FABM Lesson Proper

FABM Lesson Proper

JAYCEL A. GESMUNDO

The Business Environment

* Differentiate the branches of accounting

* Explain the types of services rendered in each branch of accounting

* Know the different types of business organizations

* Classify the different types of business operations

Multiple Choice

A branch of accounting which PRIMARILY CONCERNED is recognition, measurement and communication of economic activities

and communicated in a complete set of financial statements.

• Financial Accounting

• Management Accounting

• Government Accounting

• Government Accounting

• Cost Accounting

FINANCIAL ACCOUNTING

• broadest branch and is focused on the needs of external users

• PRIMARILY CONCERNED in recognition, measurement and communication of economic activities

• communicated in a complete set of financial statements

• conforms with accounting standards developed by standard-setting bodies

  
  

FINANCIAL ACCOUNTING

• use these information for their decision-making needs (internal)

• primarily concerned with processing historical data.

• Examples of these financial reports include: 

  • the balance sheet (statement of financial condition)

  • income statement (the profit and loss statement, or P&L)

  • statement of cash flows 

Multiple Choice

A branch of accounting which PRIMARILY CONCERNED is emphasizes the preparation and analysis of accounting information within the organization.

• Financial Accounting

• Management Accounting

• Government Accounting

• Government Accounting

• Cost Accounting

MANAGEMENT ACCOUNTING

• emphasizes the preparation and analysis of accounting information within the organization

• to provide timely and relevant information for those internal users of accounting information

• sensitive information and is not distributed to those outside the business

• IMA "PROFESSION ... TO ASSIST MANAGEMENT"

MANAGEMENT ACCOUNTING

• for example, prices, plans to open up branches, customer list, etc.

• Involves financial analysis, budgeting and forecasting, cost analysis, evaluation of business decisions, and similar areas. 

Multiple Choice

A branch of accounting which PRIMARILY CONCERNED is emphasizes the the recording of inflow and outflow of funds of the government.

• Auditing

• Tax Accounting

• Government Accounting

• Government Accounting

• Cost Accounting

GOVERNMENT ACCOUNTING

• process of recording, analyzing, classifying, summarizing, communicating and interpreting financial information about the government in aggregate and in detail reflecting transactions and other economic events involving the receipt, spending, transfer, usability and disposition of assets and liabilities.

• how the funds of the government are recorded and reported

• the recording of inflow and outflow of funds of the government. 

GOVERNMENT ACCOUNTING

• Section 109 of Presidential Decree (PD) No. 1445 "all transactions"

• The agencies responsible in performing government accounting functions are the Commission of Audit (COA), the Department of Budget and Management (DBM), and the Bureau of Treasury (BTr).

Multiple Choice

A branch of accounting which PRIMARILY CONCERNED is examination and review of accounting reports in order to ascertain their fairness, propriety, and reliability.

• Auditing

• Tax Accounting

• Accounting Research

• Government Accounting

• Cost Accounting

AUDITING

• INTERNAL (independent CPA )

• EXTERNAL (company's internal control structure)

• examination and review of accounting reports in order to ascertain their fairness, propriety, and reliability. 

Multiple Choice

A branch of accounting which PRIMARILY CONCERNED is determination of income tax and other taxes, tax advisory services such as ways to minimize taxes legally, evaluation of the consequences of tax decisions, and other tax-related matters

• Auditing

• Tax Accounting

• Government Accounting

• Accounting in Education

• Cost Accounting

TAX ACCOUNTING

• helps clients follow rules set by tax authorities

• tax planning and preparation of tax returns

• determination of income tax and other taxes, tax advisory services such as ways to minimize taxes legally, evaluation of the consequences of tax decisions, and other tax-related matters. 

• BIR

Multiple Choice

A branch of accounting which PRIMARILY CONCERNED is collection, determination, allocation, assessment, interpretation, and control of cost of data, particularly the cost of production in a manufacturing concern.

• Auditing

• Tax Accounting

• Government Accounting

• Accounting Research

• Cost Accounting

COST ACCOUNTING

• subset of management accounting

• Collection, determination, allocation, assessment, interpretation, and control of cost of data, particularly the cost of production in a manufacturing concern.

• Cost of production includes the raw materials, direct labor, factory overhead, and all other cost involved incident in each stage of production of the finished goods.

COST ACCOUNTING

• analyze actual and standard costs to help managers determine future courses of action regarding the company's operations.

  help the owner set the selling price of his products. 

  
  

• For example, if the cost accounting records shows that the total cost to produce one can of sardines is PHP50, then the owner can set the selling price at PHP60. 

Multiple Choice

A branch of accounting which PRIMARILY CONCERNED is developing future accountants by creating relevant accounting curriculum

• Auditing

• Tax Accounting

• Accounting Education

• Accounting Research

• Cost Accounting

Accounting Education

• developing future accountants by creating relevant accounting curriculum

• Accounting professionals can become faculty members of educational institutions.

• The professional accountant imparts knowledge to students enrolled in an accounting subject either in basic accounting or in higher accounting subjects.

• Accountants in the academe usually take post graduate studies to achieve the required tenure.

Accounting Education

• qcollecting information about a particular subject in order to decide and implement new standards in accounting. presenting current events that might affect the profession, or discovering new theories that will have an impact on existing accounting knowledge

  
  

BRANCHES OF ACCOUNTING

• Financial Accounting

• Management Accounting

• Government Accounting

• Auditing

• Tax Accounting

• Cost Accounting

• Accounting Education & Accounting Research

USERS OF ACCOUNTING INFORMATION

INTERNAL & EXTERNAL

INTERNAL USER

DIRECTLY INVOLVED

DECISION MAKERS

INTERNAL USER

INVESTOR

MANAGEMENT

EMPLOYEE

INVESTORS/OWNERS/

STOCKHOLDERS

• provide the financial resources

• decide whether to invest or not

• financial position

MANAGEMENT

• to set goals for their companies.

• evaluate their progress towards these goals and use financial data as a guide for future management actions

EMPLOYEE

• if they have future in the company.

INTERNAL USERS

INVESTORS

MANAGEMENT

EMPLOYEE

EXTERNAL USER

SECONDARY USERS

OUTSIDE

EXTERNAL USER

POTENTIAL INVESTORS

CREDITORS

GOVERNMENT

Customers

POTENTIAL INVESTORS

• INTERESTED IN company's financial history

• assurance

FINANCIAL INSTITUTIONS/

CREDITORS

• capacity of the business organization to pay 

• EVALUATE the risk

GOVERNMENT

• tax purposes 

CUSTOMERS

• suppliers

• LONG-TERM

EXTERNAL USER

POTENTIAL INVESTORS

CREDITORS

GOVERNMENT

Customers