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Fabm 1

Accounting records and reports financial transactions to provide oversight of a business's monetary activities. It has several branches including financial, management, government, auditing, tax, and cost accounting. Accounting information is used internally by managers and externally by regulators and tax authorities. Businesses are organized as sole proprietorships, partnerships, corporations, or limited liability companies. Financial statements like the statement of financial position, statement of comprehensive income, and statement of changes in equity analyze a business's assets, liabilities, equity, revenue and expenses over time.

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42 views4 pages

Fabm 1

Accounting records and reports financial transactions to provide oversight of a business's monetary activities. It has several branches including financial, management, government, auditing, tax, and cost accounting. Accounting information is used internally by managers and externally by regulators and tax authorities. Businesses are organized as sole proprietorships, partnerships, corporations, or limited liability companies. Financial statements like the statement of financial position, statement of comprehensive income, and statement of changes in equity analyze a business's assets, liabilities, equity, revenue and expenses over time.

Uploaded by

hanhermosilla0528
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© © All Rights Reserved
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FABM 1

Introduction to Accounting
Accounting is the process of recording financial transactions pertaining to a
business. The accounting process includes summarizing, analyzing, and reporting
these transactions to oversight agencies, regulators, and tax collection. The main
function of accounting are to store and analyze financial information and
oversee monetary transactions.

Branches of Accounting
1. Financial accounting – is the field concerned with the summary, analysis and
reporting of financial transactions related to a business.
2. Management accounting- the practice of identifying, measuring, analyzing,
interpreting and communicating financial information to managers for the pursuit
of an organizations goal.
3. Government accounting – refers to the process of recording and the
management of all financial transactions incurred by the government which
includes its income and expenditures.
4. Auditing- it is an examination of accounting and financial records that is
undertaken independently.
5. Tax accounting- is the subsector of accounting that deals with the preparation
of tax returns and tax payment.
6. Cost accounting – the recording of all the costs incurred in a business in a way
that can be used to improve its management.
TYPES OF COST ACCOUNTING

: Standard Cost Accounting


: Activity-based Cost Accounting
: Marginal Cost Accounting
: Lean Accounting
7. Accounting education- means that education which teaches recording and
maintaining books of account.
8. Accounting research – is part of the process of reviewing and auditing the
firm’s financial information to convert the data into insights on complex financial
issues that helps companies choose the best course of action.

Uses of Accounting Information the external and internal users of


financial information
A common use of accounting information is measuring the performance of
various business operations. While financial statements are the classic
accounting information tool used to assess business operations, business owners
may conduct a more thorough analysis of this information when reviewing
business operations.
Internal users include managers and other employees who use financial
information to confirm past results and help make adjustments for future
activities. External users are those outside of information to make decisions or to
evaluate an entity’s performance.

Forms of Business Organization


Various forms of business organization
1. Sole / single proprietorship- the simplest and most common form of business
ownership, sole proprietorship is a business owned and run by someone for their
own benefit.
2. Partnership – both owners invest their money, property, labor, etc. to the
business and are both 100% liable for business debts.
3. Corporation – are for tax purposes, separate entities and are considered a legal
person, it means among other things, that the profits generated by a corporation
are taxed as the `personal income’ of the company.
4. Limited Liability Company/LLC – similar to a limited partnership, an LLC
provides owners with limited liability while providing some of the income
advantages of a partnership.
The forms of business organization according to nature of ownership is that
business ownership can take one of three legal forms: sole proprietorship,
partnership, or corporation. It is important to select the most appropriate form
of ownership that best suits your needs and the needs of your business.
Business organization is the single most importance choice you’ll make
regarding your company.

Types of Business According to Activities


1. Service business
2. Merchandising business
3. Manufacturing business

Liability- a liability is defined as the future sacrifices of economic benefits that the
entity is obliged to make to other entities as a result of past transactions or other
past events.
Cost of Sale- indicates how much a retail or wholesale business spends on the
products it purchases from suppliers for resale.
Expenses- the cost required for something or the money spent on something.
Accounts payable- is a money owned by a business to its suppliers shown as a
liability on a company’s balance sheet.
Assets – property owned by a person or company, regarded as having value and
available to meet debts, commitments, or legacies.
Wages- is a payment made by an employer to an employee for work done in a
specific period of time.
Cash- money in coins or notes, as distinct from checks, money orders or credit.
Accounts Receivable- refer to the money a company’s customers owe for goods
or services they have received but not yet paid for.
Inventory- a complete list of items such as property, goods in stock, or the
contents of a building.
Revenue- income, especially when a company or organization and of a substantial
nature.

FABM 2
INTRODUCTION TO FABM 2
Luca Pacioli – was a Franciscan friar born in Borgo San Sepolcro in what is now
Northern Italy in 1446 or 1447. He is the father of accounting.
Statement of Financial Position (SFP) is another term for balance sheet. It is
used to provide an overview of a business financial position at a given point of
time.
Account titles under the assets- assets are the physical or non-physical types of
property that add the value to your business.
Capital accounts of the Statement of Financial Position- namely, cash, receivables,
inventories, prepaid expenses, property, plant and equipment, payables,
accrued expenses, unearned income, long-term liabilities and capital that will
equip him / her in the preparation of the SFP using the report form and account
form.
There are several key elements on a statement of financial position. These
includes assets, liabilities, working capital (net current assets), and capital
employed. In board terms, assets are things that a business owns, while liabilities
are things or money that a business owes.
The service income and operating expenses of a service business as well as sales,
contra sales, purchases, contra purchase accounts, cost of goods sold and general
administrative and selling expenses of a merchandising business that will equip
him / her in the preparation of the SCI for both service and merchandising
businesses solve exercises and problems that require preparation of SCI for a
service business and a merchandising business
Statement of Changes in Equity (SCE) the forms of business organization,
namely, single proprietorship, partnership, and corporation.
Analysis and Interpretation of Financial Statements the methods or tools of
analysis of financial statements to include horizontal analysis, vertical analysis,
and financial ratios to test the level of liquidity, solvency, profitability, and
stability of the business.

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