Prepared By: Mark John Bolatin

Accounting: The Languageof Business

TOPICS

• Accounting As information System• Accounting and Information System definitions

• Financial accounting and Management accounting

• Accounting as an aid in decision making

• Users of Informartion

• Accounting System / Cycle

• RA 9298

• CPA as a profession

TOPICS

• Accounting Principles, Conventions and Concepts• Definition and Differences

• Concepts

• Conventions

ACCOUNTING AS AN INFORMATION SYSTEM

WHAT IS “ACCOUNTING”• PFRSC(Formerly ASC)- 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.

• American Accounting Associations defines accounting as the process of identifying, measuring, and communicating economic information to permit informed judgment and decision by users of information.

PURPOSE of accounting

CPA’s Primary Purpose

INFORMATION SYSTEM• The information system is defined as an integrated set of methods, procedures and means

used in order to collect, transmit and process data, analyze, store, disseminate and capitalize information and knowledge to users of informations.

FINANCIAL AND MANAGEMENT ACCOUNTING

• The major distinction between financial and management accounting is the users of the information.

• Financial accounting serves external users.

• Management accounting serves internal users, such as top executives, management,and administrators within organizations.

ACCOUNTING AS AN AID TODECISION MAKING

• Accounting information is useful to anyone who makes decisions that have economic results.

• Investors

• Lenders

• Creditors or suppliers

• Government

• Customers

• Employees

• Managers and owners

External

Internal

ACCOUNTING AS AN AID TODECISION MAKING

• Fundamental relationships in the decision-making process:

Event

Accountant’sanalysis &recording

FinancialStatements

Users

ACCOUNTING SYSTEM / CYCLE

• Analyzing

• Journalizing

• Summarizing

• Un-adjusted Trial Balance

• Adjusting Entries

• Adjusted Trial Balance

• Financial Statements

• Closing Entries

• Reversing Entries

RA 9298

• Also known as the Accountancy Act of 2004

• ACCOUNTANCY has developed as a profession attaining a status equivalent to that of law and medicine

CPA AS A PROFESSION• CPA’s in Public Practice

• CPA’s in Private Institution

• CPA’s in Government

• CPA’s in Academe

ACCOUNTING PRINCIPLES, CONVENTION AND CONCEPTS

• Concepts• Are the basic notions or

fundamental premises on which accounting process is based.

• Conventions• Guidelines that arise from

practical applications of accounting principles. Conventions are not legally-binding practice, rather it is generally accepted based on customs and is designed to help accountants overcome practical problems.

ACCOUNTING PRINCIPLES

CONCEPTS•ACCRUAL

•GOING CONCERN

•ACCOUNTING ENTITY

•MONETARY UNIT

•TIME VALUE

CONVENTIONS•CONSERVATISM

•CONSISTENCY

•OBJECTIVITY

•COST PRINCIPLE

•MATERIALITY

•MATCHING PRINCIPLE

PRINCIPLES

ACCOUNTING CONCEPTS (AGAMTA)

• ACCRUAL

ACCOUNTING CONCEPTS (AGAMTA)

• GOING CONCERN

ACCOUNTING CONCEPTS (AGAMTA)

• ACCOUNTING ENTITY

ACCOUNTING CONCEPTS (AGAMTA)

• Monetary Unit

Common unit

ACCOUNTING CONCEPTS (AGAMTA)

• TIME PERIOD / ACCOUNTING PERIOD

ACCOUNTING CONVENTIONS

• MATCHING PRINCIPLE

ACCOUNTING CONVENTIONS

• CONSERVATISM

ACCOUNTING CONVENTIONS

• CONSISTENCY

ACCOUNTING CONVENTIONS

• OBJECTIVITY

ACCOUNTING CONVENTIONS

• COST PRICIPLE

ACCOUNTING CONVENTIONS

• Materiality

• Strict adherence to GAAP is not required when the items are not significant enough to affect or influence the decision of users.

ACCOUNTING CONVENTIONS

• Cost Over Benefit

•Benefit > Cost

•Benefit < Cost

REFERENCE'S:Financial Accounting- Valix Peralta

Theory of Accounts (CPA Reviewer) – Atty. Conrado Valix, Christian Valix

Various website sources

THANK YOU……..