting Systems
Electro-mechanical Accounting System• A system that uses advanced computing
machines in addition to pen and paper
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Accounting Systems
Electronic Data Processing (EDP) System• A system that uses networks of computers
and the internet in processing information• Still uses pen and paper
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Forms of Business Organization
• Sole proprietorship• Partnership• Corporation– Cooperative
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Nature of Business Operation
• Service• Merchandising• Manufacturing• Agri-business• Hybrid
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Let’s have a one minute break so that we can absorb the concepts of the previous topic.
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Definition of Accounting
It is a service function which involves the processes of identifying, recording, summarizing and interpreting financial information relevant in decision-making.
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Definition of Accounting
• It is a science because it follows a process and it involves critical thinking
• It is an art because it involves judgment and creative thinking
• It is the language of the business
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Accounting Process
1. Identifying
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Accounting Process
2. RecordingJournalizingClassifying (Posting)
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Accounting Process
3. SummarizingTrial BalanceWorksheetFinancial Statement
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Accounting Process
4. InterpretingRatio AnalysisTrend AnalysisBenchmarkingHorizontal and Vertical Analysis
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Users of Financial Information
• Owners/ Investors• Suppliers/ Trade Creditors• Lenders/ Other Creditors• Employees
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Users of Financial Information
• Customers• Government• Public
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Elements of Financial Statements
• Assets• Liabilities• Equity
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Elements of Financial Statements
• Income– Revenue– Gain
• Expense– Expense– Loss
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End of Lecture
Thank You!
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Quick Check
1. What purpose does the bullae serve during the primitive times?
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Quick Check
2. What specific rule does the code of Hammurabi say regarding business transactions?
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Quick Check
3. What is the contribution of Fra Luca Pacioli to accounting?
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Quick Check
4. Provide the types of businesses according to ownership.
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Quick Check
5. Provide the types of businesses according to nature of operations.
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Quick Check
6. Provide the various accounting systems
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Quick Check
7. Provide the processes of accounting.
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Quick Check
8. Define the needs of the different users of financial information.
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Quick Check
9. Enumerate the elements of financial statements.
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Assignment1 Whole Yellow Paper 15 Points• Provide the technical definition of the
financial statement elements based on the Conceptual Framework for Financial Reporting.
• Indicate your reference
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Seat WorkAnswer the following questions by groups of 3.
1. Provide two instances where an EDP system is not appropriate in a business.
2. Why is it important for businesses to maintain pen and paper (Printed) reports?