1. Prepared By: Mark John Bolatin
Accounting: The Language
of Business

2. TOPICS
• Accounting As information System
• Accounting and Information System definitions
• Financial accounting and Management accounting
• Accounting as an aid in decision making
• Users of Informartion
• Accounting System / Cycle
• RA 9298
• CPA as a profession

3. TOPICS
• Accounting Principles, Conventions and Concepts
• Definition and Differences
• Concepts
• Conventions

4. ACCOUNTING AS AN INFORMATION SYSTEM

5. WHAT IS “ACCOUNTING”
• PFRSC(Formerly ASC)- Accounting is a service activity. Its function is to provide quantitative
information primarily financial in nature, about economic entities that is intended to be useful in
making economic decision.
• American Accounting Associations defines accounting as the process of identifying,
measuring, and communicating economic information to permit informed judgment and
decision by users of information.
PURPOSE of
accounting
CPA’s
Primary
Purpose

6. INFORMATION SYSTEM
• The information system is defined as an integrated set of methods, procedures and means
used in order to collect, transmit and process data, analyze, store, disseminate and capitalize
information and knowledge to users of informations.

7. FINANCIAL AND MANAGEMENT ACCOUNTING
• The major distinction between financial and management accounting is the users of the information.
• Financial accounting serves external users.
• Management accounting serves internal users, such as top executives, management,
and administrators within organizations.

8. ACCOUNTING AS AN AID TO
DECISION MAKING
• Accounting information is useful to anyone who makes decisions that
have economic results.
• Investors
• Lenders
• Creditors or suppliers
• Government
• Customers
• Employees
• Managers and owners
External
Internal

9. ACCOUNTING AS AN AID TO
DECISION MAKING
• Fundamental relationships in the decision-making process:
Event
Accountant’s
analysis &
recording
Financial
Statements
Users

10. ACCOUNTING SYSTEM / CYCLE
• Analyzing
• Journalizing
• Summarizing
• Un-adjusted Trial Balance
• Adjusting Entries
• Adjusted Trial Balance
• Financial Statements
• Closing Entries
• Reversing Entries

11. RA 9298
• Also known as the Accountancy Act of 2004
• ACCOUNTANCY has developed as a
profession attaining a status equivalent to
that of law and medicine

12. CPA AS A PROFESSION
• CPA’s in Public Practice
• CPA’s in Private Institution
• CPA’s in Government
• CPA’s in Academe

13. ACCOUNTING PRINCIPLES, CONVENTION
AND CONCEPTS

14. • Concepts
• Are the basic notions or
fundamental premises on
which accounting process is
based.
• Conventions
• Guidelines that arise from
practical applications of
accounting principles.
Conventions are not legally-
binding practice, rather it is
generally accepted based on
customs and is designed to help
accountants overcome practical
problems.
ACCOUNTING PRINCIPLES

15. CONCEPTS
•ACCRUAL
•GOING CONCERN
•ACCOUNTING ENTITY
•MONETARY UNIT
•TIME VALUE
CONVENTIONS
•CONSERVATISM
•CONSISTENCY
•OBJECTIVITY
•COST PRINCIPLE
•MATERIALITY
•MATCHING PRINCIPLE
PRINCIPLES

16. ACCOUNTING CONCEPTS (AGAMTA)
• ACCRUAL

17. ACCOUNTING CONCEPTS (AGAMTA)
• GOING CONCERN

18. ACCOUNTING CONCEPTS (AGAMTA)
• ACCOUNTING ENTITY

19. ACCOUNTING CONCEPTS (AGAMTA)
• Monetary Unit
Common unit

20. ACCOUNTING CONCEPTS (AGAMTA)
• TIME PERIOD / ACCOUNTING PERIOD

21. ACCOUNTING CONVENTIONS
• MATCHING PRINCIPLE

22. ACCOUNTING CONVENTIONS
• CONSERVATISM

23. ACCOUNTING CONVENTIONS
• CONSISTENCY

24. ACCOUNTING CONVENTIONS
• OBJECTIVITY

25. ACCOUNTING CONVENTIONS
• COST PRICIPLE

26. ACCOUNTING CONVENTIONS
• Materiality
• Strict adherence to GAAP is not required when the items
are not significant enough to affect or influence the
decision of users.

27. ACCOUNTING CONVENTIONS
• Cost Over Benefit
•Benefit > Cost
•Benefit < Cost

28. REFERENCE'S:
Financial Accounting- Valix Peralta
Theory of Accounts (CPA Reviewer) – Atty. Conrado Valix, Christian Valix
Various website sources
THANK YOU……..