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    INTACC 1-MILLAN Notes

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    bualjomarie51
    Notes about intermediate accounting 1 chapter 1

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    INTACC 1-MILLAN Notes

    Uploaded by

    bualjomarie51
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    Notes about intermediate accounting 1 chapter 1

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    Notes about intermediate accounting 1 chapter 1

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    1 views3 pages

    INTACC 1-MILLAN Notes

    Uploaded by

    bualjomarie51
    Notes about intermediate accounting 1 chapter 1

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Chapter 1: The Accounting Process

    Accounting
    - “process of identifying, measuring, and communicating economic information to
    permit informed judgements and decisions by users of the information”.
    - American Association of Accountants

    Accounting information system


    - Where Identifying, measuring, and communicating economic information is
    effected
    - System of collecting and processing transaction data and disseminating financial
    information to interested parties
    - Subsystem of Management information system (MIS)

    Management Information System


    - is a set of data gathering, analyzing, and reporting functions designed to provide
    management with information it needs to carry out its functions.
    - The major components of an MIS include the following:
    1. Accounting Information System or Financial Information System
    2. Personnel Information System
    3. Logistics Information System

    Components of accounting information system


    1. Personnel directly involved in accounting work.
    2. Accounting policies and standards.
    Accounting policies are the specific principles, bases, conventions, rules
    and practices applied by an entity in preparing and presenting financial
    statements

    Not all the PFRS are applicable to an entity. The relevant PFRSs and the
    methods chosen are the entity’s accounting policies which are disclosed in
    the notes to financial statements.

    3. Procedures- sets of interrelated activities involving the originating, processing


    and reporting of financial and related information.
    4. Equipment and devices used in the system to expedite work, to provide controls,
    and prevent fraud and errors
    5. Records and reports- gather, process, store and transmit financial and other
    information.

    The Accounting Cycle Steps


    1. Identifying and analyzing
    2. Journalizing
    3. Posting
    4. Preparing the unadjusted trial balance
    5. Preparing the adjusting entries
    6. Adjusted Trial balance
    7. Preparing Financial Statements
    8. Closing the Books
    9. Preparing the post-closing trial balance
    10. Recording of reversing entries

    Accounting records of a business entity


    1. Business or source documents- original source materials evidencing a
    transaction. Ex: sales invoices, official receipts, vouchers, soa,...
    2. Books of accounts
    a. Journal
    b. Ledger

    System of recording transactions


    1. Double-entry system- each transaction is recorded in two parts- debit and credit.
    a. Duality- two fold effect on values- a value received and a value parted with
    b. Equilibrium- equal debits and credits

    This type of recording is in line with the PFRSs because profit or loss is
    determined through the “transaction approach.” Transaction approach- profit or
    loss in computed as the difference between the income and expenses

    Accounts: assets, liabilities, equity, income and expenses


    Books of accounts: Journal, Special Journal, Ledger, Subsidiary Ledger

    2. Single-entry system- transaction is recorded in simple narrative. Not in terms of debits


    and credits. Profit or loss- capital maintenance approach or by comparing the beginning
    and ending balances of equity

    Not in line with PFRSs


    Internal control is not enhanced under this type of recording

    Accounts: cash, accounts receivable, accounts payable, and equity

    Books of Acc: Cash books and subsidiary ledgers (personal accounts)

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