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Module 1 overview of acctg.docx - COLLEGE OF THE IMMACULATE...

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COLLEGE OF THE IMMACULATE CONCEPCIONINSTITUTE OF ACCOUNTANCY AND BUSINESSMODULE 1Overview of AccountingMRS. OFELIA E. HOCSON,CPA,MBAINTRODUCTIONThis module will introduce to you the definition of accounting, its basic purpose, the accountingconcepts and terminologies, the branches of accounting and the sectors involve in the practice ofaccounting profession. Accounting standards shall likewise be introduced including its authoritativestatus.LEARNING OUTCOMESAt the end of the module, students should be able to:1.Define accounting and state its basic purpose.2.Explain the basic concepts applied in accounting.3.State the branches of accounting and the sectors in the practice of accountancy.Definition of AccountingACCOUNTING is a service activity. Its function is to provide quantitative information, primarilyfinancial in nature about economic entities, that is intended to be useful in making economic decisions.(Accounting Standards Council)ACCOUNTING is the “process ofidentifying, measuring and communicatingeconomicinformation to permit informed judgments and decisions by users of the information.” (AmericanAssociation of Accountants)Three important activities included in the definition of accounting:1.Identifying - the process of analyzing events and transactions to determine whether or notthey will be recognized.2.Measuring - involves assigning numbers, normally in monetary terms, to the economictransactions and events.3.Communicating - is the process of transforming economic data into useful accountinginformation, such as financial statements and other accounting reports, for dissemination to users. Italso involves interpreting the significance of the processed information.PAGE 1 |C o n c e p t u a lF r a m e w o r ka n dA c c o u n t in gS t a n d a r d sP r e p a r e db y :M R .M A R KJ A YM .G E D OC R U Z
Basic Purpose of AccountingThe basic purpose of accounting is to provide information that is useful in making economicdecisions. The financial statements are one of the sources of information used when making economicdecisions. Other sources may include current events, industry publications, internet resources,professional advices, expert systems, etc.Accounting ConceptsAccounting concepts refer to the principles upon which the process of accounting is based. Theterm “accounting concepts” is used interchangeably with accounting assumptions and accountingtheory.It is the organized set of concepts and related principles that explain and guide the accountant’saction in identifying, measuring, communicating accounting information. Accounting theory comprisesthe Conceptual Framework and the Philippine Financial Reporting Standards (PFRSs).Most accounting concepts are derived from the Conceptual Framework and the PhilippineFinancial Reporting Standards (PFRSs). However, some accounting concepts are implicit, meaning theyare not expressly stated in the framework or PFRSs but are generally accepted because of their long-timeuse in the profession.

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Term
Fall
Professor
N/A
Tags
Balance Sheet, Generally Accepted Accounting Principles, Accounting Standards Council

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