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Introduction To Accounting Module

Accounting is the process of identifying, measuring, and communicating financial information about an entity. It involves recording transactions, classifying financial information, and preparing financial statements. The history of accounting dates back to ancient civilizations like the Sumerians, who developed the abacus as a calculating tool. Modern accounting emerged during the Industrial Revolution in the 19th century. Key developments included the establishment of accounting standards and the recognition of accounting as a profession. Accounting has several branches that serve different users, including financial accounting, management accounting, government accounting, auditing, tax accounting, and cost accounting.

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Dindin Oromedlav Lorica
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74 views

Introduction To Accounting Module

Accounting is the process of identifying, measuring, and communicating financial information about an entity. It involves recording transactions, classifying financial information, and preparing financial statements. The history of accounting dates back to ancient civilizations like the Sumerians, who developed the abacus as a calculating tool. Modern accounting emerged during the Industrial Revolution in the 19th century. Key developments included the establishment of accounting standards and the recognition of accounting as a profession. Accounting has several branches that serve different users, including financial accounting, management accounting, government accounting, auditing, tax accounting, and cost accounting.

Uploaded by

Dindin Oromedlav Lorica
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 1 : INTRODUCTION TO THE WHAT IS ACCOUNTING?

DEFINITION AND NATURE


FUNDAMENTALS OF ACCOUNTING  ACCOUNTING AS A SYSTEMATIC PROCESS
 PROCESS is a series of actions that produce
WHAT IS ACCOUNTING? something or that lead to a particular result.
DEFINITION AND NATURE  It is the process of IDENTIFYING, MEASURING
 ACCOUNTING AS A SERVICE ACTIVITY and COMMUNICATING economic information to
 Service is the occupation or function of serving; permit informed judgment and decision by users
 Its function is to provide QUANTITATIVE of the information.
INFORMATION, PRIMARILY FINANCIAL IN  FROM AAA: AMERICAN ACCOUNTING
NATURE, about ECONOMIC ENTITIES, that is ASSOCIATION
intended to be useful in making ECONOMIC
DECISION.
 FROM ASC: ACCOUNTING STANDARDS
COUNCIL

HISTORY OF ACCOUNTING
 5000 BC
 ABACUS functioned as a calculator in the
ancient times
 Was developed by the SUMERIANS
WHAT IS ACCOUNTING? ( FROM MESOPOTAMIA) ( MODERN
DEFINITION AND NATURE DAY IRAQ )
 ACCOUNTING AS AN ART
 ART is a skill acquired by EXPERIENCE.
 It is an art of RECORDING, CLASSIFYING
and SUMMARIZING in a significant
manner in terms of money, transactions
and events which are in part at least of a
financial character and INTERPRETING
the results thereof
 From AICPA: AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS

 14TH CENTRY – THE BIRTH OF DOUBLE ENTRY


BOOK KEEPING

 FOUNDER: LUCA PACIOLI OF ITALY


 “FATHER OF ACCOUNTING”
 Wrote “EVERYTHING ABOUT
ARITHMETIC, GEOMETRY, PROPORTION”
 Similar to modern day
accounting cycle
 Explains extensively the use of
BALANCE SHEET, METHOD OF
RECORDING MEMORANDUMS
 JOURNALS AND LEDGERS, THE PRACTICE: History of Accounting (Story Telling)
USE OF ACCOUNTS SUCH AS Instructions:
ASSETS, LIABILITIES AND 1. Divide the class into two (2) groups.
OWNER’S EQUITY, REVENUE AND 2. Each group will summarize the history of
EXPENSES YEAR END CLOSING accounting.
ENTRIES AND THE USE OF TRIAL 3. By storytelling, one representative from
BALANCE TO PROVE A BALANCED each group will narrate the history of
LEDGER accounting in front of the class.
4. Perform the task for five (5) minutes only.

ASSESSMENT:

Directions: Write TRUE is the statement is correct and


FALSE if the statement is wrong.

_____ 1. The history of accounting dates back to history


of mankind wherein man relied on the natural-
born intelligence than on experience.
_____ 2. Accounting is both an art and discipline.
_____ 3. Accountancy became a profession and is not
governed by sets of rules and standards.
_____ 4. One example of financial statement is Balance
Sheet.
_____ 5. Accounting is the language of business.

Chapter 2: BRANCHES OF ACCOUNTING


According to Investopedia
(http://www.investopedia.com/university/accounting/
accounting2.asp:)

“Accounting is divided into several branches to better


serve the needs of different users with varying
information needs. These branches sometimes
 19TH CENTURY – THE DAWN OF MODERN overlap and they are often closely intertwined.”
ACCOUNTING IN EUROPE AND AMERICA
 Industrial revolution which replaced  FINANCIAL ACCOUNTING
hand tools with MACHINE or POWER
 MANAGEMENT ACCOUNTING
TOOLS.
 TRANSFORMED ACCOUNTING INTO AN
 GOVERNMENT ACCOUNTING
ACTUAL PROFESSION  AUDITING
 TAX ACCOUNTING
 20TH CENTURY – THE EVOLUTION OF MODERN  COST ACCOUNTING
ACCOUNTING STANDARDS  ACCOUNTING EDUCATION
 AICPA= AMERICAN INSTITUTE OF  ACCOUNTING RESEARCH
CERTIFIED PUBLIC ACCOUNTANTS, the
first national professional association for FINANCIAL ACCOUNTING
CPAs in the United States
 is the reporting of the financial position and
 AICPA was tasked to establish FASB to set
ACCOUNTING AND AUDITING standards
performance of a firm through financial
 FASB: FINANCIAL ACCOUNTING statements issued to external users.
STANDARDS BOARD, is the result of the  Deals with the framework covering accounting
demand for more reliable and principles and concepts relative to
comparable FINANCIAL REPORTING. MEASUREMENT and VALUATION applied to the
preparation and presentation of FINANCIAL
STATEMENTS.
Example of these financial reports include:
 The balance sheet (statement of financial
condition)
 Income statement (the profit and loss
statement, or P&L)
 Statement of cashflow
MANAGEMENT (OR MANAGERIAL) ACCOUNTING
• process of identifying, measuring, analyzing,
interpreting and communicating information
for the pursuit of an organization's goals. 
• aimed at helping managers within the
organization make decisions. (INTERNAL
USERS)
• MANAGERIAL ACCOUNTING involves
financial analysis, budgeting and forcasting,
cost analysis, evaluation an business
decisions and similar areas.
GOVERNMENT ACCOUNTING
  refers to the field of  that specifically finds
application in the public sector.

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