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are accountable
PROFESSION
■ Subject matter of accounting: Economic
DEFINITION of Accounting: Activity/ies
(ACCOUNTING STANDARDS COUNCIL) CLASSIFICATION OF ECONOMIC ACTIVITIES
■ Accounting is a service activity EXTERNAL TRANSACTIONS – also
■ Its function is to provide quantitative known as exchange transactions.
information, primarily financial in - these are events that
nature, about economic entities, that is involves one entity and another entity
intended to be useful in making
economic decisions INTERNAL TRANSACTIONS – it involves
the entity only.
(AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS) MEASURING
■ Accounting is the art of recording, ■ It is the process of assigning peso
classifying and summarizing in a amounts to accountable economic
significant manner and in terms of transactions and events.
money, transactions and events which
■ Measurement bases are the historical
are in part at least of a financial
cost, current cost, realizable value and
character and interpreting the results
present value
thereof
COMMUNICATING
(AMERICAN ACCOUNTING ASSOCIATION)
■ Accounting is the process of identifying, It is the process of preparing and
measuring and communicating distributing accounting reports to
economic information to permit potential users of accounting
informed judgment and decision by information
users of the information This process is the reason why
accounting is called the “Universal
Components of Accounting Language of Business.”
(based on its definition) This process contains the recording,
classifying and summarizing aspects of
a. Identifying as the analytical component
accounting.
b. Measuring as the technical component
ACCOUNTING AS AN INFORMATION SYSTEM
c. Communicating as the formal
■ Information System of Accounting
component
measures business activities, processes
IDENTIFYING information into reports and
communicates the reports to decision
■ It is the recognition or non-recognition makers
of business activities as accountable
events. ■ Its key product is a set of financial
statements
■ Accountable event or Quantifiable
event – it is an event that has an
effect/s on assets, liabilities and equity.
OVERALL OBJECTIVE OF ACCOUNTING ■ Under the new BOA resolution, all CPA
(regardless of area or sector of practice)
“The overall objective of accounting is shall be required to comply with 120
to provide quantitative financial information CPD units for a period of 3 years.
about a business that is useful to statement
users particularly owners and creditors in ■ Here is the initial implementation of the
making economic decisions.” 120 CPD credit units: