accounting theory

Accounting cycle sequential step

-Identifying and analyzing transaction

-Journalizing

-Posting

-Preparing the unadjusted trial balance

-adjusting entries

-adjusted trial balance

-financial statements

-closing the books

-preparing the post-closing trial balance

-reversing entries

Father of modern accounting

Luca pacioli

Forms of business organizations

Sole proprietorship

Partnership

Corporation

Cooperative

Activities of business organization

Financing activities

Investing

Operating

Language of Business

Accounting

Inventor of double entry book keeping

Amantino Manucci

Alphabetical listing of all business accounts

The ledger

It is signed into law by President Gloria Macapagal Aroyo on May13,2004

Accountancy Act of 2004(R.A 9298)

Simplest form of business organization has a single owner

Sole Proprietorship

Business own by its stockholders( Complicated form of Business)

Corporation

Business owned and operated by two or more person called partner

Partnership

The process of identifying, recording and communicating economics events of an organization to interested user

Accounting

What are the nature of business

-Service

-Merchandising

-Manufacturing

-Agriculture

Four practices of a CPA

- Academe

- Government

- Public Accountancy

- Commerce and Industry (Private)

A concept where an organization or a section of a organization that evaluated separately

Entity Concept

Prepared on assumption that a reporting entity will continue in operation for the foreseeable future

Going Concern

Meaning of GAAP

Generally Accepted Accounting Principles

Acquired assets should be recorded at their actual cost

Historical Cost

Firms should use the same accounting method from period to period

Consistency

A mechanical task involving collection of basic financial

Bookkeeping

Accountancy Professions most significant service to the public

Auditing

Preparation of tax returns

Taxation

Competent end users uses hardware and software to solve information-related or decision-making problems

People

Present economic resource controlled by the entity as a result of past events

Asset

Present obligation of the entity to transfer an economic resource

Liability

Residual interest in the assets after deducting all its liabilities

Equity

Basic summary device of accounting

Account

A duty or responsibility that an entity has no practical ability to avoid

Obligation

Accounting Equation

Assets = Liabilities + Owner’s Equity

Most basic tool of accounting

Accounting Equation

An economic occurrence that causes changes in assets, liabilities, and equity.

Accounting events

Time between the acquisition of assets for processing and their realization in cash or cash equivalents

Operating cycle

A series of sequential steps or procedures perform to accomplish the accounting process

Accounting Cycle

Period of any twelve consecutive months

Fiscal Year

A period less than one year

Interim Period

Transactions are recognized when they occur

Accrual Basis

Transactions are recognized until cash is received or paid

Cash Basis

Annual period ending on December 31

Calendar Year

Entries made to update certain accounts

Adjusting Entries

Line that separates the current period to the next period

Cut-off Period