INTRODUCTION TO

ACCOUNTANCY,
BUSINESS AND
MANAGEMENT 1
Dr. Mark D. Dublin
Lyceum of the Philippines University Manila
Senior High School Department
 What is
accounting?

It is a systematic recording, reporting,

and analysis of financial transactions
of a business.
 Accounting • Because it communicates so much of the

is often information that owners, managers, and

called “the investors need to evaluate a company’s

language of
financial performance.

• These people are all stakeholders in the

business.” business, which is to say they’re interested
in its activities because they’re affected by
them.
 Accounting • resources available to a company

provides
– Physical resources (Facilities, Supplies)
– Financial (Capital and Loans)
information – Intellectual or Human Resources (higher
management to rank &file)
• the means employed to finance those
resources
– Marketing/Selling of Products or Services
• the results achieved through their use
– Income from sale of products/service
– Dividends (investors)
Debit and • DEBIT
– an entry recording an amount owned,
Credit listed on the left-hand side or column of an
account.
– A debit is an accounting entry that either
increases an asset or expense account, or
decreases a liability or equity account.
– Value Received (Napala)
• CREDIT
– A credit is an accounting entry that either
increases a liability or equity account, or
decreases an asset or expense account.
– Value parted (kapalit)
 DR CR
(debere) (credere)

Assets - are resources or things of value that Liabilities – are obligations and it is reported
are owned by a company. on a company's balance sheet. A common
example of a liability is accounts payable.

Capital - is the worth of the business after the

total liabilities owed by a company is
subtracted from that company's total
assets. Capital may also be labeled as the
equity in a company or as its net assets.

A=L+E
 Assets Liabilities
DR CR
Cash = 100,000.00 Notes payable = 100,000.00
(from the bank) (loan from bank)

Cash = 100,000.00 Capital

(self- owned) Name of Owner = 100,000.00

_______________________ _______________________
TOTAL = 200,000.00 TOTAL =200,000.00

A=L+E
 We know Accounting is the systematic recording of
Nature of financial transactions and presentation of the

accounting related information of the appropriate persons.

The basic features of accounting are as follows:

1. Accounting is a process
2. Accounting is an art
3. Accounting is means and not an end
4. Accounting deals with financial information and
transactions
5. Accounting is an information system
Accounting • A process refers to the method of
performing any specific job step by step
is a process according to the objectives, or target.
• Accounting is identified as a process as it
performs the specific task of collecting,
processing and communicating financial
information.
• In doing so, it follows some definite steps
like collection of data recording,
classification summarization, finalization
and reporting.
• Journal Entries
– is an entry to the journal.
– Journal is a record that keeps accounting
transactions in chronological order
• Ledger Accounts
– ledger account is an account or record used to
sort and store balance sheet and income
statement transactions.
• Preparation of Special Journal and General Ledger
– Sales transactions (Sales journal)
– Purchase transactions (Purchase journal)
– Cash receipts journal
– Cash disbursements journal
– Payroll journal (optional)
• Unadjusted Trial Balance

– is the listing of general ledger account

balances at the end of a reporting period,
before any adjusting entries are made to
the balances to create financial
statements.

– to check total debits recorded is equal to

total credits recorded

• Adjusted Entries

– Is prepared to adjust erroneous

transactions
• Adjusted Trial Balance
– is prepared to check total adjusted debits
recorded is equal to total adjusted credits
recorded

• Closing Entries
– are based on the account balances in an adjusted
trial balance. Temporary accounts include:
Revenue, Income and Gain Accounts.
• Post Closing Trial Balance
– is prepared after closing entries are made and
posted to the ledger.
• Financial Statements
– reports on a company's assets, liabilities, and
owners equity at a given point in time.
 • Accounting is an art of recording,
Accounting classifying, summarizing and finalizing
is an art the financial data.
• The word ‘art’ refers to the way of
performing something. It is a behavioral
knowledge involving certain creativity
and skill that may help us to attain some
specific objectives.
• Accounting is a systematic method
consisting of definite techniques and its
proper application requires applied skill
and expertise. So, by nature accounting is
an art.
 • Accounting finds out the financial
Accounting results and position of an entity and
is means the same time, it communicates this
information to its users.
and not an • The users then take their own decisions
end on the basis of such information.
 Accounting • Accounting records the financial
transactions and date after classifying the
deals with same and finalizes their result for a
financial definite period for conveying them to their

information users.
• So, from starting to the end, at every
and stage, accounting deals with financial
transactions information.
• Only financial information is its subject
matter. It does not deal with non-
monetary information of non-financial
aspect.
 • Accounting is recognized and
Accounting characterized as a storehouse of

is an information.
• This discipline of knowledge has been
information evolved out to meet the need of financial
system information required by different
interested groups.
 Accounting is concerned with
Functions of Communication of the results of the
Accounting recorded transactions in the form of Final
Accounts consisting of the Profit and Loss
Account with different sections and the
Balance Sheet with a number of reports
and statements affixed at the end.

Thus, the following are the main functions

of Accounting:
 Record Accounting is to maintain systematic and

Keeping chronological record of financial transactions

and to post them subsequently to the various
Ledger Accounts and finally to prepare the
Final Accounts to find out the profit or loss of
the business at the end of the Accounting
Period.
Protecting • Accounting is to calculate the correct

of amount of depreciation on assets by

Properties choosing the appropriate method

applicable to any particular assets.

• Accounting is to design a desirable system

to protect the properties and assets of the
business from unauthorized and
unwarranted use.
Communication • Accounting is always to
of Results communicate the results of the
recorded and transactions to the
different parties who are interested
in the particular business, i.e.,
properties, investors, creditors,
employees, Govt. official and
researchers etc.
Meeting Legal • Accounting is to devise and develop
Requirements such a system of keeping record and
reporting the results as will always
meet and legal requirements to
enable the proprietor or the authority
to file various statements like
Income-Tax Returns, Sales-Tax
Returns etc.
 Two distinct 1. Historical or Stewardship Function
departments 2. Managerial Function
of Accounting
Functions
Historical or • This part relates to the past transactions of the
Stewardship reports, analyses and interprets the transactions
business firm, Accounting records, classifies,

Function already effected.

• Accounting also calculates the profit or loss made
during the year and prepares other financial
statements and the statement of Assets and
Liabilities or the Balance Sheet and reports and
results to the proprietors, managers and other
interested parties.
 • Accounting is to render such service to the
Managerial management as to aid different levels of the

Function
managerial staff to carry out the operations
of the business efficiently.
• Accounting is an advisory service function
and is concerned with furnishing such
information to the management as will
facilitate efficient planning, operational
control and coordination of future activities
of the enterprise.
• So we see that Accounting helps in Budgetary
Control, Cost Control, Material Control and
Operational Control and also in minimizing
wastage, losses and errors and frauds.
 History of • Luca Pacioli (1494), first described the system of

Accounting double-entry bookkeeping used by Venetian

14 and
th merchants in his Summa de Arithmetica,

15 Century
Geometria, Proportioni et Proportionalita.
th
• Of course, businesses and governments had been
recording business information long before the
Venetians.

• Luca Pacioli is the first to describe the system

of debit and credits in journals and ledgers that is
still the basis of today's accounting systems.
16 to
th 18 th

Century
• Center of Commerce shifted from
Italy to Spain to Portugal and then
to Northern Europe. In 1673,
France adopted its first official
accounting code.
19 th Century • The industrial revolution catapulted England
into an unrivaled prosperity. By the middle
of the 19th century, Great Britain led in
production of coal iron and cotton textile.

• It also became the financial center of the

civilized world. Men with some experience in
bookkeeping became accountants.
20 th Century • The growth of multinational
to date corporations forested new internal
and external reporting consolidated
accounts and control system.

• As the world’s capital markets

globalized there was dramatic
increases in foreign investment and
world trade.
First CPA • In 1887, thirty-one accountants joined

Licensed together to create the American

Association of Public Accountants.

• The first standardized test for

accountants was given a decade later,
and the first CPA’s were licensed in
1896.
Computerized
Accounting
 SAP – an ERP systems integrate
Enterprise individual traditional
Resource business functions into
Planning modules enabling a single
(ERP) seamless transaction to cut
system across functional
boundaries.
SAP USERS WORDLWIDE
• 7-Eleven, Inc. IBM Pfizer, Inc.
• Accenture Johnson & Johnson Phillips Electronics
• Audi AG Konica Minolta Business Solutions
• Bayer Crop Science KPMG PricewaterhouseCoopers
• BMW Ford Motor Co Siemens Dematic
• Burger King Harley Davidson Vedicsoft Solutions
• Chevron Phillips Chemical Co. H.J. Heinz Company Verizon Communications
• Coca Cola Co. Hewlett-Packard Volkswagen of America
• Daimler Chrysler Corp. Mazitrol Co. Wacker Silicones
• Deloitte & Touche Mazda USA Walt Disney Co
• DuPont Nestle Warnaco Group, Inc.
• Electronic Data Systems Nexus Technologies, Inc. Whall Group
• Ericsson Nissan Research & Development, Inc.
• Ernst & Young Novartis Whirlpool Corp.
• Chevron Shell Oil CO.
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