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L1: Overview of Accounting: Accounting For Service and Merchandising Entities ACC11

This document provides an overview of accounting concepts including: the definition and history of accounting; the legal basis and authoritative bodies in the Philippines; classifications of businesses by form, economic size, and type; accounting assumptions and principles like going concern and revenue recognition; and the accounting equation and elements of financial statements. Key topics covered include double-entry bookkeeping, types of accounting, and the relationship between assets, liabilities, proprietorship, income, and expenses.

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Rose Laureano
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206 views14 pages

L1: Overview of Accounting: Accounting For Service and Merchandising Entities ACC11

This document provides an overview of accounting concepts including: the definition and history of accounting; the legal basis and authoritative bodies in the Philippines; classifications of businesses by form, economic size, and type; accounting assumptions and principles like going concern and revenue recognition; and the accounting equation and elements of financial statements. Key topics covered include double-entry bookkeeping, types of accounting, and the relationship between assets, liabilities, proprietorship, income, and expenses.

Uploaded by

Rose Laureano
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 PPTX, PDF, TXT or read online on Scribd
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L1: Overview of Accounting

Accounting for Service and


Merchandising Entities
ACC11

By:
Leandro Ador A. Dizon, CPA, MBA
LEARNING OBJECTIVES

⚫ Definition of Accounting
⚫ Legal basis of accounting in the Philippines and related
Authoritative bodies
⚫ Classification of businesses
⚫ Forms of business
⚫ Kinds of Business
⚫ Economic Size of Business
⚫ Accounting assumptions and principles
⚫ The Accounting Equation
⚫ The Elements of the Financial Statements (ALPIE)
What is Accounting?

Accounting is an art of creating a detailed financial history


of a business. However, unlike the typical history
storylines which is full of dates and narrations of the past,
accounting provides quantitative information.

It is through numbers that the company tells its story. And


from that story, lessons are made to correct mistakes and
improve the present and the future business operations.

Thus, accounting is known as the basic language of


business.
History of Accounting

8000 B.C. – Birth of civilization in ancient Jericho


(modern day Israel/ Palestine) where salt mines, clay
tokens, spheres, and other survival items are
exchanged.

1494 – Double-entry bookkeeping invented by Luca


Pacioli

Accounting in the Philippines


Legal basis of accounting in the Philippines and related Authoritative bodies

Republic Act 9298 – The Philippine Bureau of Internal Revenue (BIR)


Accountancy Act of 2004

Securities and Exchange


Board of Accountancy (BOA)
Commission (SEC)
Financial Reporting Standards Council
(FRSC) Cooperative Development
Authority (CDA)
Philippine Interpretations Committee
(PIC)
Insurance Commission (IC)
International Accounting Standards
Board (IASB) Bangko Sentral ng Pilipinas (BSP)

Philippine Institute of Certified Public Commission on Audit (COA)


Accountants (PICPA)
Types of Accounting

1. Management accounting
2. Financial Accounting
3. Tax Accounting
Classification of Business

Forms of Business

1. Single- Proprietorship (Sole Ownership)


2. Partnership
3. Corporation
4. Cooperative
Classification of Business

Business Economic Size


by the Securities and Exchange Commission

1. Large enterprise
2. Medium enterprise
3. Small enterprise
4. Micro enterprise
Classification of Business

Kinds of Business

1. Service-concern
2. Merchandising
3. Manufacturing
4. Hybrid
Accounting Assumptions

Accounting Assumption:

Going Concern

Implied assumptions:
Monetary Unit
Accrual
Time Period
Accounting Entity
Accounting Principles

1. Revenue recognition principle


2. Matching principle
3. Cost principle
4. Full Disclosure principle
5. Consistency principle
The Accounting Equation

The accounting entity theory follows this basic


formula:

Asset = Liability + Proprietorship

Creditors Owner
The Elements of the Financial Statements
(ALPIE)
Assets = Liabilities + [Proprietorship + (Income – Expenses)]

The Permanent accounts in the Balance Sheet:


Assets, Liabilities, and Proprietorship

The Temporary accounts in the Income Statement:


Income and Expenses
Normal Balance

Elements of FS Normal Balance

Assets Debit
Liabilities Credit
Proprietorship Credit

Income Credit
Expense Debit

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