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ACCOUNTING DEFINED
ALCRE
ROLE OF ACCOUNTING IN BUSINESS
1. Help the owners in management to make decisions.
2. Record and analyze business transactions.
3. Communicate financial information to all interested parties.
TYPE OF BUSINESS
1. Service Business entities that provide services to customers.
2. Merchandising Business entities that purchase products from other
businesses and sell them to customers.
3. Manufacturing Business entities that convert raw materials into finished
products which are sold to customers.
USERS OF ACCTG.
INFORMATION
Owner
Supplier
Creditor / Lender
Banks / Financial
Intermediaries
Government
Employees
Shareholders
Board of Director
CAREER
OPPORTUNITIES
IN ACCTG
Accounting Staff
Accounts Payable
Specialist
Accounts Receivable
Specialist
Bookkeeper Tax
Specialist
Accountant CFO
Accounting Consultant
Internal Auditor
External Auditor
MAJOR AREAS OF
ACCTG SPECIALIZATION
Financial Accounting
Management Accounting
External Audit
Tax Accounting
Payroll Accounting
INTRODUCTION TO ACCOUNTING
1. Proprietorship is a business that is owned and operated by a single
individual. The owner is called proprietor).
2. Partnership is a business that is owned by two or more individuals. The
owner are called partners.
3. Corporation is a business whose capital is divied into shares of stocks that is
created by operation of law. The owners are called stockholders.
4. Cooperative is a business that is exempted by taxation. The owners are
called members.
CHARACTERISTICS OF THE DIFFERENT FORMS OF BUSINESS ORGANIZATION
Proprietorship
1. One owner
2. Unlimited
liability for
unpaid
debts
3. Owner
manages
the
business.
Partnership
1. Two or more
owners
2. Unlimited
liability for
unpaid
debts
3. There is a
managing
partner.
Corporation
1. Unlimited
owners.
2. Limited
liability of the
stockholders for
corporate debts.
3 Management
is vested in
the Board of
Directors
(BOD).
Cooperative
1. Unlimited
owners.
2. Limited
liability
of the
members for the
cooperative debts.
3 Management
is vested in
the BDO.
INTRODUCTION TO ACCOUNTING
Net Income (Loss) the excess (deficit) of revenue over expenses for a
given accounting period. Net income increases owners equity while
net loss decreases owners equity.
= LIABILITIES (300,000)
+ OWNERS EQUITY
ASSETS (P500,000)
(200,000)
- LIABILITIES (300,000)
= OWNERS EQUITY
The equality of the accounting equation is always maintained for every transaction
that is recorded. The peso amount of the left side of the equation (called DEBIT)
should always be equal to the peso amount on the right side of the equation (called
CREDIT). If assets increase, liabilities and/or owners equity must increase by the
same amount. Conversely, if the assets decrease, there will be a corresponding
decrease by the same amount in the liabilities and/or owners equity. An increase in
an asset may also have a corresponding decrease in another asset or an increase in
a liability may also have a corresponding decrease in another liability by an equal
amount.
ACCOUNNTING EQUATION EXPANDED
ACCTG 21 | MS. CHING FILE
INTRODUCTION TO ACCOUNTING
ASSETS
Cash + Accounts
Receivable+
Supplies + Repair
Equipment
LIABILITIES
Accounts Payable + Bank
loan
OWNERS EQUITY
Owners Capital Drawing
+ Revenues Expenses
Exercise I
Dr (CR)
A, L, C, R
or E
Increase
(Decrease)
Capital
BS or IS
Real or
Nominal
Account
Cash on Hand
Notes
Receivable
Owners
Equity
Accounts
Payable
Withdrawal
Utilities
Machineries
Long Term
Notes Payable
Sales
Communicatio
n Expense
Exercise 2
40,000
Capital
350,00
0
50,000
40%
60,000
Asset
600,000
Liabilities
1
1
1
2
1
3
Asset
180,000
Liabilities
Capital
58%
40%,
100,000
200,000
40%
INTRODUCTION TO ACCOUNTING
4
25%,
100,000
480,000
180,00
0
70%
300,00
0, 60%
6
7
8
9
1
0
125,000
1
4
36%
66,000
40%
35,000
1
2
3
4
5
750,000
35%
Revenue
Expenses
350,000
450,000
200,000
Net Income
(Loss)
200,000
650,000
350,000
25%, P100,000
60%,
600,000
Exercise 3
1
2
3
4
5
Identification
With 2 to 15 owners.
With 2 or more owners, mostly they are called members.
One ownership.
With 2 or more owners, mostly they are called shareholders.
What is ALCRE?