Importance of Accounting

is a
Accounting Identifies
system that

Records

information
Relevant Communicates
that is

Reliable

to help users make better decisions.

Comparable
Accounting Activities
 Identifying  Recording
Business Business
Activities Activities
 Communicating
Business Activities
Branches of Accounting
 Government
Accounting

Public Private 1. Financial

Accounting
Accounting Accounting Accounting
1. External Auditing 2. Management
2. Tax Preparation and Accounting
Planning Service 3. Cost Accounting
3. Management 4. Budgeting
Advisory Services Accounting 5. Accounting
education Information
system
6. Tax Accounting
 Private Accounting = salaried employee who deals with company’s day
to day accounting need
• 1. Financial Accounting
• Record transactions of the business, prepare reports-
1. Statement of Financial Position
2. Income statement
3. Statement of Changes in Equity
4. Statement of Cash Flows and
5. Notes to financial statement
• Used for decision making by both internal and external users.
• Internal users included owners, shareholders and management while
external users include creditors, potential, investors, employees, and
government agencies.
• More focus on the external users.
• 2. Management Accounting
• Aid business managers in planning and controlling
business operations and in decision making . More
on internal.
• Example – decision to open a branch restaurant

• What is the difference Financial Accounting and

Management ?
• 3. Cost Accounting manufacturing concern.
• The cost of production includes the raw materials, direct
labor, factory overhead, and all other costs involved
incident in each stage of production of the finished goods.
• 4. Budgeting
• Developing financial plan for future.
• 5. Accounting Information system
• Designing of the both manual and computerized data
processing system.
• 6. Taxing Accounting
• Preparation of tax returns and doing tax planning for the
business.
• Auditing
• Auditing is the examination and review of accounting
reports in order to ascertain their fairness, propriety, and
reliability.
• Public Accounting
• Certified Public Accountants
• The accountant performs or offers to perform any activity
that will result to the issuance of an attest report that s in
accordance with professional standards.
• Examples of public accounting services are as follows:
1. External Auditing
2. Tax Preparation and Planning Service
3. Management Advisory Service
• Government Accounting
• The process of analyzing, classifying, summarizing,
and communication all transactions involving the
receipt and disposition of government funds and
property, and interpreting the results thereof.
(Section 109 of Presidential Decree (PD) No. 1445 )
• Commission of Audit (COA),
• the Department of Budget and Management
(DBM) and
• the Bureau of Treasury (BTr)
• Accounting Education
• Accounting education involves planned grading
and formal teaching in an educational institution.
 Users of Accounting Information

External Users Internal Users

•Lenders •Consumer Groups •Managers •Sales Staff

•Shareholders •External Auditors •Officers •Budget Officers
•Governments •Customers •Internal Auditors •Controllers
 Users of Accounting Information

External Users Internal Users

Financial accounting provides external users Managerial accounting provides information

with financial statements. needs for internal decision makers.
 Opportunities in Accounting
Financial Managerial Taxation
•Preparation •General accounting •Preparation
•Analysis •Cost accounting •Planning
•Auditing •Budgeting •Regulatory
•Regulatory •Internal auditing •Investigations
•Consulting •Consulting •Consulting
•Planning •Controller •Enforcement
•Criminal •Treasurer •Legal services
investigation •Strategy •Estate planning

•Lenders •FBI investigators

•Consultants •Market researchers
Accounting-related •Analysts •Systems designers
•Traders •Merger services
•Directors •Business valuation
•Underwriters •Human services
•Planners •Litigation support
•Appraisers •Entrepreneurs
Forms of Business
Organization
 Types of Business Types of Business
According to Ownership According to Activities
• Sole Proprietorship • Service
• Partnership • Merchandising Business
• Corporation • Manufacturing Business
• Cooperative
Business Entity Forms

Proprietorship Partnership Corporation

Research and Presentation about the forms
• Activities: Determine the type of business organization formed in each case.
The, determine the type of activities or operations performed by the business.

• 1. Jack and Jill were classmates since elementary. They went to college together
and recently passed the board exam for CPA. They decided to form “J&J” Auditing
Services.
• Bill, marketing student, is looking for a business to help him fund his studies. He
decides to rent a stall near the university and hire a sales lady to help him sell the
school supplies he buys from Divisoria. Mark-up is usually 25% of the cost.
• 3. Ms. A and Mr. B are both engaged in the production of soaps and shampoos .
They decided to join their businesses together in order to expand their market.
• 4. Mark, Sue and three more friends , who are mechanical engineers, decided to
open a plant where they can produce machines to be sold to big factories in
order to cut labor cost. Because the cost of starting the business is substantial,
they decided to invite incorporators to generate more funds.