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Lesson 1.
Branches of Accounting
Fundamentals of Accountancy, Business,
and Management 1 Accountancy, Business, and Management
1 What services come into your mind when you hear the word accounting?
2 What are the different uses of accounting information?
3 Quick Look
Commission on Audit and the Philippine Government
The Commission on Audit (COA) is a government agency mandated by
the Philippine Constitution to investigate and check how other government agencies spend their allocated funds. It performs its mission of ensuring accountability for public resources, promoting transparency, and helping improve government operations, in partnership with stakeholders, for the benefit of the Filipino people.
4 Quick Look
Commission on Audit and its role in the Philippine
Government Initially, these reports are sent privately to the different government agencies to give the latter time to explain the findings. These reports, together with the explanation of the government agencies, are made available to the public.
5 Quick Look
Questions to Ponder
1. What is the importance of the COA in government?
2. Why is accounting important for the COA to perform its mandate? 3. How can citizens use the information released by the COA?
6 Learning Competencies
This lesson aims to target the following DepEd competencies:
● Differentiate the branches of accounting (ABM_FABM11- IIIa-5). ● Explain the kind/type of services rendered in each of these branches (ABM_FABM11-IIIa-6).
7 Learning Objectives
At the end of this lesson, you should be able to do the
following: ● Define the different branches of accounting. ● Differentiate the branches of accounting. ● Explain the importance of the services offered by different branches of accounting.
8 Can businesses and institutions function efficiently without the services offered by accounting branches?
9 Definition of Accounting
● the process of identifying, measuring, and
communicating economic information to permit informed judgment and decision by users of the information (AAA, 1966)
10 Users of Accounting Information
○ individuals ○ businesses ○ governments ○ other organizations dealing with financial transactions
11 Branches of Accounting
The eight branches of accounting are:
12 Financial Accounting
● concerned with preparing
financial reports for external users ● examples of external users: ○ creditors ○ stockholders ○ governments
13 Financial Accounting
● follows the generally
accepted principles or accounting standards set by regulatory bodies ○ PFRS (Philippine Financial Reporting Standards)
14 Financial Accounting
Accounting standards ensure consistency and comparability of financial statements
15 Management Accounting
● concerned with producing
accounting information for internal users ● examples of internal users: ○ owners ○ managers ○ employees
16 Management Accounting
● provides useful Examples: information that helps stakeholders make informed decisions What expenses can be concerning day-to-day cut? Did a particular operations and business decision have a business direction positive or negative ● does not necessarily impact on a company’s adhere to the PFRS financial performance?
17 Cost Accounting
● concerned with recording
and analyzing the costs for producing goods or services ● kinds of costs: ○ object and driver ○ direct and indirect ○ fixed and variable
18 Cost Accounting
Example: provides information that is useful in making How can we lower decisions concerning the production cost to reduce production of a business or the selling price? an organization
19 Check You Progre r ss
What are the similarities and differences between financial,
management, and cost accounting?
20 Government Accounting
● deals with how the government apportions and spends
the financial resources ● involves the presentation of: ○ where the government funds come from ○ how funds are spent
21 Auditing
● concerned with verifying the
correctness of financial reports ● involves evaluation based on established criteria
22 Auditing
● raises the credibility of an
organization
23 External Auditing Internal Auditing
● performed by someone ● performed by someone who
outside the reporting entity works for the reporting entity ● ensures fairness and ● checks the validity of compliance of financial accounting records, discovers reports operational inefficiencies, and identifies weaknesses in the internal control measures implemented by a business.
24 Tax Accounting
● covers everything tax-
related: ○ computation of different kinds of taxes ○ preparation of tax returns ○ assessment of the repercussions of tax decisions
25 Tax Avoidance Tax Evasion
● process of reducing tax in ● the act of omitting sources of
compliance with tax laws income on taxable ● is a legitimate practice transactions ● intentional non-payment of tax ● is illegal and may be subject to imprisonment
26 Bureau of Internal Revenue
Closer Look
The Bureau of Internal Revenue, or BIR, is a government
agency under the Department of Finance mandated by the Philippine constitution to collect taxes from individuals and businesses and impose fines or penalties when these individuals or companies fail to pay their tax.
27 Check You Progre r ss
How can tax accounting be useful to businesses and
organizations?
28 Accounting Education
helps the education sector in
coming up with a curriculum to help aspiring accountants be equipped with relevant accounting knowledge and skills
29 Accounting Education
● Accounting practitioners can work as teachers or
professors who can share their expertise in the accounting industry, encouraging students to seek a career in accounting.
30 Accounting Research
centers on the pursuit of
current and relevant information in the field of accounting
31 Accounting Research
Benefits ● can help a particular clientele solve problems concerning it business ● can help regulatory bodies amend existing accounting principles ● can help develop new accounting standards to address issues and trends in accounting practices
32 BIR vs Social Media Influencers
Case S tudy
In August 2021, BIR issued a Revenue Memorandum Circular
(RMC) No. 97-2021. The circular mentioned that the bureau received reports that social media influencers, despite their vast earnings, are not paying their taxes.
“BIR: Days of Tax-evading Social Media Influencers are Numbered” 33
BIR vs Social Media Influencers
Case S tudy
There were also reports that though these influencers are
registered with BIR, they register under a different line of business, and they do not declare their earnings from their social media platforms.
“BIR: Days of Tax-evading Social Media Influencers are Numbered” 34
BIR vs Social Media Influencers
Case S tudy
Because of these reports, the memorandum was issued to
remind the social media influencers of their tax obligations and the possible sanctions for their failure to meet these.
“BIR: Days of Tax-evading Social Media Influencers are Numbered” 35
BIR vs Social Media Influencers
Case S tudy
In this situation, tax accounting is involved as this branch of
accounting is concerned with the accurate compliance of individuals with the tax code implemented in the country.
“BIR: Days of Tax-evading Social Media Influencers are Numbered” 36
Keep in Mind
● Accounting is a process employed by individuals, organizations,
institutions, and businesses. It provides the necessary financial information so that users can make informed judgments and decisions.
37 Keep in Mind
● Accounting has eight branches; each one serves different
functions and addresses the varied needs of organizations. ● Each branch of accounting differs in terms of purpose and intended user of its services.
38 Keep in Mind
39 Try This Choose the correct word from the given options and fill in the blanks.
1. Cost accounting is a sub-branch of ________ (tax,
management) accounting.
Answer area
40 Try This Choose the correct word from the given options and fill in the blanks.
2. External auditing is performed by someone ________
(inside, outside) the business.
Answer area
41 Try This Choose the correct word from the given options and fill in the blanks. 3. Financial accounting involves preparing ________ (financial statements, tax reports) for the external users of accounting information. Answer area
42 Try This Choose the correct word from the given options and fill in the blanks. 4. In accounting education, accounting practitioners can work as ________ (management, teachers) who can share their knowledge to accounting students. Answer area
43 Try This Choose the correct word from the given options and fill in the blanks. 5. Management accounting is concerned with preparing, analyzing, and presenting financial information to people working ________ (inside, outside) the reporting entity. Answer area
44 Practice Your Skills
Identify the user of information and the output produced by the given branch of accounting. Provide a situation where the accounting information would be helpful to the specified user
1. Financial Accounting Answer area
45 Practice Your Skills
Identify the user of information and the output produced by the given branch of accounting. Provide a situation where the accounting information would be helpful to the specified user
2. Management Accounting Answer area
46 Challenge Yourself Answer the following questions: Give one type of business and explain how it would benefit from cost accounting. Justify your answer by identifying the pieces of information that one would obtain from cost accounting.
Answer area
47 Challenge Yourself Answer the following questions: Give a specific institution that would benefit from Accounting Education. Justify your answer by relating the institution’s mandate and the types of information produced in accounting education. Answer area
48 Photo Credits
Slide no.1: businessman illustration by Piqsels is licensed under Copyright-Only Dedication via Creative Commons
Slides no.2 and 3: question mark question girl by HaticeEROL (Pixabay) is licensed under Copyright-Only Dedication via Creative Commons
Slide no.13 and 14: Accounting Financial Report by Gordon Dylan Johnson (OPENCLIPART) is licensed under Copyright-Only Dedication via Creative Commons
Slides no.16: Accounting Financial Report by mohamed_asan (Pixabay) is licensed under
Copyright-Only Dedication via Creative Commons
Slide no. 18: Accounting Financial Report by mohamed_asan (Pixabay) is licensed under Copyright-Only Dedication via Creative Commons
Slide no. 22 and 23: audit by mohamed_asan (PxHere) is licensed under Copyright-Only Dedication via Creative Commons
49 Photo Credits
Slide no. 25: Taxes Tax Office Return by geralt (Pixabay) is licensed under Copyright-Only Dedication via Creative Commons
Slide no. 29: Professor by mohamed_asan (Pixabay) is licensed under Copyright-Only Dedication via Creative Commons
Slide no.31: Research Scene by Videoplasty.com is licensed under Attribution-ShareAlike 4.0 International via Creative Commons
50 Bibliography
Bureau of Internal Revenue. "2021 Revenue Memorandum Circulars - Bureau of Internal Revenue." Accessed October 19, 2021. https://www.bir.gov.ph/index.php/revenue-issuances/revenue-memorandum-circulars/2021-revenue-me morandum-circulars.html .
Bureau of Internal Revenue. "BIR Mandate, Vision and Mission - Bureau of Internal Revenue." Accessed October 18, 2021. https://www.bir.gov.ph/index.php/philippine-transparency-seal/bir-mandate.html.
Ballada, Win and Susan Ballada. Basic Financial Accounting and Reporting Made Easy. 23rd ed. Manila, Metro Manila: DomDane Publishers, 2021.
Commission on Audit. "COA Constitutional Mandate." Accessed October 15, 2021.
Vera, Ben O. De. "BIR: Days of Tax-evading Social Media Influencers Are Numbered." INQUIRER.net. August 17, 2021. Accessed October 18, 2021. https://business.inquirer.net/329121/bir-days-of-tax-evading-social-media-influencers-are-numbered.
