Basic Accounting Environment and Framework

Vocabulary flashcards covering the basic definitions, accounting processes, business forms, and operational types based on the lecture notes.

Accounting

A service activity that provides quantitative, primarily financial, information about economic entities for economic decisions.

Identifying

The first step of the accounting process, which involves determining which economic events should be included in the records.

Measuring

The process of expressing transactions in monetary terms using a common unit before they are recorded.

Recording

The foundation of reliable financial information; it is the process of entering financial transactions into journals and ledgers.

Classifying

Grouping transactions of a similar nature, such as Cash or Accounts Payable.

Summarizing

Turning classified data into totals and reports that are easy to understand.

Analyzing

Studying financial information to discover useful relationships, changes, and patterns.

Interpreting

Explaining what the numbers mean and their importance for decisions, connecting numbers to real meaning.

Communicating

Presenting accounting information through various reports to ensure the right information reaches the right people in the right format.

Financial Statements

Formal reports that summarize the financial position and performance of a business, including the Balance Sheet and Income Statement.

Management Reports

Detailed reports prepared for managers to assist in planning and controlling operations, such as Budget vs. Actual reports.

Special Purpose Reports

Reports prepared for a specific audience or purpose, such as Tax Reports or Government Reports.

Bookkeeping

A subset of accounting that focuses on the systemic recording of daily transactions to provide factual, historical data on "what happened."

Revenue

Income generated from ordinary activities, such as sales or service fees.

Expenses

The costs incurred in the process of earning revenue and operating the business.

Profit (Net Income)

The excess of income over expenses, calculated as $\text{Income} - \text{Expenses}$.

Net Loss

The financial result occurring when total expenses exceed total income.

Internal Users

Individuals within the company who use accounting information, including Owners, Managers, and Employees.

External Users

Parties outside the business who use accounting information, including Investors, Banks, Suppliers, Government Agencies, and Customers.

Sole Proprietorship

The simplest form of business in the Philippines, owned by one individual who has full control and unlimited liability.

Department of Trade and Industry (DTI)

The government agency where a Sole Proprietorship in the Philippines must register.

Partnership

A form of business organization where two or more persons share profits, risks, and responsibilities.

Corporation

A legal entity registered with the government that is separate from its owners, providing limited liability for shareholders.

Cooperative

An autonomous association of persons united voluntarily to meet common needs through a democratically-controlled enterprise; regulated by the Cooperative Development Authority (CDA).

Republic Act No. 9520

The specific legislation under which cooperatives in the Philippines are regulated.

Service Business

An operation that provides labor, expertise, or solutions rather than tangible physical goods.

Merchandising Business

A business that acts as an intermediary by buying finished products and reselling them without substantial changes.

Manufacturing Business

A business that transforms raw materials or components into new products with a different form, use, and value.

Hybrid Business

A business that integrates two or more types of operations, such as a restaurant that prepares food and sells bottled drinks.