1. Introduction to Accounting and Business

Business

An organization or enterprising entity engaged in commercial, industrial, or professional activities.

Sole Proprietorship

A business organization owned by one person where the owner keeps all profits and decision-making is simple.

Partnership

A business organization with two or more owners who share income and capital investment.

Corporation

A business organization with at least five shareholders, generating more capital and subject to more taxes.

Service Business

A business that provides services to clients for a fee.

Merchandising Business

A business that buys goods from suppliers and sells them to customers with a markup.

Manufacturing Business

A business that purchases raw materials, processes them into finished products, and sells them.

Accounting

The art of recording, classifying, and summarizing financial transactions to communicate financial information.

Financial Statements

Reports that provide information about the financial performance and position of a business.

Internal Users

Individuals or groups within a business organization, such as investors and employees, who use accounting information.

External Users

Stakeholders outside the business, such as lenders, suppliers, customers, and government agencies, who require financial information.

Recording

The phase of accounting that involves writing business transactions in a systematic and chronological order.

Classifying

The phase of accounting where recorded transactions are sorted and grouped according to nature and similarity.

Summarizing

The phase of accounting that involves summarizing grouped transactions through financial statements.

Interpreting

The phase of accounting that evaluates the economic performance and condition of the business for decision-making.

Statement of Comprehensive Income

A financial statement that presents the income generated and expenses incurred by a business.

Statement of Changes in Owner’s Equity

A financial statement showing the effects of withdrawals, additional investments, and business operations on owner’s equity.

Statement of Financial Position

A financial statement detailing assets, liabilities, and owner’s equity at a specific time.

Statement of Cash Flows

A financial statement summarizing how cash is generated and used by a business.

Basic Accounting

The process of analyzing, recording, classifying, and summarizing business transactions.

Financial Accounting

Focuses on the preparation and presentation of general-purpose financial statements.

Cost Accounting

Deals with cost determination and control related to producing goods and services.

Managerial Accounting

Provides financial and non-financial information needed for planning and control functions of management.

Auditing

The independent examination of financial statements to express an opinion on their fairness.

Government Accounting

Also known as "Fund Accounting," it focuses on the utilization of government funds.

Taxation

Encompasses the preparation of tax returns and determination of tax liabilities for a company.

Professional Regulation Commission (PRC)

A government agency in the Philippines responsible for licensing various professions, including accountancy.

Professional Regulatory Board of Accountancy

Supervises the registration, licensure, and practice of accountancy in the Philippines.

Philippine Institute of Certified Public Accountants (PICPA)

A national organization of all Certified Public Accountants in the Philippines.