Module 1 Flashcards
Accounting is a (1)________of (2)__________, (3)__________ , and (4)___ _________economic information to permit informed judgments and decisions by the (5)___________.
- Process
- Identifying
- Measuring
- Communicating
- Users of Information
Accounting is a 1__________ activity. Its function is to provide 2,_______ information primarily financial in nature about economic 3__________ that is intended to be useful in making 4._________
- Service
- Quantitative
- Entities
- Economic Decisions
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.
Accounting
is the art of recording, classifying and summarizing in a significant manner, transactions and events which are in part at least of a financial character and interpreting the result thereof.
Accounting
It is a process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of information.
Accounting
is the art of (1)_________,(2)_________ and (3)_____________ in a significant manner, transactions and events which are in part at least of a (4)____ _________ and (5)________ the result thereof.
- Recording
- Classifying
- Summarizing
- Financial Character
- Interpreting
It involves systematic methods to perform tasks to achieve objectives.
Accounting is a process
the process of recognition or non-recognition of business transactions as accountable events for recording purposes. Note: the event is said to be accountable when it affects the assets, liabilities, equity, income and expenses of a business
Identifying
the process of assigning peso value or amount to the identified accountable event
Measuring
the process of preparation and distribution of financial reports. The information from different transactions and events identified, processed, measured in accounting information system to produce meaningful reports commonly known as financial statements.
Communicating
It consists of definite techniques and its proper application requires the use of creative skills, functions, expertise and judgment.
Accounting is a practical art
the preparation of journal entry in the process called journalizing.
Recording
the grouping of accounts with similar nature and characteristics
Classifying
the preparation of financial reports
Summarizing
the analytical function
Interpreting
It is a body of knowledge which has been systematically gathered, classified and organized.
Accounting is a social science
Accounting is the _____________ because it quantifies and facilitates the communication between the economic entity (business) and the users. These users or decision- makers need information. The more important their decision is, the greater is their need for reliable information. Then, the role of accounting becomes important. The accounting functions to provide relevant information to users serves as the useful basis or guide in making economic sound decisions. Accounting helps the users of to understand the clear picture of the business in financial terms..
language of business
are the fund providers of the business
Primary Users
are those who provide money, investment, capital or other resources for a business
Investors
could be a person, bank or other enterprise that has lent money or extended credit to another party/ies
Lender and Other Creditors
are users of financial information other than primary users
Other Users
work for others someone who is paid to
Employee
an individual or enterprise. that purchases the products of the business.
Customer
This types of users (BIR, SEC)
Government and their Agencies
relating to people in general
Public
Give the 3 Basic Accounting Concept
- Entity Concept
- Periodicity Concept
- Stable Monetary unit Concept
each entity should be evaluated separately; it separates owners from the business.
Entity Concept
- divides the life of an entity into equal time periods, like month, quarter or years, allows users to obtain timely data for a specific period to serve as a basis of decision making.
Periodicity Concept
treats peso amounts as though each peso has the same purchasing power as any other peso at any time; effects of inflation are ignored
Stable monetary unit concept
Give the 8 Basic Accounting Principles
- Objectivity principle
- Historical Cost
- Revenue Recognition Principle
- Expense Recognition Principle
- Adequate disclosure
- Materiality
- Consistency
- Matching Principle
accounting records and statements are based on reliable data and supported by verifiable documentation
Objectivity principle
acquired assets should be recorded at their actual cost and not at what management thinks they are worth as at reporting date
Historical cost
revenue is to be recognized in the accounting period when goods are delivered or services are rendered or performed
Revenue recognition principle
should be recognized in the accounting period in which goods & services are used to produce revenue and not when entity pays for those goods & services
Expense recognition principle
requires that all relevant information that would affect the user’s understanding and assessment of the accounting entity be disclosed in the financial statements
Adequate disclosure
dictates that financial reporting should only be concerned with information that is significant to affect evaluations and decisions.
Materiality
dictates that firms should use the same accounting method from period to period to achieve comparability over time within a single enterprise.
Consistency
the costs of doing business are recorded in the same period as the revenue they help to generate.
Matching Principle
True or False
- Primary Users are the fund providers of the business.
- Accounting is both an art and a science.
- Customers are interested in financial information which enables them to assess the stability and profitability of the company
4.revenue recognition principle states revenue is to be recognized in the accounting period when services are paid for cash
- Expense recognition principle dictates that expenses should be recognized in the accounting period in which they are incurred
- In entity concept, the business and the owner are treated as separate and distinct entity.
- Summarizing function of accounting is the grouping of accounts with similar nature and characteristics
- Other users are users of financial information other than primary users
- All events in business are accountable events.
- Accounting is a social science because it is a body of knowledge which has been
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It is an information system that measures, processes and communicates financial information about an identifiable economic entity
Accounting
These are business organizations or units that have an identity separate from those of its owners
Entity Concept
It is the process of assigning peso value to the accountable events
Measuring
It is the process of preparation and distribution of accounting information to the intended users
Communicating
It is the principle stating that accounting records and statements should be based on reliable data and supported by verifiable documentation
Objectivity Principle
It is the product or output of accounting process
Financial Statements
These are the tangible products which can be sold to the customers of the business
Tangible Goods
Information expressed in money.
Quantitative Financial Information
This principle which dictates that firms should use the same accounting method from period to period to achieve comparability over time within a single enterprise
Consistency Principle
This allows users to obtain timely data for a specific period to serve as a basis of decision making.
Periodicity Concept
