Reference:

Accounting Essentials I

Veron • Anastacio

Accounting is a service activity. Its

function is to provide quantitative

information, primarily financial in nature,

about economic entities that is intended to

be useful in making economic decisions

in making reasoned choices among

alternative courses of action.

The art of recording, classifying and

summarizing in a significant manner and

in terms of money, transactions and events

which are in part at least of a financial

character, and in interpreting the results

thereof.

Accounting is the process of identifying,

measuring and communicating economic

information to permit informed judgment

and decision by users of the information.

Identifying

• The process of recognizing or not

recognizing events

Measuring

• The process of determining the monetary

value of the accounting elements

Communicating

• The delivery of the accounting reports to

potential users of the accounting information

Keeps track of profits

Provides framework by which profit can

be planned, monitored and controlled

Whether or not the business generates profits or incurs losses

Whether or not the business is growing Whether or not the business is on the verge

of bankruptcy Whether or not the business can pay its

liabilities as they fall due

Auditing

Tax Accounting

Management Consulting

Cost Accounting

Financial Accounting

Accounting Systems

Government Accounting

Budgeting

Accounting Education

Public practice

Commerce and industry

Government

Education

Accounting covers a wider scope than bookkeeping

Bookkeeping refers to the clerical

dimension of the accounting Accounting involves not only the

recording aspect of the accounting but also the preparation and the interpretation of financial reports

Financial Accounting • The accounting process that starts with the

accumulation of accounting information and ends

with the preparation of the financial statements.

Financial Reporting

• The process of communicating financial accounting

to interested users of such information. It involves

supplying them with additional financial quantitative

and qualitative information to facilitate informed

decisions.

Financial Accounting • Serve the information needs of decision makers

outside the firm like government authorities and

creditors.

Managerial Accounting • Serve the information needs of decision makers

within the firm like shareholders and directors

or managers.

Accounting focuses on cost of the past

rather than current values

Accounting does not capture non-

financial items like opportunities and

threats, management strengths,

weaknesses, strategies and risks, human

resources and their knowledge and skills

which all impact the business

performance

FRSC • Established in 2006 by the Board of Accountancy

(BOA) of the Professional Regulation

Commission (PRC)

• Funded by the Philippine Institute of Certified

Public Accountants (PICPA)

• It was established with main function of

promulgating accounting standards and the

generally accepted accounting principles in the

Philippines.

Investors Employees Lenders Suppliers and other trade creditors Customers Government Public

External Users – those persons or entities who

are outside the business enterprise and who are not involved in the day-to-day operations of the enterprise.

Internal Users – individuals from within the business enterprise.