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JOJI ILAGAN INTERNATIONAL

SCHOOL OF HOTEL AND


TOURISM MANAGEMENT

www.jojiilagancareercenter.com
Introduction of Accounting in
Business

Objectives:
To understand the concept of accounting in business;
To understand the principles of accounting for the
service, trading and manufacturing businesses;
To be able to learn accounting principles based on
international standards; and
To be able to learn some regulatory government
agencies with regard to accounting and reporting
standards.
Accounting Overview
Importance of Records

Monitor
Reliable basis
Assess
Plan; Budget
Compliance
Account
Correct; Improve
Conceptual Framework
Accounting Defined.
"the process of identifying,
measuring and communicating
economic information to permit
informed judgement and
decision by users of
information.-AAA"
"the art of recording, classifying
and summarizing in a significant
A service activity. Its function
manner and in terms of money,
is to provide quantitative
transactions and events which
information, primarily financial
are in part at least of a financial
in nature, about economic
character and interpreting the
entities, that is intended to be
results thereof.- AICPA "
useful in making economic
decision. - ASC
The Three Important functions
cover in Accounting definition

Identifying
the recognition and nonrecognition of "accountable"
events.
The Three Important functions
cover in Accounting definition
Measuring
the process of determining or assigning the monetary amounts
The Three Important functions
cover in Accounting definition
Communicating
the process of preparing and
distibuting accounting
reports to potential users of
accounting information.
Recording or Journalizing -
writing of business data.
Classifying - similar items
are grouped under a
common characteristic.
Summarizing - the
preparation of financial
statements. Identifying and Measuring are
pointless if it is not communicated to
its intended users.
Forms of Business Organization
Sole Proprietorship

Partnership
Forms of Business Organization
Corporation

Cooperatives
formed by an association of
people for the benefit of its
members.
What are Accounting Assumptions?

Accounting Assumptions
are the basic notions or fundamental premises on which
the accounting process is based.
the "givens" and they exist without saying.
serves as the foundation or bedrock of accounting in order
to avoid misunderstanding but rather enhance the
understanding and usefulness of the FS.
also known as postulates.
Accounting Cycle
Analyzing
Financial Statements

BALANCE SHEET
- shows the financial
position of the
enterprise as of a
particular date.
Financial Statements

INCOME
STATEMENT
-shows the financial
performance of the
enterprise for a given
period of time.
Financial Statements

CASH FLOW
STATEMENT
Financial Statements

STATEMENT OF CHANGES IN EQUITY


ACCOUNTING PROCESS
1.) Analyzing
2.) Journalizing
3.) Posting
4.) Unadjusted Trial Balance
5.) Adjusting Entries
6.) Worksheet Preparation
7.) Financial Statement Preparation
8.) Closing Entries
9.) Post-Closing Trial Balance
10.) Reversing Entries
ELEMENTS OF FINANCIAL
STATEMENT (FS)
Accounts Normal Balance

Assets (Balance Sheet) Debit


Liabilities (Balance Sheet) Credit
Proprietorship (Balance Sheet) Credit
Income (Income Statement) Credit
Expense (Income Statement) Debit

*Debit (Dr.) value received


*Credit (Cr.) value parted with
Accounting Equation

Derivation:
Liabilities = Assets Owner's Equity

Owner's Equity = Assets Liabilities

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