Module 1, ACCOUNTING : AN OVERVIEW Flashcards
Accounting is 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 interpreting the results thereof.
AICPA
Accounting is the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of information
(AAA)
Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities, that is to be useful in making economic decisions.
(FRSC)
involves those mechanical and repetitive recording and classifying procedures related to the business activities of a natural or artificial
Bookkeeping
Give 3 primary responsibilities of management
Planning and organizing the activities of the business enterprise
Investing and financing activities
Controlling and assessing the performance of the business enterprise
gives roles in accounting in business
It helps the owner/s or managers in making plans and decisions.
It reports and analyzes business transactions thru the financial statements.
It communicates financial information to all interested parties.
exists when a person or group of persons makes an investment or contributes its resources in order to sell products or render services to others, for the ultimate purpose of making profit.
Business Enterprise
- “Business Enterprise”
- the main activities of a business enterprise is to make profit
Profit-oriented Organizations
established not for profit but to render services and meet the needs of the members of the community
Non-profit Organizations
is the ability of a business enterprise to pay its currently maturing financial obligations.
Liquidity
is the ability of a business enterprise to meet its long-term financial obligations.
Solvency
a business enterprise that cannot meet its obligations as they fall due
insolvent.
This type of business provides various forms of services, not tangible products, to its customers or clients.
Service Enterprise
his type of business entity is in the “buy and sell” business. A trading or merchandising enterprise buys ready-to-use products then sells these products at higher prices.
Merchandising Enterprise
this involves the conversion of raw materials into finished product, which will be sold at a higher price than the production cost.
Manufacturing Enterprise
a business owned by one person, called entrepreneur or proprietor.
Single Proprietorship
has two or more owners called partners.
Partnership
is a business that has its ownership capitalization divided into hundreds or thousands of transferable shares of stock. The corporation must have at least five owners or investors called stockholders or shareholders.
Corporation
lf the business has unpaid debts which it can no longer pay, the creditors can run after the owner and attach his properties to satisfy their claim.
Unlimited lability
lf the business has unpaid debts which it can no longer pay, the creditors can run after the owner and attach his properties to satisfy their claim.
Unlimited lability
the liability of the partner, shareholders or members is limited only up to the extent of their paid up capital.
Limited lability
it is the careful study of the client’s accounting information and gathering of evidence both from within the business enterprise and from other sources
auditing
the CPA may be hired by his client to perform the latter’s tax requirements such as the settlement of tax cases, tax planning, tax consulting, etc.
Tax Services
the chief accounting officer of a business enterprise
Controller
the branch of accounting that is primarily concerned with the preparation and presentation of general-purpose financial statements of a business enterprise
Financial Accounting
provides specific information needs of the internal data-users, principally the management
Management Accounting
Internal Auditors have the responsibilities of evaluating the efficiency of operations and determining whether the business’ policies are being followed in all organizational levels of operations in order to achieve the organization’s objectives.
Internal Auditing
what is the difference of accounting and bookkeeping?
a bookkeeper’s role is to record transactions and keep you financially organized, while accountants provide consultation, analysis, and are more qualified to advise on tax matters.
