FUNDAMENTALS OF ABM-1

Accounting (Presented by: Sir Jacky Chan Camitoc)

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, in making reasoned
choices among alternative courses of action.

HISTORY OF ACCOUNTING (Presented by: Yvone Jimenez)

WHAT IS ACCOUNTING?

Accounting is the process of recording financial transactions pertaining to a business. The accounting
process include summarizing, analyzing, and reporting these transactions to oversight agencies,
regulators, and tax collection entities. The financial statements used in accounting are a concise
summary of financial transactions over an accounting period, summarizing a company's operations,
financial position, and cash flows.

FATHER OF ACCOUNTING (Fra Luca Bartolomeo de Pacioli: Born: 1447 , Died: June 19, 1517)

Fra Luca Bartolomeo de Pacioli was an Italian mathematician, Franciscan friar, collaborator with
Leonardo da Vinci, and an early contributor to the field now known as accounting. He is referred to as
"The Father of Accounting and Bookkeeping" in Europe and he was the first person to publish a work on
the double-entry system of book-keeping on the continent. He was also called Luca di Borgo after his
birthplace, Borgo Sansepolcro, Tuscany.

HISTORY OF ACCOUNTING

Both the words accounting and accountancy were in use in Great Britain by the mid-1800s, and are
derived from the words "accompting" and "accountantship". In Middle English (used roughly between
the 12th and late 15th century), the verb "to account" had the form "accounten", which was derived
from the Old French word "aconter" , in turn related to the Vulgar Latin word "computare" (meaning "to
reckon"). The base of "computare" is "putare", which variously meant to prune, to purify or to correct
an account - hence, to count, calculate, or think.

The word accountant is derived from the French word "compter", which isalso derived from the Latin
word "computare". It was formerly written in English as "accomptant", which was always pronounced by
dropping the "p”, and in time gradually changed both in pronunciation and orthography to its present
form.

The history of accounting is thousands of years old and can be traced to ancient civilizations. The early
development of accounting dates back to ancient Mesopotamia, and is closely related to developments
in writing, counting and money. There's also evidence for early forms of bookkeeping in ancient Iran and
early auditing systems by the ancient Egyptians and Babylonians. By the time of the Emperor Augustus,
the Roman government had access to detailed financial information.
Double-entry bookkeeping developed in medieval Europe, and accounting split into financial accounting
and management accounting with the development of joint-stock companies. On November 10th 1494 a
book titled "Summa de Arithmetica, Geometria, Proportioni et Proportionalita" (Everything About
Arithmetic, Geometry and Proportion) by Luca Pacioli, was published in Venice that contained the first
ever essay on double-entry bookkeeping and provided a base for other works on mercantile accounting.
November 10th is now celebrated as internationally as Accountants Day.

Accounting began to transition into an organized profession in the 19 th century, with local professional
bodies in England merging to form the Institute of Chartered Accountants in England and Wales in 1880.

INTERNAL USERS (Presented by: Julius Ryle Dumanon)

What are Internal Users?

Internal Users are the individual who runs, manages and operates the daily activities of the inside area
of an organization.

Internal Users include managers and other employees who use financial information to confirm past
results and help make adjustments for future activities.

What are the some examples of Internal Users?

Managers – Managers need detailed performance information about each segment of the business, so
that they can make ongoing corrections and enhancements to the organization. Their objective are to
maintain a steady or increasing level of cash flow.

Employees / Accountants

Some employees, such as accountants or the finance department, are usaers of financial statements
because it’s part of their job. If other employees have access to the information, it can help them judge
whether the firm is in good shape of if it’s time to jump ship.

Owners

Owners can use the statements to evaluate whether their investment is safe and whether the company
is providing an acceptable return on their money.

EXTERNAL USERS and their examples (Presented by: Pamela Espadero)

External Users - External users are the persons who have an interest in the account information of a
business but they are not part of the administrative process of the business organization.

EXAMPLES

Investors - One of the most common categories of an external user is investors. These are the people
that use their personal money to buy, or invest, into a company. Since the goal of becoming a
shareholder in a business is to make money, investors are keenly interested in financial information.
Creditors - A second category of external users are creditors. There are a number of different types of
creditors that a business may have. A bank is an example of a creditor. A bank is a potential financer for
a business.

Lenders - Lenders want to know if a business can pay for outstanding loans, and whether they have
sufficient collateral to support the loans. Based on their review of a borrower's financial statements,
they may call a loan or be willing to extend additional funds.

Creditors vs. Lenders

Both the terms "lender" and "creditor" refer to an entity, such as a bank, that provides money in the
form of a loan in exchange for loan interest. The difference is that the term "lender" refers to a general
supplier of money, whereas "creditor" refers to a provider of money in relation to a specific borrower.

For example, when a company obtains a loan from a bank, the bank becomes its "creditor." If the
company has no debt, it has no "creditors," but the bank remains a "lender" in its own right.

Supplier - A supplier is another type of creditor. Oftentimes in business, suppliers sell needed supplies to
a business on a credit basis. The credit basis means that the supplies are delivered without payment but
with a guarantee that they will be paid for in a certain time period.

Customers - Customers are more likely to have an interest in a company's financial statements when
they rely upon the goods and services provided by the firm. If the firm is in a weak financial position,
customers are more likely to take their business elsewhere.

Government - A third type of external user of accounting information is the government. They want to
know how much money a company made in order to know how much taxes the company should be
paying. This is a vital part of our economy, and even though we don't always like it, paying taxes

is what keeps our world spinning.

Labor Union - Labor union negotiators want to see a firm's financial statements in order to arrive at
negotiating positions regarding the compensation and benefits of the employees that they represent.
NATURE OF ACCOUNTING (Presented by: Jewel Castro)

Accounting is a method of recording, classifying, and documenting the financial transactions of a

The Nature of Accounting can be defined in two ways:

a. Qualitative Attributes of Accounting

b. Quantitative Attributes of Accounting

Qualitative Attributes of Accounting

Qualitative characteristics of accounting information are traits that allow financial professionals to more
easily understand and make decisions on accounting reports.

There are six different types of qualitative characteristics of accounting information, including:

a. Relevance

b. Reliability

c. Verifiability

d. Understandability

e. Comparability

f. Timeliness

Quantitative Attributes of Accounting

The Quantitative attributes explaining Nature of Accounting are as follows:

a. Recording only financial transactions

b. Classifying

c. Summarizing