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Lesson 1 - Fabm2

The document outlines key concepts in accounting, including definitions, the accounting cycle, and financial statements. It emphasizes the importance of accounting as a process and an art, detailing steps such as journalizing, posting, and preparing financial statements. Additionally, it highlights the rules of debits and credits, as well as the significance of financial reports for assessing a business's financial health.

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Ahlyzza Aniñon
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7 views18 pages

Lesson 1 - Fabm2

The document outlines key concepts in accounting, including definitions, the accounting cycle, and financial statements. It emphasizes the importance of accounting as a process and an art, detailing steps such as journalizing, posting, and preparing financial statements. Additionally, it highlights the rules of debits and credits, as well as the significance of financial reports for assessing a business's financial health.

Uploaded by

Ahlyzza Aniñon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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HELLO!

Welcome to

FABM 2
1. What branch of accounting targets to
Quick educate students in accounting field?

Recap! a. Financial education


b. Accounting Education

2. What refers to the interactions of a


business with other businesses and
stakeholders?
a. Business Transactions
b. Business Obligations
3. The following are steps in the
Quick accounting process except_____?

Recap!
a. Recording
b. Segregating

4. Which of the following is considered the


language of business?
a. Accounting
b. Customers
Quick
Recap! 5. What do you call the reports that reflect
the financial standing and economic
activities of the business?
a. Financial Accounts
b. Financial Statements
Definition of
Accounting
ACCOUNTING (SFAS)
is a service activity. Its function is to provide
a quantitative information, primarily financial in ACCOUNTING (AICPA)
nature, about economic entities that is intended to
be useful in making economic decisions. is an art of recording, classifying,
summarizing in a significant manner and in terms of
ACCOUNTING (IAS) money, transactions, and events which are, in part
at least, of a financial character, and interpreting the
results thereof.
is the process of identifying, measuring and
communicating economic information to permit
informed judgments and decisions by the users of
the information.
Nature of
Accounting
Accounting is a process.

Accounting is an art.
Accounting is a means, not an end.

Accounting is concerned with Accounting is an information system.


financial information and
transactions.
Philippine Accounting
Standards (PAS)

Generally Accepted
Accounting Principles
(GAAP)

International Financial
Reporting Standards

Accounting
(IFRS)
Since 2005, the Philippines
Standards became completely
compliant with the IFRS.
Accounting
Cycle
ANALYSIS OF TRANSACTIONS
-Value Received; Value Parted With ; Accountable or not

JOURNALIZING (general entry)


- journalize the economic transcations and events.
Accounting
Cycle
POSTING (final entry)
- post the journal entries to the general ledgers.

UNADJUSTED TRIAL BALANCE (equality of DR & CR)


- prepare the trial balance from the general ledgers.
-list of all accounts with their corresponding debit/credit balances
Accounting
Cycle
WORKSHEET
6 column - NO AJE
8/10 column - THERE ARE AJE

FINANCIAL STATEMENTS
- Statement of Financial Position
- Statement of Financial Performance
- Statement of Owner’s Equity
- Statement of Cash Flows
- Notes to Financial Statements
Accounting
Cycle
ADJSUTING JOURNAL ENTRIES
- update the account balances
- Defferals and Accruals

CLOSING ENTRIES
-zero out nominal accounts (income statement accounts)
-real accounts are permanent ( balance sheet accounts)
-income summary is used to close the nominal accounts
Accounting
Cycle
POST-CLOSING TRIAL BALANCE
-proe the equality debits and credits
-Only real accounts remain
- Real accounts (Assets, Liabilities, Capital)

REVERSING ENTRIES
-prepared in the first day of the next accounting period
-Reverse the Expense and Revenue method only
Natural Balances

Assets Debit Balance


General ledger
accounts have their Liabilities Credit Balance
natural balances:
Owner’s Equity Credit Balance

Revenue/Income Credit Balance

Cost & Expenses Debit Balance


RULES OF DEBITS AND CREDITS
DEBITS CREDITS
1. Debit asset account for increase in 1. Credit asset account for decrease
asset. in asset.
2. Debit liability account for decrease 2. Credit liability account for increase
in liability. in liability.
3. Debit owner’s equity account for 3. Credit owner’s equity account for
decrease in owner’s equity. increase in owner’s equity.
4. Debit income account for decrease 4. Credit income account for increase
in income. in income.
5. Debit expense account for increase 5. Credit expense account for
in expense. decrease in expense.
Financial
Statements
report that shows the financial activities and
performance of a business. It is used by
lenders and investors to check a business’s
financial health and earnings potential.

provide information about the financial


position, performance, and cash flows of an
entity that is useful to a wide range of users
in making economic decisions.
Financial
Statements
1 STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)
company's financial report that records information related to assets, liabilities that must be
paid to other parties, and capital owned by business owners in a certain period.

2 STATEMENT OF FINANCIAL PERFORMANCE


contains information about whether a company experienced a loss or profit in a certain period.

3 STATEMENT OF CHANGES IN CASHFLOW


or commonly called cash flow is a type of financial report that contains information about expenditures
and cash inflows made by a business entity during a certain period.
Financial
Statements
4 STATEMENT OF OWNER’S EQUITY
contains information about changes in equity at a certain time.

5 NOTES TO FINANCIAL STATEMENTS


report contains additional information from the four reports above to
help readers understand the existing financial reports.
Thank
You
Maraviles; Aniñon

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