ABM 1 TRANSES
BY: YANCH SANCHEZ
TEACHER: DORIS PATENO
Chapter 1: Accounting and Its
Environment
MSME’s (Micro, Small and Medium
Enterprises)
Assets No. of Workers
Micro 3 million 1-9
Small Over 3 million 10-99
to 9 million
Medium Over 9 million 100-199
to 100 million
Activities in Business Organization
 Financing- process of providing funds
for business activities, making
purchases or investing. (related to
raising their capital, where they will get
their capital. Another way in raising
capital is borrowing in bank)
 Investing- act of allocating resources,
usually money, with the expectation of
generating an income or profit. (related
to buying assets or disposing assets)
acquiring assets that can be use in one
period
 Operating- all things a company does
to bring its products and services to
market on an ongoing basis. (operating
activities of school is accepting
students, in hospital receiving patients)
Fundamental Concepts
 Entity Concept- a business or an
organization and its owners are treated as
two separately identifiable parties (folds
that the business is separate from the
owners)
 Periodicity Concept- also called time
interval concept, is a period during
which business enterprises are required
to prepare financial statement at
specified intervals.
 Stable Monetary Concept- assumes
that the value of peso is stable over time
(allows accountants to disregard the
effect of inflation)
General Accepted Accounting Standards
(GAAS)
 conventions, rules, procedures
necessary to define accepted
accounting practice at a particular time.
 collections of commonly followed
accounting rules and standards for
financial reporting.
Basic Principles
 Objectivity- the concept that the
financial statements of an organization
be based on solid evidence
 Historical Cost- measure used in
accounting in which the value of an
asset on the balance sheet is recorded
at its original cost when acquired by the
company
 Revenue Recognition Principle-
feature of accrual accounting, requires
that revenues are recognized on the
income statement in the period when
realized and earned
 Expense Recognition Principle-
expenses should be recognized in the
same period as the revenues to which
they relate
 Adequate Disclosure- confirming that
all essential information is included in
financial statements
 Materiality- principle which states that
all items that are reasonably likely to
impact investors’ decision-making must
be recorded or reported in detail
 Consistency Principle- states that
once you adopt an accounting principle
or method, continue to follow it
consistently in future accounting periods
Scope of Practice
 Practice of Public Accountancy-
performance of or any offer to perform
one or more services for a client or
potential client (ACPAAP)
 Practice in Commerce and Industry-
known as private accounting. An
accountant serves only one company
(ACPACI)
 Practice in Government- (GACPA)
 Practice in Education/ Academe- shall
constitute in a person in an educational
institution which involve teaching of
accounting, auditing, management
advisory services (ACPAE)
Professional Organizations
 ACPAPP (Association of Certified
Public Accountants in Public
Practice)
 ACPACI (Association of Certified
Public Accountants in Commerce
and Industry)
 GACPA (Government Association of
Certified Public Accountants)
 ACPAE (Association of Certified
Public Accountants in Education)
Scope of Examination
 Theory of Accounts
 Business Law and Taxation
 Management Services
 Auditing Theory
 Auditing Problems
 Practical Accounting Problems I
 Practical Accounting Practice II
Core Competencies
 Knowledge
- General
 - Organizational and Business skin of crocodiles then make it bag.
- Information and Technology Canned goods: buy processed
- Accounting meats and make it canned goods)
~ Basic  Agriculture (one would use nature
~ Taxation like land, seeds)
 Skills
- Intellectual FORMS OF BUSINESS OWNERSHIP
~ Analysis
~ Problem Solving Form No. of Name of
~ Critical Thinking Owners Owner
- Interpersonal Single 1 Proprietor/
- Communication Proprietorship/ Entrepreneur
 Values Entrepreneurship
- Professional Ethics Partnership 2 or more Partner
- Moral Values Corporation 5 or more Shareholder/
Stockholder/
Fundamental Principles Member
 Integrity- straightforward, honest, Cooperative 15 or Member
truthful more
 Objectivity- no bias, no conflict of
interest
Approving Bodies
 Professional Competence and
Due Care- maintain professional Corporation Securities & Exchange
knowledge and skills Commission
 Confidentiality- should not disclose Cooperative Cooperative
any information obtained during Development Authority
engagement
 Professional Behavior- comply Partnership
with relevant laws and regulations A contract whereby two or more persons
bind themselves together to contribute
Branches of Accounting money, property or industry(services) into a
 Auditing - independent examination; common fund with the intention of dividing
issue opinion on fairness of the reports the profits among themselves. Two or more
 Bookkeeping – collection of basic persons may also form a partnership for the
financial data; journalizing to financial exercise of a profession.
statements
 Cost Accounting – same as Corporation
bookkeeping but more detailed; cost of Sec. 2. Corporation defined. - A corporation
producing goods is an artificial being (not natural person)
 Financial Accounting – recording and created by operation of law, having the right
periodic preparation of financial reports of succession and the powers, attributes
 Financial Management – managers are and properties expressly authorized by law
responsible in setting financial objectives, or incident to its existence. (it can be sued)
making plans based on the objectives, Ex: St. Mary’s
safeguarding assets
 Management Accounting – Look for actual business engage in service,
incorporates all financial and non- trading, manufacturing, agriculture (just 1
financial data form a wide range of each, the company and the service)
sources
 Taxation – preparation of tax returns and
its consequences
 Government Accounting – sources and
uses of government funds

Chapter 2: The Business Environment

2

NATURE OF BUSINESS
 Service (school, hospital)
 Trading (business buys merchandise
and sell merchandise in same form)
malls
 Manufacturing (business buy raw
materials and the finesse goods is
being sold (bag: business would buy