Accounting for Non-Accountants Flashcards
(49 cards)
It is an information system that provides financial reports to users about economic activities of the business
Accounting
A way to record the events related to the business that affects its resources and obligations
Accounting
The language of business
Accounting
A process of identifying, recording and communicating economic information that is useful in making economic decisions.
Accounting
The accountant analyzes each business transaction and identifies whether the transaction is an “accountable event” or “non-accountable event.”
Identifying
The accountant recognizes (i.e., records) the “accountable events” he has identified. This process is called “journalizing.” After journalizing, the accountant then classifies the effects of the event on the “accounts.” This process is called “posting.”
Recording
At the end of each accounting period, the accountant summarizes the information processed in the accounting system in order to produce meaningful reports.
Communicating
Types of infoirmation provided by accounting
- Quantitative Information
- Qualitative Information
- Financial Information
To provide external users with information that is useful in making investment and credit decisions
Function of Accounting in Business
To provide internal users with information that is useful in managing the business.
Function of Accounting in Business
At the start of the period, a business has total assets of ₱500,000 and total
liabilities of ₱300,000. During the period, the business earned total income
of ₱1,000,000 and total expenses of ₱640,000. No additional investments or
withdrawals were made by the owner. Total assets at the end of the period
were ₱830,000. How much is the total liabilities at the end of the period?
270,000
The output of an accounting system is (are)
Accoutning reports
Entity A has an interest-bearing note payable. At the end of the period,
Entity A would most probably recognize which of the following?
Interest Expense
Which of the following is not considered a manufacturing business?
a. San Miguel Pure Foods
b. Apple
c. Banco de Oro
d. Toyota
Banco de Oro
Which of the following is most likely not considered a merchandising
business? Pharmacy, Department Store, Rice Wholesaler or Movie Theater?
Movie Theater
It is the left side of an account.
Debit
It is the right side of an account.
Credit
The accounting standards in the Philippines are called
Philippine Financial Reporting Standards (PFRSs)
Entity A’s equipment was lost due to theft. How will Entity A record this
event?
Charge the carrying amount of the lost equipment as loss.
The beginning equity is ₱5,000. If total income for the period is ₱8,000
while total expenses are ₱6,000, how much is the ending balance of
equity?
7,000
Entity A purchased inventories for ₱100,000. Entity A expects to sell the
inventories for ₱120,000 and therefore records the inventories at ₱120,000
rather than at ₱100,000. Which of the following accounting principles is
violated?
historical cost
This represents the value of inventories that have been sold during the
accounting period.
Cost of sales
An event is considered an accountable event if
it has an effect on the assets, liabilities, equity, income or expenses
of the entity
The start-up capital of a business consisted of ₱1,000,000 cash provided by
the business owner and an additional ₱250,000 from a bank loan. The total
start-up assets of the business therefore is
1,250,000
