MODULE I Describe the changes taking place in

INTRODUCTION TO ACCOUNTING the business environment and how

business organizations addressed
A. OVERVIEW these changes.
Module I contains the vision and
mission of the university and the C. REQUIREMENTS
goals of the college for you to read, After the reading and studying the
understand, and recite by heart. The module, please answer the
module also contains the accounting questions/exercises given at the end
concepts and basic principles which of the lecture.
serve as guide as the lessons II. CONTENT
progress. It also contains the
definition of accounting and its A. LESSONS
importance to different stakeholders.
Accounting information system and 1. VISION-MISSION-GOALS
its fundamental principles are VISION. A leading technology-driven
introduced. The lesson also includes university responsive to the
the classification of business development needs of changing
organization. Finally, in this module societies.
are the changes taking place in
business environment, and how MISSION. To develop globally
business addressed these changes. competitive and socially responsible
professionals through technology-
B. LEARNING OUTCOMES driven instructions, innovative
At the end of this module, you researches, sustainable extension
should be able to: programs that will enhance the lives
Familiarize with the vision and of people in the communities.
mission of the university and the
goals of the college. COLLEGE GOALS
1.1. To produce business
Learn the history of accounting. professionals and entrepreneurs
Develop clear understanding of the with skills, knowledge, abilities, and
accounting concepts and principles. work attitude ready to the challenges
Define accounting. of competitive business world.
1.2. To prepare young men
Understand the importance of and women in the field of business
accounting to different stakeholders. and industry, making them aware of
Define accounting information their worthwhile contributions to the
system. economy and society, as well as
their ethical and social
Discuss the fundamental system responsibilities.
principle.

Identify the different business

organizations as to nature and
ownership.

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2. HISTORY OF ACCOUNTING 3.1. Generally Accepted
Accounting Principles (GAAP)
Ancient Egyptians kept records of all
the goods kept in the royal Generally Accepted Accounting
storehouses. Scribes of Principles (GAAP) are accounting
Mesopotamia also kept business rules, procedures, practices, and
records on clay tablets. Ancient standards which served as guide in
Greek bankers’ account books show the preparation and presentation of
that they changed and loaned financial statements. They were
money. Ancient Romans’ bank developed based on reason, usage,
accounts were kept by the heads of experience, and necessity.
families.
3.2. Accounting
The term bookkeeping first appeared Assumptions
in the 1500s and meant the work of
keeping account books. Luco Pacioli Accounting assumptions are the
is the Father of Accounting released foundation of all accounting
in the 14th century Italy. He practices and principles:
described double-entry bookkeeping Accounting Entity
and other business-related concepts Going Concen
in his book, “De Computis et Time Period
Scriptures” (Of Reckoning and Monetary Unit
Writings).

In 1854 Scotland, Queen Victoria 3.3. Business as an

granted a royal charter to the Accounting Entity (Entity
Institute of Accountants in Glasgow, Principle)
creating the profession of chartered
accountant (CA), this was the start In accounting, the business is
of the modern accounting always considered separate from its
profession. owner or owners. Which means that
the personal properties of the owner
The chartered accountants from are different from the assets of the
Scotland and Britain came to the US business; the liabilities of the
to audit British investments. Some of business are different from his
these accountants stayed in the US personal obligations; and the
and practiced their profession; this expenses incurred by the business
was the origins of US accounting are also different from his personal
firms. expenses. Therefore, the
transactions entered into by the
3. ACCOUNTING CONCEPTS, owner in behalf of the business
ASSUMPTIONS AND PRINCIPLES should be recorded in the books of
The following accounting concepts the firm.
will serve as guide as you go along For example, Mr. V. Santos, who
with the lesson: owns a store and manages his own
business receives a monthly salary

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of Php 20000. Since this salary is the results thereof.” –AICPA
given to Mr. Santos at the end of Committee on Terminology
each month, it is an expense of the “The process of identifying,
business and should be recorded in measuring, and communicating
the accounting books of the firm. economic information to permit
This principle holds true to all types informed judgments and decisions
of business, whether sole by users of the information.” –
proprietorship, partnership, or American Association of
corporation. Accountants
3.4. Going Concern or Explanation of the Definitions
Continuity Assumption Art of Communication - Accounting
is a service activity which purpose is
The business is assumed to have a to communicate to different
continuous operation from the date it stakeholders the relevant
is established. information of the business
3.5. Time Period Identifying- Events of business
organizations are analyzed and only
The final result of any business those business transactions which
operation may not be obtained are identified as quantifiable or
unless the business is terminated measurable in terms of money are
and liquidated. Users of financial recognized and recorded in
reports, however, need periodic accounting books.
reports of the business. This is the Recording, Classifying,
reason for dividing the life of the Summarizing, Interpreting
business into accounting periods. These are the four (4) phases of
One accounting period is usually accounting:
one year. It could be a calendar Recording- or the technical term is
year, January 1 to December 31, or bookkeeping. It is the process of
natural business year which consists recording business transactions in
of 12 months that ends on the lowest the accounting books; the journal
or slack period of the business. and the ledger. There are two kinds
3.6. Monetary Unit of bookkeeping, the single-entry
bookkeeping and the double-entry
The Peso is the Philippine monetary bookkeeping. The single-entry
unit. Thus, assets, liabilities, equity, bookkeeping does not show the two-
income, and expenses should be fold effects of business transactions,
presented in this unit of measure. while the double-entry bookkeeping.

4. DEFINITION OF ACCOUNTING Classifying- accounts recorded are

Different accounting bodies have grouped and classified as to assets,
defined accounting as an “art of liabilities, capital, income, and
recording, classifying, summarizing expenses.
in a significant manner and in terms
of money, transactions and events,
which are in part, at least, of
financial character and interpreting

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 Assets are the properties of The following, among others, are the
the business. users of financial information of the
Liabilities are debts or business. Users of accounting
financial obligations of the information are the direct and
business. indirect users.
Capital is the amount of assets Direct users are the following:
invested by the owner in the
business. 5.1. Owner.
Income is the amount of Questions like “Has the business
revenue or earnings from improved?” “Is it wise to make
business operations. additional investments?” may be
Expense is the amount spent asked by the owner of a firm. He is
or paid for items used to operate interested to know whether the
the business. business should be maintained,
increased, decreased, or disposed
Summarizing- the data recorded or of completely. Furthermore, he
journalized and classified or posted needs to know if he is getting a fair
to their respective accounts are then return on his investment.
summarized in the form of financial
statements. 5.2. Management.
The basic financial statements are: The management may ask questions
income statement, statement of like, “What are the sources of
financial position, statement of business? How much are its debts?
changes in owner’s equity and the What expenses can be minimized?
statement of cash flows. Did the business earn? What is the
proportion of the expenses to sales?
Interpreting- based on the Is there a need for expansion?”
information provided by the financial
statements, the status of the To the management, financial
business is analyzed and interpreted information serves as a measure for
as to solvency, liquidated, making future financial decisions
profitability and other necessary and a measure of management
interpretations. From these effectiveness.
interpretations, proper decisions
could be done by the users of 5.3. Prospective Investors.
business information. “Will my money grow in the
business?” an investor may ask.
5. IMPORTANCE OF
ACCOUNTING TO An investor is interested in the
STAKEHOLDERS financial statement to determine
The main role of accounting is to whether to acquire ownership in the
communicate to stakeholders or firm.
users of financial information all
about the business, its organization 5.4. Creditors.
and condition by means of its A creditor may ask the following
financial statements. questions before granting loans.

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“Can the business meet its
obligations?” Creditors use financial
statements as a basis to answer ACCOUNTING INFORMATION
such question. SYSTEM (AIS)
Accounting information system is a
5.5. Employees. process which consists of:
“Are we receiving fair Input or the data gathered from
remuneration?” or “Can we ask for measurable business transactions
more financial assistance/benefits?” Process or processor which are
are some questions an employee recording, classifying, and
may ask. summarizing.
Output which are the financial
Employees are interested in financial statements, which purpose is to
information so they can assess the communicate to the users the results
ability of the firm to provide of business operation and financial
remuneration and other benefits. condition
Likewise, to labor unions such
information is useful for negotiating ACCOUNTING INFORMATION
increases in wages and improving SYSTEM (AIS) PRINCIPLES
working conditions.
To have efficient and effective AIS,
5.6. Government. the following principles have to be
“Is this firm reporting the correct followed:
amount of income?” may be one of
the questions asked by the Control Principle- the firm must have
government’s Bureau off Internal a good internal control. A good
Revenue. internal control protects the assets of
the business organization; produces
The government needs accounting reliable and accurate accounting
information to regulate the firm’s records; compliant with the company
activities for tax collection purposes policies; and proper evaluation of
and to determine the basis for unit/department performance.
taxation policies.
Cost-benefit Principle- the
All of these questions can be advantage derived from an asset
answered and wise decisions can be bought is more than the cost spent
made only after a thorough study of for its acquisition.
the accounting reports of the
business. Relevance Principle- the information
must be useful and must be reported
Indirect users are those who use promptly to users to reach a
accounting information as basis for conclusion and make a timely
their advice/assistance to direct decision.
users. They are the regulatory
agencies, the public, financial and
legal consultants.

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Compatibility Principle- the system persons. It is organized by operation
design should fit the size and usage of law
of the firm.
Cooperative- this kind of
Flexibility Principle- there are times business is governed by the
that the needs of the firm become “onemember, onevote” principle.
more complex, in that case, the
system design should allow for Common types of cooperative are:
changes. 8.1.4a. Worker Cooperative- owned
and operated by people working
NOTE: Accounting Information there.
System and the above-mentioned 8.1.4b. Consumer Cooperative-
principles will be taken up in detail, owned and operated by people who
among others, in higher accounting buy the goods or services from that
courses. coop.
8.1.4c. Producer Cooperative-
owned and operated by the people
6. BUSINESS ORGANIZATIONS who collaborate to process and
market their product.
Business organizations can be
classified according to (1) ownership 6.2. Nature of Business-
and (2) the nature of the business. according to the nature of business,
the following are the different types
6.1. Ownership- from the point of organizations:
of view of ownership, the following
are the types of business: i Service Concern- this deals with
the rendering of services to the
Single or sole proprietorship- this customers such as tailoring shops,
type of business is owned by one beauty shops, firms of CPA’s,
person. Usually the owner is also the lawyers, doctors, and others.
manager of the business. He usually
supplies the capital or borrows funds Trading or Merchandising
from banks or other lending Concern- this type of business deals
institutions. with the buying of goods and selling
of the same for profit. Examples are
Partnership- this is a business sari-sari stores, department stores,
organization with two or more grocery stores, etc.
owners. The owners, called
partners, agree on the capital Manufacturing Concern- this
contributions, management of the involves the purchase of raw
firm, distribution of profits and materials and converting these into
losses, and other matters pertaining finished products. Examples are
to the operation of the firm. textile manufacturing firms, candy
manufacturing firms, etc.
Corporation- this is a business
organization of no less than five

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BUSINESS ENVIRONMENT AND Fundamentals of Accountancy,
THE CHANGES TAKING PLACE Business and Management by
Rodiel C. Ferrer
With the advent of technology,
commerce has evolved.
E-commerce makes business III. SUMMARY
transactions possible even without
physical presence in the site of the Accounting is a service activity which
business main function is to communicate to
Business transactions are done the stakeholders of the business its
online financial information pertaining to
Goods/Products are ordered and operation and condition. It has four
paid on-line phases: recording, classifying,
Meetings and conferences are done summarizing, and interpreting. There
on-line via different platforms such are accounting concepts and
as Skype, Zoom, etc principles which serve as guide from
On-line banking is also a trend; and the analysis of business transactions
many other business transactions to preparation of financial
are done using technology. statements. Business organizations
The 2020 pandemic caused by can be classified into two: according
Covid-19 virus compelled the to nature and according to
government to quarantine and ownership. According to nature are
lockdown some areas to avoid service concern, merchandising
transmission of the disease. People concern, and manufacturing
were ordered to stay home and concern. While according to
businesses were temporarily closed. ownership are sole-proprietorship,
With this condition, people and partnership, and corporation. Years
business devoted to on-line back, transactions of these business
transactions: people go shopping organizations were done manually
using their gadgets and internet; and physical presence on the site of
even schools are holding classes business. However, with the advent
using different modalities with the of technology, business
aid of the internet. organizations have evolved and
Ecommerce is now commonly used
by most of them.
B. ADDITIONAL READINGS
Fundamentals of Accounting by
Amelia M. Arganda MODULE 2
Conceptual Framework and
Accounting Standards by Zeus INTRODUCTION
Millan
Financial Accounting and Reporting OVERVIEW
For Services and Merchandisers by Module 2 contains the different fields
Zenaida Manuel of accounting where you can choose
from for employment after
graduation. It also contains the

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regulatory and professional bodies in
accounting, and some important LESSON
provisions of Accountancy Acts of
2004, 2016, and 2017. The A. CONTENT
theoretical framework of accounting
is also an important content of the 1. FIELDS OF ACCOUNTING
module. This is the foundation of An accountant may specialize in any
accounting theories and principles. of these different fields: public
Corporate governance, business accounting, private accounting,
ethics, and the code of professional government accounting, accounting
ethics are also taken up. These education, international accounting,
topics are important as yours’ and and social accounting.
other accounting professionals’
guide in performance of duties as Public Accounting- it is a
professional accountants. professional service rendered by a
Certified Public Accountant and his
LEARNING OUTCOMES employees to the public for a fee.
At the end of the lesson, you should The following are the most common
be able to: services offered by a public
Identify the different accounting accountant.
fields. Auditing- this is the principal service
Explain the role of the regulatory offered by public accountants. In
bodies. making an audit, they carefully
Identify the professional bodies in examine, test, and check the
accounting. accuracy of the reports and financial
Discuss the important provisions of data from which these reports were
the Accountancy Act of 2004. taken. Then they express their
Explain the ethical standards in the opinion on the fairness of the
practice of accounting profession. audited reports.
Management advisory services- this
REQUIREMENTS includes the design, installation, and
After reading and studying the improvements of the firm’s general
lessons, please answer the accounting system and other
questions/exercises at the end of the systems deemed necessary for
lesson. controlling and distributing
INSTRUCTION manufacturing costs. In addition,
Spend the first two days of the week advice on financial planning,
(MW and TTh) reading, studying, budgeting, forecasting, and
and understanding the lessons in inventory control are offered.
this module. Then answer the Tax services- this includes
questions/exercises given and send preparation and filing of income tax
them to my private messenger. Then returns.
prepare for a discussion on the last Private Accounting- is done for
day of the week (F and S). private business enterprises. The
PRE-ASSESSMENT number of accountants in the firm
Recitation/Quiz depends on the size and needs of

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the business. Small business firms audit the income, payroll, and tax
may employ a few accountants while returns submitted to the government.
large business enterprises may have
a hundred of accountants. Accounting Education- faculty
Accountants in private firms may or members in accounting departments
may not be Certified Public of various colleges and universities
Accountant. However, the controller are Certified Public Accountants.
or the head of the department is
usually a CPA. International Accounting- this field of
accounting is concerned with the
General Accounting- this includes transactions and special problems of
recording transactions and preparing multinational business organizations
financial reports for the use of in their dealings in the international
management, owners, creditors, trade.
governmental units, and other
interested parties. Social Accounting- this involves the
measurement of social costs and
Cost Accounting- this has to do with benefits such as the measurement
determining and controlling costs in of traffic patterns for the most
producing a product or service. efficient use of traffic funds.

Budgeting- this provides REGULATORY BODIES

management with a plan for
operations. After this plan has been Securities and Exchange
applied, summaries and reports Commission (SEC)
comparing the actual The SEC is tasked to regulate
accomplishments with the plan are business operations of partnerships,
provided. corporations, and foreign companies
doing business in the Philippines. It
Internal Auditing- aside from the requires these entities to submit/file
audit done by a public accountant, audited financial reports as part of its
some business firms usually supervisory function over these
maintain a staff of internal auditors business organizations. It is also
who check the records prepared and tasked to protect the investments in
maintained in each department or the capital market, stocks and
branch. These internal auditors see bonds.
to it that the established accounting
procedures are being followed Bureau of Internal Revenue (BIR)
throughout the year. The BIR is tasked to collect licenses
and fees; and taxes from people and
Government Accounting- business organizations’ earning
government officials, like private income. Such collections are the
business firms, rely on accumulated source of funds of the Philippine
accounting data. Accountants are government used in its various
responsible for the accumulation of projects.
these data. They also check and

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Bangko Sentral ng Pilipinas (BSP) Philippines upon the
The BSP is tasked to regulate all recommendation of the PRC.
banks and financial institutions in the Among its functions are:
Philippines. It monitors importations, Monitor the practice of accountancy
exportations, interests, discounts, in the Philippines
loans, and foreign currency Conduct examinations to CPA
transactions. Through sound candidates
monetary policies, it promotes and Grant certificates to board passers
maintains the stability of Philippine Register members
peso. Suspend erring members
Conduct dialogue with accountancy
Cooperative Development Authority students, examinees, accountants
(CDA) Conduct seminar to update CPAs on
The CDA is tasked to regulate the current accounting standards
cooperatives in the Philippines and policies

PROFESSIONAL REGULATORY Philippine Institute of Certified Public

BODIES Accountants (PICPA)
Professional Regulation The PICPA which is the national
Commission (PRC) professional organization of certified
The PRC is a government agency public accountants in the Philippines
which is in charge of regulating and is an accredited body by the Board
licensing the practice of a profession of Accountancy and the PRC. Its
like accounting, engineering, main function is to set up and
architecture, education, medicine, implement rules regarding
nursing, and others. accounting profession. To assist the
Among its functions are: PICPA to formulate and promulgate
Maintain and enforce professinuonal standards, the Philippine Financial
examinations Reporting Standards Council
Promulgate and implement (PFRSC) was created by the PICPA
standards and ethics in the practice and to assist the PFRSC, the
of a profession Philippine Interpretation Council was
Provide legal and other regulatory also created.
services The Philippine Financial Reporting
Act on valid complaints Standards (PFRS), the
Suspend or revoke license of an Philippine Accounting Standards
erring professional (PAS) and the Philippine
Interpretation
Board of Accountancy ( BOA- Board) Council (PIC) comprised the
The BOA is under the jurisdiction of financial reporting standards in the
the PRC. It is tasked to promulgate Philippines.
professional standards and ethics in 3.4. International Accounting
the practice of accounting Standards Council
professions. It is composed of a The International Accounting
chairman and six members all Standards Council (IASC) is a
appointed by the President of the standard unifying body which

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harmonizes financial reporting and documents which are necessary for
measurement from member practice of accounting profession.
countries to make possible Supervision, control and regulation
comparability of financial of the accounting practice in the
statements. Philippines. To achieve this
The International Accounting objective, the following are enforced:
Standards Board (IASB) is tasked to Enumerate prohibitions, vested
formulate new standards for financial rights, and limitations in the practice
reporting and measurement. of accountancy
ACCOUNTANCY ACT OF 2004 Require certificate of accreditation
The Accountancy Act of 2004 has for individual CPA, accounting firms,
the following objectives: partnership of CPAs, and accounting
Standardization and regularization of educators
accounting education. Require a continuing professional
Among the functions to achieve this development (CPD) for all CPAs as
objectives are: a pre-requisite for renewal of license
Define the standard of practice and to practice. For this purpose, PICPA
service an accountant may engage created the CPE Council and the
in NACPAE to conduct seminars to
Mandate the creation of standard update competencies of accountants
formulating bodies such as the
Financial Reporting Standard ETHICAL STANDARDS IN THE
Council (FRSC) and the Auditing PRACTICE OF ACCOUNTING
and Assurance Standard Council PROFESSION
(AASC) Ethics is a set of values and moral
Mandate the creation of the principles which guides one to
Education Technical Council which conduct oneself accordingly and
is tasked to assist the BOA in distinguish right and wrong.
matters involving curriculum making, The Code of Professional Conduct
teaching standards, monitoring specifies two key elements of ethical
progress of accountancy programs behavior: integrity and objectivity.
and evaluating performance of Integrity is a highly professional
educational institutions offering characteristic which includes
accountancy. honesty, sincerity, and
Examination for registration of trustworthiness. One’s actions must
certified public accountants. To be free from any intentional
achieve this objective, the following malpractice or thought of distortion
are undertaken: or misappropriation matters.
Require the taking of the licensure Objectivity requires one to be fair in
examination, registration and all matters. The elements of
licensing of certified public objectivity are competence,
accountants before they can go into independence and confidentiality of
practice of accounting and auditing. records.
Issue certificate of registration and Competence requires adequate
professional identification cards, knowledge, skills, and experience in
the practice of profession.

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Independence requires a practitioner SCORING/RUBRICS
to be free of personal interest and Contents 30%
compromising relationship with the Reasoning 30%
client.
Clarity 20%
Confidentiality of records requires a
practitioner to keep information Organization 20%
obtained from the client from leaking 100%
out.
ADDITIONAL READINGS
Accountancy Act of 2004
Fundamentals of Accounting by
Amelia M. Arganda
Conceptual Framework and
Accounting Standards by Zeus
Millan
Financial Accounting and Reporting
For Services and Merchandisers by
Zenaida Manuel
Fundamentals of Accountancy,
Business and Management by
Rodiel
Ferrer

EXERCISES
Direction: In your own words, answer
the following exercises then send
your answers to my private
messenger. Your answers should be
in 120-150 words.

In a scale of 1-10, 10 being the

highest, evaluate the performance of
the regulatory bodies given in this
module, explain your answer.
Your “kumpare” hired you to be his
bookkeeper. However, along the
course of your service, there were
some items whom he would like you
to conceal and you found out later
that this concealment will give
material advantage to your
kumpare’s business to the
determent of the government,
particularly the BIR. What are you
going to do?

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