FABM 1 – Module 1: Introduction to Accounting

Vocabulary flashcards that cover key terms, concepts, historical milestones, functions, competencies, values, and principles introduced in FABM 1 – Module 1: Introduction to Accounting.

Accounting (PICPA definition)

A system that measures business activities, processes information into reports, and communicates findings to decision makers.

Accounting (AICPA definition)

The art of recording, classifying, and summarizing monetary transactions and events of a financial character and interpreting the results.

Recording

The phase of accounting that involves writing and maintaining journal entries of business transactions.

Classifying

Organizing recorded data into ledgers and accounts to prepare financial reports.

Summarizing

Condensing classified data into financial statements for easier analysis.

Interpreting

Analyzing and explaining financial information to support decision-making.

Financial Statements

Formal records that summarize a business’s financial activities and position for a period or at a point in time.

Statement of Financial Position

Report showing a company’s assets, liabilities, and equity on a specific date.

Statement of Comprehensive Income

Report detailing income, expenses, and overall profit or loss over a period.

Statement of Changes in Equity

Report that tracks movements in owners’ equity, such as investments and retained earnings.

Statement of Cash Flows

Report outlining cash inflows and outflows from operating, investing, and financing activities.

Notes to Financial Statements

Explanatory details that provide context for figures in the main financial statements.

Art and Science of Accounting

Concept that accounting requires judgement (art) and follows systematic rules and methods (science).

Language of Business

Nickname for accounting because it communicates a firm’s financial story to stakeholders.

Accounting Information System

Structure that collects, processes, and distributes financial data to users.

Users of Financial Information

Individuals such as owners, investors, and managers who rely on accounting data for decisions.

Double-entry Bookkeeping

Method introduced by Luca Pacioli in 1494 where every transaction affects at least two accounts.

Luca Pacioli

Italian mathematician known as the “Father of Accounting” for formalizing double-entry bookkeeping.

Chartered Accountants (1854)

First professional governing body of accountants formed in Scotland.

Act No. 3105 (1923)

Philippine law establishing the accountancy profession and the Board of Accountancy.

PICPA

Philippine Institute of Certified Public Accountants, the accredited professional organization of CPAs in the Philippines (since 1973).

RA No. 9298

The Philippine Accountancy Act of 2004 regulating the practice of accountancy through the PRC.

Communication Skills

Core competency enabling accountants to clearly explain financial data to various audiences.

Leadership Skills

Ability to guide teams and make confident professional decisions.

Strategic and Critical Thinking Skills

Competency for analyzing data and crafting sound business plans.

Ability to Focus

Skill of maintaining attention and accuracy during detailed accounting tasks.

Ability to Interpret Converging Information

Talent for understanding and integrating data from multiple sources.

Adeptness with Technology

Proficiency in accounting software and digital tools.

Competence

Core value of possessing the knowledge and skill to perform accounting work effectively.

Continuing Education and Lifelong Learning

Commitment to regularly updating professional knowledge and skills.

Objectivity

Principle of making decisions based on facts without personal bias.

Integrity

Quality of being honest and trustworthy in all professional actions.

Attuned to Broad Business Ideas

Value of understanding how accounting information fits into the overall business context.

Professional Competence and Due Care

Fundamental principle requiring accountants to act diligently with appropriate expertise.

Confidentiality

Obligation to keep client and company information private.

Professional Behavior

Conducting oneself respectfully and in compliance with laws and regulations.

Technical Standards

Established rules and procedures that guide accurate accounting practice.

Professional Skepticism

Mindset of being alert and questioning when evidence appears inconsistent or unusual.

Accounting as Measurement of Business Activities

Role of quantifying transactions in monetary terms to appraise and assess a business’s viability.

Accounting as Communication for Decision-Making

Function of providing interpreted financial information to help stakeholders choose appropriate actions.