Studied by 10 people
Father of Modern Accounting in Venice 1494
Luca Bartolomeo de Pacioli is known as the Father of Modern Accounting in Venice in 1494.
Main Branches of Accounting
Public accounting, private accounting, government accounting are the main branches of accounting.
Owners
Internal users of financial reports interested in determining the return of investment in the business.
Creditors
External users interested in financial reports.
Essential Traits of Accounting
Qualitative information, financial in nature, useful in decision-making.
Objectives of Accounting
Ascertain results of operations, ascertain financial position, maintain control over assets, aid management in planning and performance evaluation, provide information to government agencies and for legal purposes.
Financial Accounting
Concerned with general-purpose financial statements and business financial position.
Management Accounting
Prepares financial and accounting information for management's planning, assessing, and motivating functions.
Government Accounting
Focuses on proper custody of government funds and their purposes.
Auditing
Review of a firm's accounting systems and financial statements to ensure compliance with GAAP and prescribed standards.
Tax Accounting
Involves tax computation, filing tax returns, and planning for future tax obligations.
Cost Accounting
Involves collecting, recording, and classifying costs incurred by a firm.
Accounting Education
Preparation for a professional career in accountancy.
Accounting Research
Responsible for developing and discovering accounting concepts and practices.
Tax Avoidance
Lawful attempt to reduce tax payments.
Tax Evasion
Illegal non-declaration of income sources on which tax is due.
Uniform Accounting Standards
Needed for fair presentation of financial statements and reliable information for comparison.
Entity Regulating Standards
IASB (International Accounting Standards Board) regulates accounting standards.
Generally Accepted Accounting Principles (GAAP)
Guidelines laid out by the IASB.
Accounting Firms in the PH
FRSC, PFRS, PRS are the accounting firms in the Philippines.
Double Entry
Basic accounting theory based on dual effects of transactions.
Steps of Accounting Process
Analyzing, recording, classifying, summarizing, reporting, interpreting.
Accounting
Gathering financial information and reporting to users.
Analyzing
Examining events and their impact on the business.
Recording
Entering financial information into the accounting system.
Classifying
Sorting and grouping similar items.
Summarizing
Aggregating similar events to provide simplified information.
Reporting
Communicating the results.
Interpreting
Deciding the meaning and importance of reports.
Generally Accepted Accounting Principles
Rules by the Securities and Exchange Commission.
Service Business
Provides services.
Merchandising Business
Buys products to sell to customers.
Manufacturing Business
Makes products to sell.
Accounting Clerk
Performs daily accounting tasks in businesses.
Bookkeepers
Supervise accounting clerks and handle tax requirements.
Para-Accountants
Provide accounting, auditing, or tax services under an accountant's supervision.
Accountants
Design accounting info systems and analyze information.
Certified Public Accountant
Achieves professional recognition as a public accountant.
Forensic Accounting
Includes fraud detection, prevention, and business valuations.
Accounting Information Systems
Design and implement manual and computerized accounting systems.
Budgeting
Helps managers develop financial plans.
Certified Fraud Examiner
Forensic accountant who passed the exam.
Certified Internal Auditor
Achieved professional recognition as an internal auditor.
Certified Management Accountant
Passed an exam offered by the Institute of Management Accountants.
Controller
Oversees the accounting process in a company.
Management Advisory Services
Provides advice on managerial issues.
Assets and Expenses
Accounts debited when increased.
Liabilities and Capital
Accounts credited when increased.
Account
Record summarizing changes in assets, liabilities, and owner's equity.
Account Title
Description of asset, liability, equity, revenue, or expense.
Accounting Equation
Assets = Liabilities + Owner's Equity.
Accounting Period Concept
Income determination on a periodic basis.
Accounts Payable
Promise to pay a supplier for assets or services.
Accounts Receivable
Amount owed by customers for goods or services.
Asset
Owned item providing future benefits.
Balance Sheet
Reports assets, liabilities, and owner's equity on a specific date.
Business Entity
Engages in economic activities and controls resources.
Business Transaction
Economic event impacting the business.
Capital
Amount by which assets exceed liabilities.
Drawing
Owner's withdrawals reducing equity.
Expenses
Decrease assets, increase liabilities in revenue production.
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Current Liabilities
Liabilities due within 1 year or the normal operating cycle of a business
Income Summary
Temporary account used in the closing process to summarize revenue and expense accounts
Operating Cycle
Time needed to purchase supplies, convert them to cash
Permanent Accounts
Accumulate info across accounting periods, on the balance sheet
Post-Closing Trial Balance
Prepared after closing entries to ensure debit/credit balance equality
Corporation
Artificial entity separate from owner, created by law
AICPA
American Institute of Certified Public Accountants
AAA
American Accounting Association
Stable Monetary Unit
Financial statements in a common financial denominator
Historical Cost
Assets valued based on original cost
Right of Succession
Corporation continues despite shareholder death
Commission on Audit
Regulates government accounting
Money-Measuring Unit
Money as the best unit for assets, liabilities, equity
Revenue Recognition
Recognizing revenue at the point of sale
Predictive Value and Confirmatory Value
Ingredients of relevance
Confirmatory Value
Provides feedback on previous evaluations
Faithful Representation
Information reasonably free of error and bias
General Partner
Partner with unlimited liability
Department of Budget and Management
Formulates and implements national budget
Note
Flashcard