Basic Accounting Modules 1-6

AICPA

American Institute of Certified Public Accountants

specified It is an art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are part at least of financial character and interpreting the results thereof.

American Institute of Certified Public Accountants

AICPA

American Institute of Certified Public Accountants

specified It is an art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are part at least of financial character and interpreting the results thereof.

American Institute of Certified Public Accountants

specified accounting is a service acticity

Philippine Institute of Certified Public Accountants (PICPA)

PICPA

Philippine Institute of Certified Public Accountants

Specified Its function is to provide quantitative about economic entities, that is intended to information, primarily financial in nature, be useful in making economic decisions.

Philippine Institute of Certified Public Accountants (PICPA)

Economic events

Identifying

Should be systematic or methological

Recording

Providing meaningful and presentable info

Summarizing

A decision that is giving value and looking at different perspectives

Economic decision

Multiple steps that lead to a common goal.

Systematic process

Combination of techniques and its application requires skill and expertise

Art

Deals with Financial Information

Deals only with quantitiable tinancial transaction.

A tool to achieve specific objective itself.

Means and not an end

A serviced function,it collects processes and communicates financial information of any entity.

Information Svstem

AAA

American Accounting Association

process of identifying,measuring and communicating economic information to permit judgement and decisionby users of the information.

American Accounting Association

FOUR ASPECTS OF ACCOUNTING

Recording

Classifying

Summarizing

Interpreting

Main functions of accounting

Keeping systematic record of business transactions

Protecting properties of the business

Communicating results to various parties in or connected with the business

Meeting legal requirements

Does not only involved entering the transactions in the accounting books, It should be systematic to enable easy understanding of readers.

KEEPING SYSTEMATIC RECORD OF BUSINESS TRANSACTIONS

Serves as the evidencethat properties of a business do exist or how much resource does a company have.

PROTECTING PROPERTIES OF THE BUSINESS

Shows that the amount of cash should be P1M any excess and deficiency willbe notleec immediately.

PROTECTING PROPERTIES OF THE BUSINESS

⁃ It helps in preventing employee fraud- and misappropriation of company resources

PROTECTING PROPERTIES OF THE BUSINESS

Produced at the end if each period are not only used by external parties but also by the management in their decision making function.

COMMUNICATING RESULTS TO VARIOUS PARTIES IN OR CONNECTED WITH THE BUSINESS

Essential for all concerned parties to enable them to take well-informed decisions.

COMMUNICATING RESULTS TO VARIOUS PARTIES IN OR CONNECTED WITH THE BUSINESS

Aims to protect the public by providing them

MEETING LEGAL REQUIREMENTS

History of acc in order

Ancient Accounting in Egypt, Mesopotamia,Greece and Rome 14thCentury, The Birth of Double-Entry Bookkeeping 19thCentury, The Dawn of Modern Accounting in Europe and America

20thCentury, The Evolution of Modern Accounting Standards

The Information Age 21stCentury-Accounting in the modern times,

14thCentury

The Birth of Double-Entry Bookkeeping

19th century

The Dawn of Modern Accounting in Europe and America

20th century

The Evolution of Modern Accounting Standards ⁃ The Information Age

21st century

Accounting in the modern times

A calculating instrument developed by the ancient Sumerians in 5,000 BCE

Abacus

Developed in 4000 BCE,this is not only allowed recording of commercial transactions but also transcription of religious tect,music,literature and more.

Papyrus

believe that writing actually developed out of early marks that were used to tally the kinds and amounts of foods in stock at ancient warehouses

DR.GUNTER DREYER

Earliest writing

Inventory control

Considered to be among the oldest ritten tax accounting records.

CLAY TABLETS

Used for trading came in different shapes and sizes. These represented different objects

Tokens

The archaeologist who unearthed clay tablets considered to be among the oldest written tax accounting records

Dr. Gunter Dreyer

Who performed extensive duties in writing and recording in the Mesopotamian civilization are the equivalent of present-day accountants.

Scribes

Greek alphabet

Phonecian system

Introduced money in form of coins

Greeks

BANKERS IN GREECE OFFERED CREDIT AND HELPED PEOPLE TRANSFER OF FUNDS TO BANKS IN OTHER CITIES

BANKER's BOOKS OF ACCOUNT

WHO INTRODUCED THE USE OF AN ANNUAL BUDGET WHICH COORDINATED ESTIMATED REVENUES AND TAXES PAID BY THE CITIZEN

Romans

THE ROMANS INTRODUCED THE USE OF AN ANNUAL BUDGET WHICH COORDINATED ESTIMATED REVENUES AND TAXES PAID BY THE CITIZEN

CASH BOOK was maintained by households

The equivalent of present-day accountants during Mesopotamian times

Scribes

They introduced the use of coins in around 600 BCE which contributed to the development of accounting

Greeks

Introduced the use of an annual budget which coordinated estimated revenues and taxes paid by the citizen

Romans

Took possession of all properties in the name of the king upon his invasion

WILLIAM THE CONQUEROR

Contained all the real estate surveyed by William the Conqueror and the taxes due to them

DOMESDAY BOOK

Is the most ancient surviving accounting record in the English language. This contains yearly accounting rent,fines, and taxes due to King of England from 1130 to 1830.

PIPE ROLL OR THE GREAT ROLL OF THE EXCHEQUER

Pacioli credited him for the original idea of the double -entry bookkeeping-

BENEDETTO COTRUGLI

broadly recognized for their marked contribution to the improvement of trade and commerce,.

Italians

He is the writer of Della Mercatura et edl Mercante Perfetto (Trading and the Perfect Trader), where the original idea of the double entry bookkeeping was introduced.

Benedetto Cotrugli

Father of accounting

Luca pacioli

Which replaced hand tools with machine or power tools otherwise known as the factory system, transformed accounting into actual profession

19TH CENTURY, THE DAWN OF ODERN ACCOUNTING IN EUROPE AND AMERICA

Industrial revolution

Businesses continued to expand requiring the expertise of accountants to gain corporate control of their flourishing business.

19TH CENTURY, THE DAWN OF ODERN ACCOUNTING IN EUROPE AND AMERICA

Industrial revolution

Granted a royal charter to the Institute of Accountants in Glasglow

thereby creating the profession of Chartered accountant (CA).thus accounting became a formal profession.

QUEEN VICTORIA

Date where the profession of Chartered accountant (CA)was created. thus accounting became a formal profession.

July 6, 1954

birth of the first national US accounting society

1887

Predecessor of the present (AICPA)

AMERICAN ASSOCIATION OF PUBLIC ACCOUNTANTS

Formed in the United States, this is the first national professional association for Certified Public Accountants (CPA)

AMERICAN NSTITUTE CERTIFIED PUBLIC ACCOUNTANTS OF (AICPA)

Was tasked to set the accounting and auditing standards for these reports until the establishment of the Financial Accounting Standards Board(FASB) in 1973.

AMERICAN NSTITUTE CERTIFIED PUBLIC ACCOUNTANTS OF (AICPA)

establishment of the Financial Accounting Standards Board(FASB)

1973

Because of economic depression, this was formed.

periodic reports vouched by certified public accountants were filed by all publicly-traded companies who had to register before selling their securities to the public,

SECURITIES AND EXCHANGE COMMISSION (SEC)

Are currently two of the significant authorities establishing the generally accepted accounting principles (GAAP) in the US.

In responses to the continuing expansion of businesses, large accounting firms offered consultancy services aside from their auditing function.

FASB AND GOVERNMENTAL (GASB) ACCOUNTING STANDARDS BOARD

Established in 1973,this was tasked to set accounting and auditing standards for reports to be filed of this Egyptian King,

Financial Accounting Standards Board (FASB)

This is where periodic reports vouched by- certified public accountants were filed by all publicly traded companies who had to register before selling their securities to the public

Securities and Exchange commission (SEC)

Formed in the United States this is the first national professional association for Certified Public Accountants (CPA)

American Institute of Certified Public Accountants (AICPA)

Known as the Computer Ase Digital Ageor New Media Age

INFORMATION AGE

Have been developed and accommodate the numerous needs and demands of the different businesess

VARIOUS SOFTWARE APPLICATIONS IN ACCOUNTING

Many countries including the Philippines have adopted this in order to support comparability and understandability of financial statements across the globe.

International Financial Reporting Standards (IFRS)

⁃ Face greater and more complicated responsibilities.

⁃ Technology reduces the time effort, and cost of record keeping, minimizes errors as well as processes and summarizes large volumes of data input.

⁃ Must always be updated with the latest innovations affecting their profession.

Accountants in modern times

Considered to be the greatest corporate fraud case recorded in American history which caused Arthur Andersen, one of the top audit firms in the USA.

Enron scandal

⁃ This was signed into federal law in responses to the Great Recession, It contains sixteen major areas of reform.

Dodd Frank Act

Dodd Frank act was signed into federal law

July 21,2010

⁃ This was passed by the US Congress in 2002 which imposed tougher restrictions on accountants conducting consultancy services to their clients

Sarbanes-Oxley Act

◦Different Branches of Accounting

1. Financial Accounting

2. Management Accounting

3. Government Accounting

4. Auditing

5. Tax Accounting

6. 6.Cost Accounting

7. Accounting education

8. Accounting research

guide external and internal users in their economic decisions

Financial Accounting

deals with the theoretical framework covering accounting principles and concepts relative to measurement and valuation as applied to AL,OE,Retained Earnings ,revenue and expense accounts

Financial Accounting

focuses on the preparation of financial reports used by managers in their day to day decision making.

Management Accounting

defines accounting as profession that involves partnering in management decision making, devising planning, and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy

Institute of Management Accounting (IMA)

Roles of management accountants

1. Advise managers about the financial implications of projects

2. Explain the financial consequences of business decisions

3. Formulate business strategy

4. Monitor spending and financial control

5. Conduct internal business audits

6. Explain the impact of the competitive landscape

7. Being a high level of professionalism and integrity to the business.

Management Accountant Skill Set

• Analysis

• Strategy

• Risk

• Planning

• Communication

Accounting for the receipt and disposition of government funds.

Government Accounting

Who is the executive department of the Philippine government responsible for ensuring access to basic public health services by all Filipinos?

DOH

Enhances the responsibility accounting in all agencies.

This system of placing accountability in each agency discourages misappropriation and misuse of public funds.

New Government Accounting System (NGAS)

is the enacted budget of the country for the upcoming year.

Has the force of law and states how much an agency can spend for the year

Declaration of the General Appropriations Act (GAA)

-responsible for the keeping governments general accounts

-tasked to keep and update the accounting books of the whole organization.

-disseminates accounting rules and regulations to be used by all agencies.

Commission on Audit (COA)

Department of Budget and Management

-responsible for the safekeeping of the national funds

-it serves like a bank where the funds are kept.

-responsible for the management and control of the disbursement of such funds.

Bureau of the Treasury (BTr)

Examines and evaluates financial statements of a company independently.

Gives credibility to the financial statements of a company.

Auditing

ls an unbiased examination and evaluation of the " financial statements of an organization,

ls a process that includes numerous steps to determine whether or- not a company's financial statements are presented truthfully.

Auditing

Auditors with no connection to the company

Independent auditors

Lays down the different treatments of the taxing authorities regarding financial transactions.

Helps in determining the amount of taxes payable.

Tax accounting

Are the lifeblood of the government

Tax

⁃Enables the taxing authorities to collect taxes that differ from the amount due computed using financial accounting

produces tax returns to be filed to appropriate government agencies.

National Internal Revenue Code(NIRC)

(the number of working hours related to the amount of salaries a company pays)

Cost driver

materials,labor etc)

Direct cost