ORIENTATION

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ORIENTATION ACCOUNTING BASICS

• Week 1

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ORIENTATION
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COURSE OVERVIEW

1. Course No. IT200
2. Course Title Accounting Information System
3. No. of Units 3 units
4. Semester Offered 1st Semester
5. Lecturer Mylene S. Caballero
6. Consultation Hours Tuesday 1230 230
7. Linkage with Subsequent Courses This course is
   not a prerequisite to any of the major subjects
   of the BSIT program.
8. Schedule
9. IT3B 800 1100am lab. Tues.
10. IT3B 410 540pm lec. Tues. Thurs.
11. IT3A 100 430pm lab. Tues.
12. IT3A 100 405pm lec. Thurs.

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COURSE OVERVIEW

• Course Description This course introduces
  Computer Science and Information Technology
  majors to the basic accounting concepts and
  principles underlying financial statements of
  business enterprises. This course provides a
  theoretical basis for understanding accounting
  and system concepts as an introduction of
  Accounting Information Systems. The course
  contains in-depth coverage on transaction
  processing systems organized by cycles (Revenue,
  Expenditure, Conversion, and Financial Cycles).
  The course shows on how to use database theory
  and tools to build functional accounting systems
  per accounting transaction cycles.

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OBJECTIVES

• Values to be integrated This course aims to
  develop the critical thinking skills of the
  students as they try to portray the role of a
  systems analyst particularly in accounting
  information systems. They are expected to become
  good development planners equipped with the
  proper knowledge and values as they try to
  formulate humane decisions and solutions to
  real-world issues.

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TEXTBOOKS/REFERENCES

1. Basic Accounting by Win Lu Ballada
2. Basic Accounting by Edwin G. Valencia Gregorio
   F. Roxas, 3rd edition 2009-2010
3. Fundamentals of Accounting by Rafael M. Lopez,
   Jr., Millennial edition 2007-2008
4. Accounting Information Systems by James Hall
5. Building Accounting Systems Using Access 2000 by
   James Perry Gary Schneider, 2001 edition

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COURSE REQUIREMENTS

• Assignments
• Projects
• Exams

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THE GRADING SYSTEM
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CLASSROOM POLICIES

• Pray before and after the class.

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COURSE OUTLINE

• 1 Accounting basics
• 2 The accounting equation the double-entry
  system
• 3 Recording business transactions
• 4 Adjusting the accounts
• 5 Worksheet financial statements
• 6 Completing the accounting cycle
• 7 Merchandising operations
• 8 Overview of accounting information systems
• 9 Accounting Information Cycles Revenue
  Cycle, Expenditure Cycle, Conversion Cycle,
  Financial Cycle

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ACCOUNTING BASICS
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LEARNING OBJECTIVES

• Discuss differentiate forms of business
  organizations
• Activities performed by business organizations
• Define terms use in accounting
• Explain differentiate phases of accounting
• Differentiate the difference between bookkeeping
  accounting
• Discuss different fundamental concepts

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What is an IT(INFORMATION TECHNOLOGY)?
INFORMATION
Data placed in a meaningful and useful context
for an end user.
in its various forms (business data, voice
conversations, still images, motion pictures,
multimedia presentations, and other forms).
Data
Anyone who uses an information system or the
information it produces.
End user
The scientific method and material used to
achieve a commercial or industrial objective.
TECHNOLOGY
The study, design, development, implementation,
support or management of computer-based
information systems.
Method used
Material used
Computer Hardware and software application
To create, convert, store, exchange, protect,
process, transmit, and securely retrieve and use
information in its various forms
Commercial or Industrial objective
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What is an IT?

• Information technology (IT), is "the study,
  design, development, implementation, support or
  management of computer-based information systems,
  particularly software applications and computer
  hardware to create, convert, store, exchange,
  protect, process, transmit, and securely retrieve
  and use information in its various forms
  (business data, voice conversations, still
  images, motion pictures, multimedia
  presentations, and other forms) for anyone who
  uses an information system or the information it
  produces.

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Why do IT needs Accounting?

• Accounting is called the language of business.

Bridging communication through Financial
Information or Financial Statements
Is the medium of communication
Motive is profit.
IT is a business.
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Why do IT needs Accounting?

• Accounting is called the language of business.

Bridging communication through Financial
Statements
Business
Various users (decision makers)
Two-way communication
Legal Forms of Business Organizations (Sole
proprietorship, Partnership, Corporation,
Cooperative)
Internal user Management Group (own, manage
control the business entity)
External users Financing Group and Public Group
(do not own, manage control the business entity)
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LEGAL FORMS OF BUSINESS ORGANIZATION

1. Sole Proprietorship
2. Partnership
3. Corporation
4. Cooperative

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Various Users (Decision Makers)

• Users of Accounting Information

EXTERNAL USERS
INTERNAL USERS
FINANCING GROUP Investors, potential investors,
trade creditors or suppliers, potential
creditors, lenders or banks other financing
institutions.
MANAGEMENT GROUP Sole proprietors, partners,
board of directors or stockholders, officers,
managers, supervisors
PUBLIC GROUP Government regulatory agencies,
taxing authorities, labor unions, employees,
retirees, economic planners, customers
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ASSIGNMENTS
1. What are the legal forms of business
organization? Differentiate them and state the
name of the owner.
2. Give at least 10 users of Financial
Statements. What decision they have to make?
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Why do Accounting needs IT?

• Information Technology's Role Today

1. All businesses need Computers
2. One of the first and largest applications of
computers is keeping and managing business and
financial records.
3. Large databases are managed by computer
programs.
4. All the information companies need to do
business involves the use of computers and
information technology.
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What is Accounting?

• Accounting is the system that measures
  activities, processes that information into
  reports, and communicates the results to
  decision-makers.

1) measures business activities
2) Processes that information into reports, and
3) Communicates the results to decision-makers.
Measures
Communicates
through monetary value
Processes
By means of Financial Statements
Accounting process through accounting cycle
Business activities
Results
Servicing, Merchandising, Manufacturing,
Agriculture
information
Of Financial Statements
Financial information
Decision makers
To Various users
Reports
Operating, investing financing activities
Balance Sheet, Income Statement
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ACTIVITIES PERFORMED BY BUSINESS ORGANIZATIONS
SERVICING
MANUFACTURING
Perform services for a fee
Raw materials into finished products
MERCHANDISING
AGRICULTURE
Buy sell finished products
Plant, sell in raw or finished form
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WHAT IS ACCOUNTING?
Accounting is the art of recording, classifying,
summarizing in a significant manner and in terms
of money, transactions and events which are, in
part at least, of a financial character, and
interpreting the results thereof.
As an art, accounting demands critical thinking
and creative skills. Accountants gather relevant
data and convert them into organized financial
reports.
Art
4 Phases of Accounting
Summarizing
Recording
Classifying
Interpreting
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WHAT IS ACCOUNTING?
Accounting is the art of recording, classifying,
summarizing in a significant manner and in terms
of money, transactions and events which are, in
part at least, of a financial character, and
interpreting the results thereof.
May be occasional to the business such as losses
due to theft, calamity and decline in market
value of inventory.
Event
Is sourced from ordinary business activities,
such as selling, purchasing and producing.
Transaction
In terms of money
Before the effects of transactions can be
recorded, they must be measured and expressed in
terms of a common financial denominator---money.
Are all business events and transactions
accountable?
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PHASES OF ACCOUNTING
Recording
Classifying
Summarizing
Interpreting
5. Adjusting journal entries
Profitability How much is the increase in
capital as a result of business operation?
1. Identifying transactions and events source
documents
3. Posting to the ledger general ledger
6. Preparing the worksheet
4. Trial balance preparation
7. Preparing financial statements
2. Journalizing transactions the journal
Liquidity Are there available funds to finance
the business operation?
8. Closing entries
NOTE Steps 1 to 10 is the ACCOUNTING CYCLE.
Solvency Can the business pay its long-term
obligations to others?
9. Post-closing trial balance
10. Reversing entries
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BOOKKEEPING ACCOUNTING(are two related
processes.)
Recording
Classifying
Summarizing
Interpreting
BOOKKEEPER
ACCOUNTANT
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BOOKKEEPING ACCOUNTING(one is useless without
the other)
Recording
Classifying
Analyzing Interpreting
Summarizing
BOOKKEEPING (how accounting is done)
ACCOUNTING (why accounting is done)
1. Refers to the analytical and interpretative
aspects of accounting.
1. Refers to the mechanical aspect.
2. The process of recording systematically the
business transactions in a chronological manner.
2. Requires complete and accurate bookkeeping
records necessary to the performance of its
responsibility.
Systematic it follows procedures and principles.
Chronological the transactions are recorded in
order of the date of occurrence.
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BOOKKEEPING ACCOUNTING(one is useless without
the other)
Recording
Classifying
Analyzing Interpreting
Summarizing
BOOKKEEPING (how accounting is done)
ACCOUNTING (why accounting is done)
3. Functions at a higher level or degree than
bookkeeping.
3. An accounting support function.
4. Bookkeeper uses the accounting information
system the accountant designs.
4. Accountant designs the accounting information
system that the bookkeeper will use.
5. Bookkeeper is under the supervision of an
accountant.
5. Accountant supervises the work of bookkeepers.
6. Alone could not arrive at the desired result
of the entire accounting process.
6. Could not reach at this final point without
first passing through the bookkeeping process.
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Other definition of Accounting

• It is a service activity. Its function is to
  provide quantitative information, primarily
  financial in nature, about economic entities that
  is intended to be useful in making economic
  decisions.
• It is the process of identifying, measuring and
  communicating economic information to permit
  informed judgments and decisions by users of the
  information.

• All of the above and previous definitions touch
  the most important points of accounting as
• Accounting is about quantitative information.
• The information is of financial in character.
• Usefulness of information in decision making.

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ACCOUNTING CONCEPTS OR ASSUMPTIONS

• Are important assumptions or ideas which
  accountants observe in recording business
  transactions in the books of accounts.
• Entity concept or accounting entity concept
• Periodicity concept or time periods concept
• Stable monetary unit concept or monetary unit
  concepts

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Accounting Entity Concept

• State that accountants regard a business
  enterprise as a separate and distinct entity from
  the person or people who own and run it.
• Business and personal transactions of the owner
  should not be merged.

BUSINESS 1
BUSINESS 2
OWNER
Keep its own record
Keep its own record
Keep its own record
Transactions of different entities should be
accounted for together.
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Periodicity or Time Period Concept

• An entitys life can be meaningfully subdivided
  into equal time periods for reporting purposes.
• This concept allow the users to obtain timely
  information to serve as a basis on making
  decisions about future activities.

CALENDAR YEAR
FISCAL YEAR
INTERIM PERIOD
Composed of 12 months but starts from any month
other than January.
A 12-month period (Jan. to Dec. 31 of the
accounting period).
A business period within acx accounting period
(weekly, monthly, quarterly, or semi-annual)
When a financial report is prepared, it is
importrant to indicate the date when it was
prepared and the time period it covers.
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Monetary or Stable Monetary Unit Concept

• The Philippine peso is a reasonable unit of
  measure and that its purchasing power is
  relatively stable. It has the same purchasing
  power as any other peso at any time.
• This is the basis for ignoring the effects of
  inflation in the accounting records.

QUANTIFIABILITY ASSUMPTION
PESO STABILITY ASSUMPTION
Accountants use a common unit of measurement that
is, money.
Accountants assume that the monetary unit retains
its purhcasing power regardless of fluctuation in
money value.
With the adoption of IAS and IFRS, some
accounting elements are measured at their fair
market value.
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THE END