Accountancy

forms/types of business:

the language of business

accounting

what are the forms of business?

• sole proprietorship

• partnerships

• corporation

types of business

• service

• merchandising

• manufacturing

• money invested in a business

capital

 legal permission to operate a corporation

charter

a form of business only consisting of one owner

sole proprietorship

own by two or more owners

partnerships

a large company/group of companies recognized by law as one single unit

corporation

services for a fee

service

buys and sells products

merchandising

makes and sells products

manufacturing

who defined accounting as the language of business?

warren buffet

Is the process of ?, ? and ? economic events of an organization to interested users

• identifying

• recording

• communicating

this involves selecting economic events that are relevant to a particular business transaction.

identifying

- economic events of an organization

Transactions

- involves keeping a chronological diary of events that are measured in pesos. (journals and ledgers)

Recording

Recording - involves keeping a chronological diary of events that are measured in pesos. these books are called —-

(journals and ledgers)

- occurs through the preparation and distribution of financial and other accounting reports

Communicating

defined accounting as a service activity

Philippine Institute of Certified Public Accountants (PICPA)

• The American Institute of Certified Public Accountants (AICPA) defines accounting

as the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions, and events which are at least in part of a financial character, and interpreting the result thereof.

functions of accounting

• keeping systematic records of business transactions

• communicating results to various parties

• meeting legal requirements

• protecting properties of the business

who are the users of accounting information?

internal and external users

- are those individual inside a company who plan, organize, and run the business

Internal users

users who are Directly involved and operating the business

internal users

- outside a company who want financial information about the company

External users

the two common types of external users:

• potential investors

• creditors

• use accounting information to make decisions to buy share of a company

• potential investors

• use accounting information to evaluate the risks of granting credit or lending money 

creditors

•  events which can be measured in terms of money and are recorded in the financial statements (transfer of things with value)

economic events

what are some examples of economic events

• Purchase of materials

• Payment of business expense

• Sale of goods

• Acquisition of machinery