COTRUGLI- published the FIRST ACCOUNTING BOOK. FR. LUCA PACIOLI- father of accounting, made the MODEL OF VENICE.

ASSETS- the properties owned by the owner. LIABILITIES- the debts owed to others. DEBTOR-who borrows money. CREDITOR-who lends money. TENERO DE LIBRO- bookkeeping. BUSINESS- is an economic unit that controls and engages in buying and selling of goods or services. PROFIT- is obtained when the amount you receive is more than the amount you paid. Business is measured by the profit. OWNERS INVESTMENT- main source of the capital. RETURN OF CAPITAL- what was invested. RETURN ON CAPITAL- receives more that what you invest. MICRO FINANCE- providing a range of financial services to low income entrepreneurs who lack the funding for their business. RISK- is the element of uncertainty in the business. TO REDUCE RISK : careful planning and control by the manager. Management- the art of managing or directing people and resources as efficiently as possible with a view of accomplishing the goal of the organization. MANAGERS- qualified to run the business. EFFICIENCY- be used at the least time. EFFECTIVENESS- the companys attainment of its goals. PLANNING- lines up the activities to be undertaken to accomplish the goals set up. ORGANIZING- work out the plans and positions will be created. DIRECTING and CONTROLLING- will oversee the day to day operation of carrying out the planned activities. MAKE A DECISION- choosing the best of the alternatives presented. PRODUCTION MANAGER- draws a paln based , production department (operation) MARKETING MANAGER aa study of the market, market plan. SALES DEPARTMENT- to find out whether the goals of the company were achieved. FINANCIAL MANAGER - decision making. PERSONNEL MANAGER proper division of work. MANAGERIAL ACCOUNTING- managerial reports processed in the AIS.

SOLE PROPRIETORSHIP acts as a manager, DTI, BIR. PARTNERSHIP two or more individuals. DTI, SEC, BIR.. CORPORATION- separate legal entity with BOARD OF DIRECTORS. DTI, SEC, BIR. FINANCING ACTIVITIES- investments and withdrawals. INVESTING ACTIVITIES acquisition of properties. OPERATING ACTIVITIES earning activities. SERVICE BUSINESS provides services with a fee. MERCHANDISING BUSINESS- buys and sells goods or merchandise. ACCOUNTING- the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information MANAGERIAL REPORTS internal reports prepared for management use. MANAGEMENT ACCOUNTING - a course about managerial reports. SPECIAL REPORTS like banks prepared a annual report to be passed in BSP. FINANCIAL REPORTS general purpose financial statements, main source of information of stakeholders. STAKEHOLDERS is a person or entity who has an interest in the economic performance of a business. OWNER or INVESTOR - who puts capital in a business venture and receive a return on capital from the profit of the business. MANAGER for organizing, planning, directing and controlling the operation of the business. A good stward that protects the business. LENDER- the ability of the business to pay the principal debt and the additional charge called interest. SUPPLIER offers goods or merchandise on cash basis or on credit term. GOVERNMENT tax collector. EMPLOYEE higher wages and security of tenure, the ability of the business to grant these demands. CUSTOMER - the ability of the company to supply the goods they need at the right price and quality. ACCOUNTING INFORMATION SYSTEM orderly way of accounting while the reports are generated. CONTROL PRINCIPLE - most possess internal control.

INTERNAL CONTROL enumerates the methods and procedures necessary to monitor the activities of all the records. COST-BENEFIT PRINCIPLE advantages enjoyed from installing the system must outweigh. RELEVANCE PRINCIPLE the information must be reported promptly and understandable to reach a conclusion and make a decision COMPTIBILITY PRINCIPLE - designed to fit the unique characteristics of the company. FLEXIBILITY PRINCIPLE - the companys system should be changed, if needed, to come up with timely and updated information. PHASES: 1. data gathering. 2.analyzing, measuring, recording. 3. classifying, storing 4. summarizing, reporting, interpreting, Last.decision making TRANSACTION activity or even taking place in business which is expressed in terms of money. BUSINESS DOCUMENT describes in words and amounts the nature of the transaction. OFFICE RECEPT when receiving cash. CASHIER CASH VOUCHER when paying cash. INVOICE- when selling or buying goods or services. SALES OFFICER PERSONNEL involved in preparing, gathering, handling and recording business transactions. Only qualified people should be hired. DOCUMENTS- DATA INPUT- we need a JOURNAL ENTRY. RECORDS- book of accounts where the data are gathered and reccorded called JOURNAL LEDGER- data is organized and classified into related groups and stored here. BOOKKEEPING summarizing of the system covers hee mechanical or procedural phase of accounting. METHODS the procedures of processing captured data from the documents by JOURNALIZING, CLASSIFYING, SUMMARIZING, REPORTING, and INTERPRETING ELECTRONIC DATA PROCESSING (EDP) environment the transactions may be stored in a computer INPUT data are analyzed and encoded by the employees. PROCESS measured, recorded classified, summarized and stored by the computer. OUTPUT- reports comes out from the processed data.

FINANCIAL STATEMENTS- is about financial position, performance and cash flows FINANCIAL PERFORMANCE the income statement or profit statement or statement of earnings. Describes how the business operated , profitable or not. REVENUES income earned. EXPENSE incurred by the business PROFIT or NET INCOME results when revenues exceed expenses STATEMENT OF FINANCIAL POSITION(BALANCE SHEET) how healthy or robust the enterprise is when it shows that accumulated resources and debts of the business, the assets, liabilities and the NET WORTH. OWNERS EQUITY or NET WORTH SOLVENCY- is the ability of the business to pay for its liabilities LIQUIDITY to pay for its short term obligations as it falls due. STATEMENTS OF CHANGES IN OWNERS EQUITY explains the activities for a period of time that caused of change. Activities: investments, withdrawal, profit or loss. STATEMENT OF CASH FLOWS- why the amount of cash changed over a period of time. Listing of the cash inflows (receipts) and cash outflows (payments). Explained what happened to the cash by listing the cash flows from the financing, investing and operating. INCOME STATEMENT: .sales. used.rent.then profit STATEMENT OF OWNERS EQUITY: .capital.profit then new capital STATEMENT OF FINANCIAL POSITION: Total assets STATEMENT OF CASH FLOWS: Investments. Receipts. Payments then cash TRADE LIBERALIZATION frre flow of goods and services arount the world. TRADE INTERNATIONALIZATION global market LIFELONG PROCESS OF LEARNING attending conference and seminars DYNAMIC to remain in an active environment FLEXIBLE and ADAPTABLE ready to make changes and be able to adjust. CREATIVE with a mind open to more ideas

CRITICAL MIND able to make a choice on which one is the best among the different ideas evaluated. BUSINESS PLANNER the accountant is involved in the preparation of the master budget for the coming year. ECONOMIC FORECASTER determines the profitability trend of the company. FINANCIAL ANALYST evaluates the financial statements of the entity to determine its profitability, solvency and liquidity. PROFITABILITY the ability of the company to increase the owners equity by generating more revenues than cost and expenses. MANAGEMENT CONSULTANT gives advice on how the company more competitive.public accounting. SYSTEM ANALYST - participation in design, development, maintenance and control of electronic system to ensure that these are in accordance with the requirements for processing accounting and financial information. EFFECTIVE COMMUNIATION SKILLS should be able to collect and communicate information. Must be a good writer and speaker- able to express oneself. To discuss and explain clearly before management and the other users the reports submitted to them. INTERPERSONAL SKILLS - must know how to get along with people motivate them, lead and influence them, organize and delegate tasks, withstand and resolve conflicts. INTELLECTUAL SKILLS creative and critical thinking to be able to gather relevant information, evaluate them and communicate them. GENERAL KNOWLEDGE - includes history and culture so one can interact with people of different places. BUSINESS KNOWLEDGE includes economics, business statistics, quantitative methods, operations management, organizational behavior, law, tax and other social and cultural courses in business which makes one understand how business works. INFORMATIO TECHNOLOGY KNOWLEDGE makes one conversant in IT concepts and proficient in the implementation and use of information technology ACCOUNTING and AUDITING KNOWLEDGE is needed to be able to construct accounting data and come up with reliable and relevant information, evaluate these and give advice on how to use these in making decisions. PUBLIC ACCOUNTING CPA who offers to the public, for a fee, expert services like bookkeeping, auditing, accounting, tax and financial planning.

EXTERNAL AUDITOR to make an independent examination or review of the financial records of the firm and renders an opinion as to the fairness of presentation of the firms financial statements. TAX CONSULTANT in preparing tax returns. PRIVATE ACCOUNTING- more accountants are employed because of the huge number of merchandising, manufacturing or service firms BOOKKEEPER with knowledge of accounting who does the routine work of recording, classifying and summarizing of accounting information CHIEF ACCOUNTANT who does the preparation of the financial statements. CONTROLLER- toe overall in-charge of all accounting activities and function as the CHIEF ACCOUNTING OFFICER of the corporation whose work includes both financial and management accounting. INTERNAL AUDITOR who assists in the maintenance of the organizations internal control by conducting on- going review to ensure efficient and effective operation. BUDGET OFFICER - prepares plans and forecasts of the companys future operation CHIEF INFORMATION OFFICER - in charge of the information and communication technology department whose function is to oversee the electronic data processing information. TAX OFFICER advises management on the effect of taxes. GOVERNMENT and NOT for PROFIT ACCOUNTING work as an accountant in government agencies. RESEARCH EDUCATION RESEARCHER investigates and makes a studying improving accounting theories that will suit the changes taking place in a particular business ACCOUNTING PROFESSOR formation of competitive accountants as a teacher ACCOUNTING REVIEWER helps prepare the candidates from the CPA Licensure Examination. BASIC ACCOUNTING or BOOKKEEPING procedural aspect of accounting. FINANCIAL ACCOUNTING - preparation and interpretation of financial statements. COST ACCOUNTING necessary to produce and sell a product or service. MANAGERIAL ACCOUNTING primarily for management. Evaluate performance, determine,analyze and control cost, evaluate cost behavior and prepare operating and capital budgets. AUDITING independent verification and fairness GOVERNMENT and NON- PROFIT ACCOUNTING fund accounting which deals with the

administration. Objective is more on how the funds are used to service the people ratherfund account than to earn profit. TAX ACCOUNTING tax matters. FORENSIC ACCOUNTING illegal cases POFESSIONAL REGULATION COMMISSION (PRC)- in charge of regulating and licensing the practice of a profession like accounting. Prepare the exams twice a year. BOARD OF ACCOUNTANCY (BOA -BOARD)setting up and promulgating a set of professional standards and ethics. Monitors the practice of accountancy in the Philippines. PHILIPPINE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (PICPA) national professional organization of CPA in the Philippines, October 2, 1975.setting up and implementing rules. International Federation of Accountants, Confederation of Asian and Pacific Accountants and ASEAN Federation of accountants. PHILIPPINE FINANCIAL REPORTING STANDARDS COUNCIL (PFRSC) created in 2006 for formulating and promulgating standards ACCOUNTING STANDARDS COUNCIL (ASC)created in 1981 by the PICPA. THE PHILIPPINE INTERPRETATION COMMITTEE (PIC) created 2006 to assist the PFRSC, setting up and improving the standards. PFRS, PAS and INTERPRETATIONS the financial reporting standards in the Philippines. ASSOCIATION OF CERTIFIED PUBLIC ACCOUNTANTS IN EDUCATION (ACPAE)- for the accounting professors. GOVERNMENT ASSOCIATION CPA (GACPA)government accountants. ASSOCIATION OF INTERNAL AUDITORS internal auditors. THE ASSOCIATION PF CPAs IN COMMERCE AND INDUSTRY (ACPACI)- public and private accountants. SECURITY AND EXCHANGE COMMISSION (SEC)- tasked to safeguard public interest specially investors in the capital market (stocks and bonds), granted license/franchise to operate BANGKO SENTRAL NG PILIPINAS (BSP)regulates the operation of all the banks task to promote and maintain peso stability. BUREAU of INTERNAL REVENUE (BIR) tax and license compliance from people and business entities earning income. INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE (IASC)- the unique needs of its users after considering cultural attributes of its country. INTERNATIONAL ACCOUNTING STANARDS BOARD (IASB)- tasks is to formulate new standards for financial reporting and measurement called

INTERNATIONAL FINANCIAL REPORTING STANDARDS. THE ACCOUNTANCY ACT OF 2004 1.standardization and regularization, 2. Examination and 3. Supervision, control and regulation of the practice. SALIENT POINTS: 1. standard of practice than accountant should have. 2. creation of standard setting bodies like FPSC and ASC. 3. Mandates the creation of ETC. 4. Filipino citizen, of good moral character. 5. issues in connection with the practice of the profession. 6. enumerates the prohibitions 7. review he quality control 8. promulgation of PRC

UNDERSTANDIBILITY 1. Terminologies must be clear, 2. Form and presentation orderly and 3. Have a reasonable knowledge. RELEVANCE quality of the information to make a meaningful decision. It needs timeliness and promptly or within the period it is needed to form judgment. FEEDBACK that the information must give the user information of the past performance PREDICTIVE useful in projecting what might take place in the future RELIABILITY everything is documented FAITHFUL REPRESENTATION and SUBSTANCE OVER FORM that the information should not mislead users to think that it is when it is not. NEUTRALITY must be free from bias and manipulation. PRUDENCE which requires the accountant to exercise caution when using estimates or information that is market by uncertainty COMPARABILITY consistency and uniformity, helps one identify changes taking place in the entity between two or more periods so users will be able to determine the trend. PRINCIPLES- broad laws or rules adopted as guides to the conduct and practice of the profession. FINANCIAL REPORTING STANDARDS (FRSC)initially prepares exposure drafts which are disseminated to the different accounting associations. FINANCIAL REPORTING STANDARDS (FRS)when the concept or assumption is formalized and approved by the Financial Reporting Standards. BUSINESS ENTITY CONCEPT that the business enterprise is separate and distinct from the owner and investor. If an owner has more business, it should have separate records. EXCHANGE PRICE OR COST CONCEPT In the actual transactions, it should record the actual amount. GOING CONCERN CONCEPT - that the business is still ongoing. Financial statements should be prepared on a going concern basis. ACCRUAL CONCEPT based on the occurrence on the transaction rather than on whether cash is received or paid. OBJECTIVITY CONCEPT assets required must be verifiable substantiated by documents; current

market value is subject to constant change. It is also a component of qualitative characteristics of reliability, factual information. DISCLOSURE CONCEPT - qualitative characteristics of financial statement which is called RELEVANCE. Enhance to help a good judgment REPORTING PERIOD internal purposes doing some financial reports. UNIT OF MEASURE IN TERMS OF MONEY only one unit of measurement. FINANCIAL POSITION structure of a business. FINANCIAL PERFORMANCE income and expense ASSETS economic resources owned by the business. A resource obtained and controlled by the enterprise as a result of a past event and from which probable future economic benefits are expected to flow to the enterprise. LIABILITIES debts of the business. A present obligation arising from a past event. I is usually paid in cash but may also be paid in the form of property or service. OWNERS EQUITY - the residual right or interest of the owner in the entitys net assets. ASSETS= LIABILITIES + OWNERS EQUITY TRANSACTIONS economic activities occurring daily in a business. EXCHANGE OF VALUES every value received by the business there must be equal value parted with. REVENUE RECOGNITION CONCEPT / REALIZATION earned when service is rendered. EXPENSE RECOGNITION CONCEPT associated with the earnings of specific income items within a specific period of time (MATCHING PRINCIPLE). It is recognized when revenue is recognized. Allocated (spread out) as expense over the years that will benefit from its use. Periodic expense. CASH CONCEPT recognizing revenue when some cash is involved. REVENUE represents an inflow of cash or other assets for service rendered or for merchandise. As an increase in economic benefits SALES- is the revenue title used by merchandiser and manufacturers. EXPENSES incurred. Consumption of assets. Decrease in economic benefits. INVOICE when service or merchandise is given to a customer or client. OFFICE RECEIPT issued when cash is received by the entity. CASH OR CHECKVOUCHER a document used when cash is paid or a check is issued.

CHECK is a negotiable instrument used as a substitute for cash. STATEMENT OF ACCOUNT is a bill presented to a customer for service rendered or merchandise given for which payment is demandable. PROMISSORY NOTE is a written promise to pay a certain sum of money at a future date. JOURNAL recording of the documents in this book. LEDGER classifying and posting from the journal. TRIAL BALANCE list of account balances to facilitate preparation of financial reports. CHART OF ACCOUNTS is a listing of account titles which guides the bookkeeper in the recording of transactions. T ACCOUNT used to analyze the effects of a transactions on the accounts. ACCOUNT BALANCE different between debit and credit. DEBIT BALANCE debit total is higher than credit total. CREDIT BALANCE credit total is higher than debit total. ZERO ACCOUNT BALANCE/ CLOSE ACCOUNT the debit is equal to the credit total. BOOK OF ORIGINAL ENTRY- the transactions are initially recorded in the journal. POSTING process of transferring the debits and credits from the journal to the ledger. CONTROL ACCOUNT - Accounts payable. ACCOUNTS RECEIVABLE subsidiary ledger. MARKET VALUE represents the amount for which the assets could be sold or bought in its present condition. INVESTMENT IN PROPERTY - current market value and exchange price or cost concept. INVESTMENT OF PROPERTY with EXISTING LIABILITY the liability decrease the amount of capital to be credited. INVESTMENT OF AN ALREADY be recorded at the current market value. OWNERS DRAWING in original cost or book value. BOOK VALUE represents the unexpired cost or remaining utility of the asset. CASH ON HAND AND IN BANK money in the hands and deposited in bank. ACQUISITION COST OF POPERTIES: *purchase price * incidental expenses *additional expenditures *trade discounts

OBSOLESCENCE occurs when a better model is invented. INADEQUACY results when the asset can no longer meet the demands of the business. PAYROLL represents compensation paid to employees and workers. SALARIES regular employees. WAGES hour rate. DEDUCTIONS FROM GROSS PAY: *income tax *SS and Philhealth *HDMF *union dues *advances PAYROLL SHEET is a salary computing sheet. EMPLOYERS CONTRIBUTIONS *SS premium based on the employee *PhilHealth Premium based on the employee *EC *HDMF NON INTEREST BEARING NOTE: *date drawn by the maker *face or principal amount *maturity date or due date *payee *maker INTEREST BEARING NOTE there is an interest charge. DISCOUNTING NOTE interest is immediately deducted so the cash received is lower than the face of the note. PERCENTAGE TAX 3% for P100,000 P1,500,000. VALUE ADDED TAX 12% if it exceeds P1,500,000.