BASIC
ACCOUNTING
YOLANDA C. RENOS
CONTENT STANDARDS:
The learners demonstrate understanding of the
fundamental concepts and principles of accounting and
accounting for service business.
PERFORMANCE STANDARDS:
The learners analyze key accounting functions and
principles relevant to real enterprise operations such as
type of business, books of accounts used, and
accounting process methodology.
COMPETENCY:
Discuss the e nature, history and branches of
Why do businesses need
to keep records of their
transactions?
ACCOUNTIN
G
IT IS THE PROCESS OF RECORDING,
CLASSIFYING, SUMMARIZING, AND
INTERPRETING FINANCIAL INFORMATION.
“Language of business”
Accounting as science and art
Accounting is a social science with a body of
knowledge Fixed, inflexible, which has been
systematically gathered, classified, and organized and
systematic organized. It is influenced by, and
interacts with, economic, social and political
environments.
Accounting is a practical art which requires the use
of creative skill and judgment.
Accounting as an information system
Accounting identifies and measures economic activities,
processes information into financial reports and
communicates these reports to decision makers.
Economic Activities and their classification
•Production – the process of converting economic
resources into outputs of goods and services that are
intended to have greater utility than the required
inputs.
•Exchange – the process of trading resources or
obligations for other resources or obligation.
•Income distribution - the process of allocating rights
to the use of output among individuals and groups in
society.
•Consumption – the process of using the final output of
the production process.
•Investment – the process of using current inputs to
increase the stock of resources available for output as
opposed to immediately consumable output.
•Savings – the process by which individuals and groups
set aside rights to present consumption in exchange for
rights to future consumption.
BASIC PURPOSE OF ACCOUNTING
To provide financial information for decision-
making.
Users of Accounting
Information
Internal: Owners, managers, employees
External: Investors, creditors, government,
customers
TYPES OF INFORMATION PROVIDED
BY ACCOUNTING
1. Quantitative information – expressed in numbers,
quantities
or units.
2. Qualitative information – expressed in words or
descriptive form
3. Financial information – expressed in terms of money
BRANCHES OF ACCOUNTING
A. Financial Accounting
Purpose: Prepares financial statements for
external users.
Users: Investors, creditors, government agencies.
Focus: Historical data, accuracy, and compliance
with
standards like IFRS (International
Financial Reporting Standards)
or GAAP (Generally Accepted Accounting
Principles)
B. Managerial Accounting
Purpose: Provides internal management with
financial insights for decision-making.
BRANCHES OF ACCOUNTING
C. Cost Accounting
Purpose: Analyzes the cost of producing goods or
services.
Users: Internal management.
Focus: Cost control, pricing strategies, and
profitability analysis.
D. Auditing
Purpose: Verifies the accuracy and fairness of
financial records.
Users: Management, investors, regulators.
Types:
Internal Audit: Done by in-house auditors.
External Audit: Done by independent auditors.
BRANCHES OF ACCOUNTING
E. Tax Accounting
Purpose: Ensures compliance with tax laws and
regulations.
Users: Government, tax authorities, business
owners.
Focus: Tax planning, filing returns, and minimizing
tax liabilities legally.
FUNCTIONS OF ACCOUNTING
Recording transactions
What it means: Keeping a systematic record of all
financial
activities (e.g., sales,
purchases, payments).
Why it matters: Ensures that no transaction is
forgotten and
helps in tracking business
activities.
Classifying Data
What it means: Organizing recorded transactions
FUNCTIONS OF ACCOUNTING
Summarizing Information
What it means: Preparing financial statements
like the income
statement, balance sheet, and cash flow
statement.
Why it matters: Gives a clear picture of the
company’s
financial position and performance.
Interpreting Financial Results
What it means: Analyzing financial data to
understand trends,
strengths, and weaknesses.
ACTIVITY TIME
The class will be divided into five groups, each
group will be given scenario and identify which
type of user would need the accounting
information and why?
ASSIGNMENT
In a one-half sheet of paper, write a paragraph on
how accounting helps a business grow.
"GOOD ACCOUNTING IS THE
FOUNDATION OF GOOD DECISION-
MAKING."
