OBJECTIVES To define accounting as an art, a service activity and a process. To state the basic purpose of Accounting and its major functions. To identify the various accounting organizations and profession. To discuss the different forms of organization and classification of business according to its activities Presented by: May Anne M. Arabit, CPA DEFINITION Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of financial character and interpreting the results thereof. ---ASC
Presented by: May Anne M. Arabit, CPA
DEFINITION Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature about economic entities that is intended to be useful in making economic decision
---AICPA
Presented by: May Anne M. Arabit, CPA
DEFINITION Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information.
---AAA
Presented by: May Anne M. Arabit, CPA
IMPORTANT ACTIVITIES Identifying – recognition and non-recognition of “accountable” events Measuring – process of determining monetary amounts at which the elements of financial statements are to be recognized and carried in the financial statements Communicating – preparing and distributing accounting reports to potential users of accounting information
Presented by: May Anne M. Arabit, CPA
BASIC PURPOSE OF ACCOUNTING The basic purpose of accounting is to provide quantitative information about a business, that is useful to statement users particularly owners and creditors, in making economic decisions.
Presented by: May Anne M. Arabit, CPA
BRANCHES OF ACCOUNTING AUDITING BOOKKEEPING COST ACCOUNTING FINANCIAL ACCOUNTING FINANCIAL MANAGEMENT MANAGEMENT ACCOUNTING TAXATION GOVERNMENT ACCOUNTING Presented by: May Anne M. Arabit, CPA THE ACCOUNTANCY PROFESSION
THE REGULATORY BODIES OF ACCOUNTING Professional Regulation Commission (PRC) •ACPAE Board of Accountancy (BOA) •ACPACI Philippine Institute of Certified •ACPAPP Public Accountants (PICPA) •GACPA
Accounting Standards Council (ASC)
Financial Reporting Standards Council (FRSC) Presented by: May Anne M. Arabit, CPA FORMS OF BUSINESS ORGANIZATION Sole or Single Proprietorship Partnership Corporation
Presented by: May Anne M. Arabit, CPA
Sole or Single Proprietorship ADVANTAGES DISADVANTAGES It is easy to organize. Unlimited liability– The owner acquires all Limited resources the profits from his All losses are borne by business. the owner The owner and not the specialization in business is being taxed business management are not present
Presented by: May Anne M. Arabit, CPA
Partnership ADVANTAGES DISADVANTAGES It is also easy to Conflicts or quarrels organize between or among the Better management partners because of the presence It lacks stability or more participants Unlimited liability Possibility of bigger All partners may be held resources liable for the action of Tax-exempt if one partner professional partnership, but subject to corporate tax if commercial partnerships Presented by: May Anne M. Arabit, CPA Corporation ADVANTAGES DISADVANTAGES Limited Liability Complexity in organization and regulation. Power of succession Only the Board of Directors Greater source of capital and other authorized officers can bind the corporation in Continuity contracts Shareholders have limited access and control over management and operations Possibility of double taxation
Presented by: May Anne M. Arabit, CPA
TYPES OF BUSINESS OPERATIONS Service Merchandising Manufacturing Financing
Presented by: May Anne M. Arabit, CPA
IN YOUR OWN POINT OF VIEW, WHAT DOES ACCOUNTING MEANS?
Presented by: May Anne M. Arabit, CPA
Big yellow worksheets; several huge notebooks; brain-whacking theories; gazillions of numbers; numerous account titles; struggling calculator; statements to finish; life-long practice; thick books to read; rushing late night work; ugly eye bags; unbalanced financial reports; accuracy problems; unhealthy lifestyle; constant lack of sleep; nosebleed exams; heart-stopping results. Name it! Everything is in here. People may call it “Accounting.” But to us, we call it “LIFE”. Presented by: May Anne M. Arabit, CPA