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accounting bba slides.pptx
1. •Because natural resources are limited,
people have to know food crops, and raise
domesticated animals to be able to sustain
life
•During cropping and livestock, human
observed, recorded the wastage and labor
spent to achieve results, then compare,
evaluate what to plant, what brings most
benefits.
2. Accounting is an information system that provides quantitative,
financial information to stakeholders about the economic
activities and condition of a business so that they can make
business/economic decisions.
3. •Dating back 10,000 years, the first accounting system probably
consisted of stones used to represent wealth.
•Accounting began as a simple system of clay tokens to keep
track of goods and animals, before developing complex
transactions and other financial information.
4. •Accountancy has its roots in the earliest history of civilization.
With the rise of agriculture and trade, people needed a way to
keep track of their goods and of transactions.
•Around 7500 B.C Mesopotamians began using clay tokens to
represent goods, such s animals, tools, food items or units of
grains.
•Starting around 3000 B.C the Chinese developed the abacus, a
tool for counting and calculating.
5. •During and after the Crusades, European trade markets opened up to
Middle Eastern trade, and European merchants, especially in Genoa
and Venice, became increasingly wealth.
•They needed a better way to keep track of large amounts of money
and complex transactions, and this led to the development of double-
entry bookkeeping.
•Double-entry bookkeeping means that each transaction is recorded
at least twice, as a debit from one account and a credit to another.
•In 1494 Luca Pacioli published a math book titled “Summa de
arithmetica, geomatria, proportione et proportionalita” which
contained a description of double-entry accounting gave valuable tool
for keeping track of detailed financial information.(Luca Pacioli is
often called the “Father of Accounting”)
6. •Accounting developed further advent of the industrial
revolution in the late 18th centuries
•Help business owners and managers understand how best to
make their businesses as cost efficient as possible
•People began to specialize in accountancy
•Thus becoming the first professional public accountants
7. •Today, accounting is a business unto itself, with thousands of
practitioners worldwide and a large number of professional
organizations and official guidelines to codify practices and
requirements
•The Generally Accepted Accounting Principles, set forth the
standards by which public accountants must do business. Every
country has a similar set of accounting guidelines.
8. •Due to the complex nature of today's economic system,
specialized branches of accounting have developed
•In addition to traditional financial accounting, there are now
subdivisions, such as tax accounting, management accounting,
lean accounting, fund accounting and project accounting
•Professional accountants are required for understanding of
business needs and accountancy practices
9. •Tech innovations such as real-time data, remote conference
meetings, mobile apps, and evolving accounting software
•These programs include standalone products such as Quick
books and Quicken, online options like Fresh books, and
enterprise packages such as SAP.
10. The accounting conceptual framework is a theory that details
the basic reasoning underlying the financial statements and
financial reporting in general. The ACF clearly defines the
objectives and users of financial statements.
11.
12. Qualitative characteristics of accounting information that
must be present for information to be useful in making
decisions:
•Relevance
•Representational faithfulness
•Enhancing qualities
13. Qualitative characteristics of accounting information that must
be present for information to be useful in making decisions:
•Relevance
•Representational faithfulness
14. Relevance refers to how helpful the information is for financial
decision-making processes. For accounting information to be
relevant, it must possess:
Confirmatory value – Provides information about past events
Predictive value – Provides predictive power regarding
possible future events
15. Complete – Financial statements should not exclude any transaction.
Neutral – The degree to which information is free from bias.
Free from error – The degree to which information is free from
errors.
16. Qualitative characteristics of accounting information that
impact how useful the information is:
Verifiability
Timeliness
Understandability
Comparability
17. Verifiability is the extent to which information is reproducible given
the same data and assumptions. For example, if a company owns
equipment worth $1,000 and told an accountant the purchase cost,
salvage value, depreciation method, and useful life, the accountant
should be able to reproduce the same result. If they cannot, the
information is considered not verifiable.
18. Timeliness is how quickly information is available to users of
accounting information. The less timely (thus resulting in older
information), the less useful information is for decision-making.
Timeliness matters for accounting information because it
competes with other information. For example, if a company
issues its financial statements a year after its accounting period,
users of financial statements would find it difficult to determine
how well the company is doing in the present.
19. Understandability is the degree to which information is easily
understood. In today’s society, corporate annual reports are in excess
of 100 pages, with significant qualitative information. Information that
is understandable to the average user of financial statements is highly
desirable. It is common for poorly performing companies to use a lot
of jargon and difficult phrasing in its annual report in an attempt to
disguise the underperformance.
20. Comparability is the degree to which accounting standards and
policies are consistently applied from one period to another. Financial
statements that are comparable, with consistent accounting standards
and policies applied throughout each accounting period, enable users
to draw insightful conclusions about the trends and performance of
the company over time. In addition, comparability also refers to the
ability to easily compare a company’s financial statements with those
of other companies.
The qualitative characteristics of accounting information are
important because they make it easier for both company management
and investors to utilize a company’s financial statements to make well-
informed decisions.
21. Economic Entity Assumption
•Separate and distinct from its owners or other business units.
Going Concern Assumption
•A company is assumed to have a long life
•The current relevance of the historical cost principle is dependent on the going-concern
assumption.
Monetary Unit Assumption
•Money is the common denominator of economic activity
•Provides an appropriate basis for accounting measurement and analysis
•Monetary unit is assumed to remain relatively stable over the years in terms of purchasing
power.
Periodicity Assumption
•The economic activities of a company can be divided into artificial time periods for the
purpose of providing the company’s periodic reports
Accruals
•Transaction are recorded using the accrual basis of accounting, where the recognition of
revenues and expenses arises when earned or used.
22. Measurement Principle
•Measuring principle is a technical form or analysis which looks to historical price movements
to identify future trends
•Should only record an accounting transaction which can be expressed in terms of money
Fair Value Principle.
• In investing, it refers to an asset's sale price agreed upon by a willing buyer and seller,
assuming both parties are knowledgeable and enter the transaction freely.
Revenue Recognition Principle
•Revenue is recognized at the time in which the performance obligation is satisfied
Expense Recognition Principle
•Recognition of expenses is related to net changes in assets and earning revenues
Full Disclosure Principle
•In the preparation of financial statements, the accountant should include sufficient
information to influence the judgment and decision of an informed user
Historical Cost Principle
• Acquisition cost is considered a reliable basis upon which to account for assets and liabilities
of a company.
•Historical cost has an advantage over other valuations, as it is thought to be verifiable.
23. Cost Constraint
•The cost constraint (or cost-benefit relationship) relates to the notion that the
benefits to be derived from providing certain accounting information should
exceed the costs of providing that information. The difficulty in cost-benefit
analysis is that the costs and especially the benefits are not always evident or
measurable.
24. •Accounting is the backbone of business.
•The role of the accountant will always be in demand.
•Accountants are commonly examining financial records to
ensure accuracy and to spot financial inefficiencies.
•A chief financial officer (CFO) is an executive tasked with
analyzing a company’s financial health and using that
information to plot current and future strategies for growth.
26. •Balance sheet show the financial position of the business
•On the balance sheet one hand side show the assets and on
another hand shows the liabilities and equity
27. •Income statement is one of a company‘s core financial statements
that shows their profit and loss
•The profit and loss statement shows a company‘s ability to generate
sales , manage expenses, and create profits over a period of time
28. •Cash flow statement is a financial statement that provides aggregate
data regarding all cash in flows a company receives from its on going
operating and external investment sources
•It also include all cash outflows that pay for business activity and
investment during a giving period
29. Retained earnings is the amount of net income left over for the
business after it has paid out dividends to its share holder
It can be also re-invested back into the company for growth
purposes
31. •Recording the business transacting in books
•Preparation of periodical reports for managers and general
public
32. •Control the cost of production and distribution
•Checks the efficiency of producing, selling and administrative
departments by actual and pre-determined techniques
•Effect on cost with changes in the volume of production and
sales
33. •Concern with the selection of best among various alternatives
•Uses the techniques of historical, estimated and actual data as
a device toward positive change
34. •Method of recording transaction of the central and provisional
governments.
•Records expenditure, taxes, revenue and budget
•Provides information to financial aspect of public
administration and activities.
•This also known as applied accounting
35. •Examination of the accounting record.
•Purpose of examination to finances and accuracy of accounts
•Reconciliation with the prescribed rules, policies and
procedure.
36. •Structure of accounting methods focused on taxes rather than
the appearance of public financial statements
•Governed by the Internal Revenue Code, which dedicates the
specific rules follow when prepare their tax returns.
38. •Certified accountants provides services to private business ,
Individuals , non-profits or government.
• Audit
• Reviewing, editing, preparing financial statement to e disclose to public
• Testing and validating information and discussing and inquiring with clients
• Tax
• Advising on tax planning and preparing the return.
• Provide advise to client on transactions and ways to handle intended changes in
business
• Advisory/Consulting
overall strategies planning and implementation of specific operations
39. •Employees of entity set up systems and record transactions;
then aggregate them into financial statements.
•Goal is improve financial performance through review of
financial statements.
40. •Highly variables
•Short term goal should be finding internship in your industries
of choice
•Full time career path:
• Staff accountant-
• Assistant controller
• Controller/ managers
• CFO
41. •Prepare income statements
•Prepare balance sheets
•Statement of cash flows
•Expense reports
•Preparing reports of audit contracts, orders and vouchers
•Prepare tax return
42.
43. •Bright future
•Knowledge and skills set of this profession is always in demand
•Good education
•Gaining experience at an accounting firm
•Improving productivity skills
•Competition in job market