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Introduction to Accounting- FABM 1.pdf

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kathleen villanueva

This document provides an introduction to an introductory course on accounting, business, and management fundamentals. It outlines the course content which will cover basic accounting concepts and principles. These include analyzing transactions, journalizing, general ledgers, adjusting entries, financial statements, and more. The objectives are to develop an appreciation of accounting as the language of business and an understanding of how to analyze business performance.

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ACCOUNTANCY, BUSINESS, & MANAGEMENT FUNDAMENTALS OF 2024
INTRODUCTION This is an introductory course in accounting, business, and management data analysis that will develop students appreciation of accounting as a language of business and an understanding of basic accounting concepts and principles that will help them analyze business transactions.
TABLE OF CONTENT Accounting in Action Analyzing Transaction: Debit and Credit Journalizing Transactions Posting to a General Ledger Work Sheet and Adjusting Entries Accounting for Uncollectible Accounts Receivable
TABLE OF CONTENT Adjusting Entries and T Balance Financial Statements Closing Entries and Post-Closing T-Balance Purchases and Cash Payments Sales and Cash Receipts Transactions using a General Journal
Accounting is the language of business. Warren Buffett
OBJECTIVES Describe the different users of accounting information Prepare a net worth statement and explain its purpose Classify accounts as assets, liabilities or owners equity and their relationship Analyze the effects of transactions on the accounting equation Distinguish between cash and on account transactions Compare and Contrast the types of transactions that increase or decrease OE Explain difference between expenses and liabilities
ROLE it communicates so much of the information that owners, managers, and investors need to evaluate a company's financial performance the process of measuring and summarizing business activities, interpreting financial information, and communicating the results to management and other decision makers. FIELDS Financial Accounting Management Accounting Cost Accounting External Auditing Internal Auditing DEFINITION ACCOUNTING
USERS OF THE ACCOUNTING INFORMATION External Users Internal Users
Corporation Partnership Sole or Single Proprietorship FORMS OF BUSINESS ORGANIZATIONS
Manufacture Merchandise Service TYPES OF BUSINESS (ACC. TO ACTIVITIES)
ACCOUNTING IN PERSONAL LIFE Accounting can be used to make personal financial decisions as well as business decisions.
Net Worth Statement A formal report which shows what an individual owns, what an individual owes, and the difference between the two.
ASSET VS. LIABILITY ASSET cash, house, cars, bikes and real estates Anything of value that is owned LIABILITY Loans, Money owed from friends, banks, or relatives, credit card and bills An amount owed
NET WORTH Total estimated value of everything owned less the total of everything owed.
PERSONAL NET WORTH Total estimated value of everything owned less the total of everything owed. NET WORTH EQUITY= ASSET - LIABILITY
ETHICS IN BUSINESS In order for a business to become successful it should be governed ethically.
ACCOUNTING CONCEPTS ENTITY CONCEPT Business is considered separate and distinct from the owner
ACCOUNTING CONCEPTS GOING CONCERN CONCEPT this concept assumes that the business will continue its operations for an indefinite period unless there is an indication to the contrary
ACCOUNTING CONCEPTS ACCRUAL CONCEPT It gives rise to the receivables and payables. Revenues are recorded as long as the earning process is complete.
ACCOUNTING CONCEPTS PERIOD CONCEPTS It makes the financial reporting meaningful and the financial information useful. A life of business is divided into measurable period.
ACCOUNTING CONCEPTS UNIT OF MEASURE Common monetary unit required to record all the financial transactions.
ACCOUNTING CONCEPTS MATCHING CONCEPT requires that there should be proper matching of expenses against the revenues for which they incurred.
ACCOUNTING CONCEPTS DUAL EFFECT CONCEPT indicates that every transactions of the business will cause a value receive and a value given up.
ACCOUNTING CONCEPTS GENERAL PURPOSE CONCEPT makes financial reporting understandable to a broad group of users of financial statements.
Accounting Standards and Rules General Accepted Accounting Principles (GAAP) The Philippine Financial Reporting Standards (PFRS) and the Philippine Accounting Standards (PAS) are the current set of Generally Accepted Accounting Principles (GAAP) in the Philippines. The PFRS is a set of GAAP issued by the Accounting Standards Council (ASC) to govern the preparation of financial statements
Accounting Equation
Accounting Equation Accounting equation is used to record transactions of the business. A record that summarizes all the transactions pertaining to a single item is called an account. Every asset, liability and equity should be entered into a single account as follows.
ASSETS DEFINITION, EXAMPLES AND TYPES 2023 these are resources with potential economic benefits that are within the control of the company these are resources with potential economic benefits that are within the control of the company Cash Receivables Inventory Prepaid Expenses Property, Plant, and Equipment Intangible Assets
LIABILITIES DEFINITION, EXAMPLES AND TYPES 2023 these are obligations that the company required to pay. these are obligations that the company required to pay. Accounts Payable Accrued Expenses Unearned Income Long-Term Liabilities
EQUITY 2023 it is the net assets of the business. it is composed of accumulated net income and net of any distribution to the owners. it reflects the portion if the asset that belongs to the owner/s of the business it is the net assets of the business. it is composed of accumulated net income and net of any distribution to the owners. it reflects the portion if the asset that belongs to the owner/s of the business
EXAMPLE OF TRANSACTION IN ACCOUNTING EQUATION
MORE EXAMPLE:
Transactions made in Delgado Web Services Transaction 1. January 2. Received cash from owner as an investment, Php20,000.00 RECEIVING CASH ASSET = LIABILITES + EQUITY CASH Delgados Capital P20,000.00 P20,000.00
Transactions made in Delgado Web Services Transaction 2. January 2. Paid Cash for supplies, P 1,650.00 Transaction 3. January 3. Paind cash for Insurance, P 9,000.00 PAYING CASH ASSET = LIABILITES + EQUITY Cash + Supplies + Insurance Delgados Capital P20,000.00 P20,000.00 -P 1,650 +P 1,650 -P 9,000 +P 9,000 P 9,350 P 1,650 P 9,000 P 0.00 P 20,000.00
Transactions made in Delgado Web Services Transaction 6. January 10. Received cash from Sales, P 11,000.00 Transaction 7. January 12. Sold services on account to Main Street Servies, P 5,000.00 TRANSACTION AFFECTING EQUITY ASSET = LIABILITES + EQUITY Cash + + Supplies + Insurance Delgados Capital P20,000.00 P 36,000 Accts. Pay. - Canyon Office + = T.6 T.7 P 1,200 P 9,000 P 3, 850 P 8,350 Acct. Receivable - Main Street Services + 11,000 + 5,000 + 11,000 + 5,000 P19, 350 P 5,000 P 3, 850 P 9,000
Transactions made in Delgado Web Services Transaction 8. January 12. Paid Cash for Communication Bill for cell phone and internet services, P 800.00 Transaction 9. January 13. Paid Cash for equipment rental, P 4,000.00 EXPENSE TRANSACTIONS ASSET = LIABILITES + EQUITY Cash + + Supplies + Insurance Delgados Capital P20,000.00 P 31,200 Accts. Pay. - Canyon Office + = T. 8 T. 9 P 1,200 P 9,000 P 3, 850 P 19,350 Acct. Receivable - Main Street Services -800 - 4,000 -800 - 4, 000 P14, 550 P 5,000 P 3, 850 P 9,000 P 5,000
Transactions made in Delgado Web Services Transaction 10. January 16. Received cash on account from Main Street, P 2,000. Transaction 11. January 16. Michael Delgado withdrew equity in cash, P 3,500.00. OTHER CASH TRANSACTIONS ASSET = LIABILITES + EQUITY Cash + + Supplies + Insurance Delgados Capital P31,200 P 27,700 Accts. Pay. - Canyon Office + = T. 10 T. 11 P 1,200 P 9,000 P 3, 850 P 14,550 Acct. Receivable - Main Street Services 2,000 - 3,500 + 2,000 - 3, 500 P13, 050 P 5,000 P 3, 850 P 9,000 P 3,000
Transactions made in Delgado Web Services Lets CHECK ASSET = LIABILITES + EQUITY Cash + + Supplies + Insurance Delgados Capital P 27,700 Accts. Pay. - Canyon Office + = P 1,200 Acct. Receivable - Main Street Services P13, 050 P 3, 850 P 9,000 P 3,000 P 1,200 + 27,700 = P 28,900 P13, 050 + 3,000 + 3,850 + 9,000 = P 28,900.00
THANK YOU

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Introduction to Accounting- FABM 1.pdf

  • 2. INTRODUCTION This is an introductory course in accounting, business, and management data analysis that will develop students appreciation of accounting as a language of business and an understanding of basic accounting concepts and principles that will help them analyze business transactions.
  • 3. TABLE OF CONTENT Accounting in Action Analyzing Transaction: Debit and Credit Journalizing Transactions Posting to a General Ledger Work Sheet and Adjusting Entries Accounting for Uncollectible Accounts Receivable
  • 4. TABLE OF CONTENT Adjusting Entries and T Balance Financial Statements Closing Entries and Post-Closing T-Balance Purchases and Cash Payments Sales and Cash Receipts Transactions using a General Journal
  • 5. Accounting is the language of business. Warren Buffett
  • 6. OBJECTIVES Describe the different users of accounting information Prepare a net worth statement and explain its purpose Classify accounts as assets, liabilities or owners equity and their relationship Analyze the effects of transactions on the accounting equation Distinguish between cash and on account transactions Compare and Contrast the types of transactions that increase or decrease OE Explain difference between expenses and liabilities
  • 7. ROLE it communicates so much of the information that owners, managers, and investors need to evaluate a company's financial performance the process of measuring and summarizing business activities, interpreting financial information, and communicating the results to management and other decision makers. FIELDS Financial Accounting Management Accounting Cost Accounting External Auditing Internal Auditing DEFINITION ACCOUNTING
  • 11. ACCOUNTING IN PERSONAL LIFE Accounting can be used to make personal financial decisions as well as business decisions.
  • 12. Net Worth Statement A formal report which shows what an individual owns, what an individual owes, and the difference between the two.
  • 13. ASSET VS. LIABILITY ASSET cash, house, cars, bikes and real estates Anything of value that is owned LIABILITY Loans, Money owed from friends, banks, or relatives, credit card and bills An amount owed
  • 14. NET WORTH Total estimated value of everything owned less the total of everything owed.
  • 15. PERSONAL NET WORTH Total estimated value of everything owned less the total of everything owed. NET WORTH EQUITY= ASSET - LIABILITY
  • 16. ETHICS IN BUSINESS In order for a business to become successful it should be governed ethically.
  • 17. ACCOUNTING CONCEPTS ENTITY CONCEPT Business is considered separate and distinct from the owner
  • 18. ACCOUNTING CONCEPTS GOING CONCERN CONCEPT this concept assumes that the business will continue its operations for an indefinite period unless there is an indication to the contrary
  • 19. ACCOUNTING CONCEPTS ACCRUAL CONCEPT It gives rise to the receivables and payables. Revenues are recorded as long as the earning process is complete.
  • 20. ACCOUNTING CONCEPTS PERIOD CONCEPTS It makes the financial reporting meaningful and the financial information useful. A life of business is divided into measurable period.
  • 21. ACCOUNTING CONCEPTS UNIT OF MEASURE Common monetary unit required to record all the financial transactions.
  • 22. ACCOUNTING CONCEPTS MATCHING CONCEPT requires that there should be proper matching of expenses against the revenues for which they incurred.
  • 23. ACCOUNTING CONCEPTS DUAL EFFECT CONCEPT indicates that every transactions of the business will cause a value receive and a value given up.
  • 24. ACCOUNTING CONCEPTS GENERAL PURPOSE CONCEPT makes financial reporting understandable to a broad group of users of financial statements.
  • 25. Accounting Standards and Rules General Accepted Accounting Principles (GAAP) The Philippine Financial Reporting Standards (PFRS) and the Philippine Accounting Standards (PAS) are the current set of Generally Accepted Accounting Principles (GAAP) in the Philippines. The PFRS is a set of GAAP issued by the Accounting Standards Council (ASC) to govern the preparation of financial statements
  • 27. Accounting Equation Accounting equation is used to record transactions of the business. A record that summarizes all the transactions pertaining to a single item is called an account. Every asset, liability and equity should be entered into a single account as follows.
  • 28. ASSETS DEFINITION, EXAMPLES AND TYPES 2023 these are resources with potential economic benefits that are within the control of the company these are resources with potential economic benefits that are within the control of the company Cash Receivables Inventory Prepaid Expenses Property, Plant, and Equipment Intangible Assets
  • 29. LIABILITIES DEFINITION, EXAMPLES AND TYPES 2023 these are obligations that the company required to pay. these are obligations that the company required to pay. Accounts Payable Accrued Expenses Unearned Income Long-Term Liabilities
  • 30. EQUITY 2023 it is the net assets of the business. it is composed of accumulated net income and net of any distribution to the owners. it reflects the portion if the asset that belongs to the owner/s of the business it is the net assets of the business. it is composed of accumulated net income and net of any distribution to the owners. it reflects the portion if the asset that belongs to the owner/s of the business
  • 31. EXAMPLE OF TRANSACTION IN ACCOUNTING EQUATION
  • 33. Transactions made in Delgado Web Services Transaction 1. January 2. Received cash from owner as an investment, Php20,000.00 RECEIVING CASH ASSET = LIABILITES + EQUITY CASH Delgados Capital P20,000.00 P20,000.00
  • 34. Transactions made in Delgado Web Services Transaction 2. January 2. Paid Cash for supplies, P 1,650.00 Transaction 3. January 3. Paind cash for Insurance, P 9,000.00 PAYING CASH ASSET = LIABILITES + EQUITY Cash + Supplies + Insurance Delgados Capital P20,000.00 P20,000.00 -P 1,650 +P 1,650 -P 9,000 +P 9,000 P 9,350 P 1,650 P 9,000 P 0.00 P 20,000.00
  • 35. Transactions made in Delgado Web Services Transaction 6. January 10. Received cash from Sales, P 11,000.00 Transaction 7. January 12. Sold services on account to Main Street Servies, P 5,000.00 TRANSACTION AFFECTING EQUITY ASSET = LIABILITES + EQUITY Cash + + Supplies + Insurance Delgados Capital P20,000.00 P 36,000 Accts. Pay. - Canyon Office + = T.6 T.7 P 1,200 P 9,000 P 3, 850 P 8,350 Acct. Receivable - Main Street Services + 11,000 + 5,000 + 11,000 + 5,000 P19, 350 P 5,000 P 3, 850 P 9,000
  • 36. Transactions made in Delgado Web Services Transaction 8. January 12. Paid Cash for Communication Bill for cell phone and internet services, P 800.00 Transaction 9. January 13. Paid Cash for equipment rental, P 4,000.00 EXPENSE TRANSACTIONS ASSET = LIABILITES + EQUITY Cash + + Supplies + Insurance Delgados Capital P20,000.00 P 31,200 Accts. Pay. - Canyon Office + = T. 8 T. 9 P 1,200 P 9,000 P 3, 850 P 19,350 Acct. Receivable - Main Street Services -800 - 4,000 -800 - 4, 000 P14, 550 P 5,000 P 3, 850 P 9,000 P 5,000
  • 37. Transactions made in Delgado Web Services Transaction 10. January 16. Received cash on account from Main Street, P 2,000. Transaction 11. January 16. Michael Delgado withdrew equity in cash, P 3,500.00. OTHER CASH TRANSACTIONS ASSET = LIABILITES + EQUITY Cash + + Supplies + Insurance Delgados Capital P31,200 P 27,700 Accts. Pay. - Canyon Office + = T. 10 T. 11 P 1,200 P 9,000 P 3, 850 P 14,550 Acct. Receivable - Main Street Services 2,000 - 3,500 + 2,000 - 3, 500 P13, 050 P 5,000 P 3, 850 P 9,000 P 3,000
  • 38. Transactions made in Delgado Web Services Lets CHECK ASSET = LIABILITES + EQUITY Cash + + Supplies + Insurance Delgados Capital P 27,700 Accts. Pay. - Canyon Office + = P 1,200 Acct. Receivable - Main Street Services P13, 050 P 3, 850 P 9,000 P 3,000 P 1,200 + 27,700 = P 28,900 P13, 050 + 3,000 + 3,850 + 9,000 = P 28,900.00