Mgt 111 Module 1

Language of business

provides accurate picture of the business in financial terms

a service activity; to provide quantitative information useful in making economic decisions

the art of recording, classifying, and summarizing in terms of money, transactions, and events; and interpreting the results thereof

the art of recording, classifying, and summarizing in terms of money, transactions, and events; and interpreting the results thereof

the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information

the art of recording, classifying, and summarizing in terms of money, transactions, and events; and interpreting the results thereof

the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information

- Understandable

- Reliable

- Relevant

- Complete

the art of recording, classifying, and summarizing in terms of money, transactions, and events; and interpreting the results thereof

the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information

- Understandable

- Reliable

- Relevant

- Complete

Relevance and Faithful representation

Predictive value and Confirmatory value

Predictive value and Confirmatory value

it can be used as an input to processes employed by users to predict future outcomes

Predictive value and Confirmatory value

it can be used as an input to processes employed by users to predict future outcomes

it provides feedback about previous evaluations

Predictive value and Confirmatory value

it can be used as an input to processes employed by users to predict future outcomes

it provides feedback about previous evaluations

- complete

- neutral

- free from errors

- complete

- neutral

- free from errors

1. Comparability

2. Verifiability

3. Timeliness

4. Understandability

- complete

- neutral

- free from errors

1. Comparability

2. Verifiability

3. Timeliness

4. Understandability

External and Internal

- complete

- neutral

- free from errors

1. Comparability

2. Verifiability

3. Timeliness

4. Understandability

External and Internal

people that are part of the business/organization

- complete

- neutral

- free from errors

1. Comparability

2. Verifiability

3. Timeliness

4. Understandability

External and Internal

people that are part of the business/organization

people that are NOT part of the business/organization

- complete

- neutral

- free from errors

1. Comparability

2. Verifiability

3. Timeliness

4. Understandability

External and Internal

people that are part of the business/organization

people that are NOT part of the business/organization

financial reports are directed to them

- complete

- neutral

- free from errors

1. Comparability

2. Verifiability

3. Timeliness

4. Understandability

External and Internal

people that are part of the business/organization

people that are NOT part of the business/organization

financial reports are directed to them

financial reports are NOT directed to them

1. Single/Sole Proprietorship

2. Partnership

3. Corporation

A business owned by one individual only

An association of two or more people who contribute money and resources to a common fund

Most complex form of business organization owned by shareholders

1. Single/Sole Proprietorship

2. Partnership

3. Corporation

A business owned by one individual only

An association of two or more people who contribute money and resources to a common fund

Most complex form of business organization owned by shareholders

- Service business

- Merchandising business

- Manufacturing business

A type of business operation that renders service to customers or clients in exchange for a fee

A type of business operation that buys and sells goods or commodities at a profit

A type of business operation that produces and sells goods

1. Public Accounting

2. Private Accounting

3. Accounting Education

4. Government

1. Public Accounting

2. Private Accounting

3. Accounting Education

4. Government

Accountants and staff offering services on a fee basis

1. Public Accounting

2. Private Accounting

3. Accounting Education

4. Government

Accountants and staff offering services on a fee basis

a. Auditing

b. Tax services

c. Management advisory services / Management consulting

1. Public Accounting

2. Private Accounting

3. Accounting Education

4. Government

Accountants and staff offering services on a fee basis

a. Auditing

b. Tax services

c. Management advisory services / Management consulting

being employed in a business firm or non-profit organization

1. Public Accounting

2. Private Accounting

3. Accounting Education

4. Government

Accountants and staff offering services on a fee basis

a. Auditing

b. Tax services

c. Management advisory services / Management consulting

being employed in a business firm or non-profit organization

being employed to teach Accounting

1. Public Accounting

2. Private Accounting

3. Accounting Education

4. Government

Accountants and staff offering services on a fee basis

a. Auditing

b. Tax services

c. Management advisory services / Management consulting

being employed in a business firm or non-profit organization

being employed to teach Accounting

being employed by any government unit

Formal reports prepared by accountants

1. Statement of Financial Position (SFP)

2. Income Statement

3. Statement of Changes in Equity

4. Cash Flow Statement

shows the financial position of the business entity at any given time

Assets, Liabilities, and Owner's Equity

1. Statement of Financial Position (SFP)

2. Income Statement

3. Statement of Changes in Equity

4. Cash Flow Statement

shows the financial position of the business entity at any given time

Assets, Liabilities, and Owner's Equity

shows the operating performance of the busintentity for a given period

Income and Expenses

shows the movements in various elements of the owner's capital for a certain period of time

Expenses paid for by the business in advance

-Allowance for Bad Debts

-Accumulated Depreciation

Losses due to uncollectible accounts

Represents the expired cost of property, plant, and equipment and as a result of usage and passage of time

assets that do not meet the criteria of a current asset

Tangible assets held by a business for use in production of goods or services, or rental to others, or for administrative purposes.

Expected to be used during more than one accounting period.

Assets held by an enterprise for the accretion of wealth through capital distribution

a present obligation of an entity to transfer economic resources as a result of past events

Liabilities are classified as current when:

a. expected to be settled in the entity's normal operating cycle

b. held primarily for the purpose of being traded

c. due to be settled within twelve months after the balance sheet date

outstanding balance owed to vendors or suppliers

explains the changes in cash and cash equivalents during an accounting period

amounts owed to creditors evidenced by a written promise to pay

unpaid expenses that haven't been logged under Accounts Payable during an accounting period; haven't received invoice yet

Pre-payment

Long-term liabilities or obligations which are payable for a period longer than one year

long-term debts/loan that is secured by property

form of long-term debt in which the issuer of bonds makes a formal agreement to pay interest

Residual interest in the assets after deducting all its liabilities

the owner's investment of assets into a business

Used to record any withdrawal of cash or other assets of the business by the owner intended for any personal or non-business use

a temporary account used at the end of the accounting period to close income and expense account

the balance of this account shows the net income or net loss for the period it is closed to the capital account

-composed of Assets, Liabilities, and Owner's Equity

-are not closed at the end of the accounting period

closed or put to zero balance at the end of the accounting period

increase in assets or a decrease in liabilities that result in increase of equity

revenue and gains

income from the normal business activities

income that is not from the ordinary course of business

decrease in assets or increase in liabilities that result in decrease in equity

Losses and expenses

Cost of merchandise sold

This is used to record expenses for leased office spaces, building, or other assets

Records the supplies used by the business

Records the portion of the cost of a tangible asset

present economic resources controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise

Current Assets

Non-current Asssets

Assets are classified as current assets when:

a. expected to be realized in, or is intended for sale or consumption in, the entity's normal operating cycle

b. held primarily for the purpose of being traded

c. expected to be realized within twelve months of the balance sheet date

d. cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the balance sheet date

Any medium of exchange that the bank will accept at face value

Stocks or bonds purchased by the enterprise and are to be held for only a short span of time

any amount of money owed by customers for purchases made on credit

a written promise to receive money at a future date

The appropriate portion of a company's tangible asset's cost that is being used up during the accounting period

cost of borrowing money from banks, bond investors, and other sources

cost of advertisements

Total gross salary of the employees

cost of consumption of utilities like light, phone, and internet

Amount of receivables that are deemed to be uncollectible from the customer

Expenses that cannot be classified from the above expenses

a business should report their financial statements appropriate to a specific period of time

- Calendar Year

- Fiscal Year

- Interim Period

A twelve-month period starts on January 1 and ends on December 31

do not arise in the course of ordinary regular activities and include losses resulting from disasters

1. Cost principle

2. Revenue recognition (realization) principle

3. Matching principle

4. Accrual basis

5. Monetary unit assumption

6. Going concern assumption

7. Business entity assumption

8. Time period assumption

9. Materiality constraint

10. Cost-benefit constraint

11. Dual aspect concept

states that assets purchased are recorded using the invoice price

states that the revenue is earned when the service is already performed or the goods are already delivered to the customer regardless of the receipt of the cash

states that all costs and expenses that are incurred in the production of revenues must be matched with the revenue in the period in which efforts are expended to generate the revenue

transactions are recognized when they occur

states the only transaction data that can be expressed in terms of money should be included in the accounting records

states that the business entity will continue to operating indefinitely - for a period of time sufficient to carry out its existing objectives

financial records of a business must be kept separate from those of its owners or any other business

Expenses that cannot be classified from the above expenses

a business should report their financial statements appropriate to a specific period of time

- Calendar Year

- Fiscal Year

- Interim Period

A twelve-month period starts on January 1 and ends on December 31

A twelve-month period but starts from any other month than January

do not arise in the course of ordinary regular activities and include losses resulting from disasters

1. Cost principle

2. Revenue recognition (realization) principle

3. Matching principle

4. Accrual basis

5. Monetary unit assumption

6. Going concern assumption

7. Business entity assumption

8. Time period assumption

9. Materiality constraint

10. Cost-benefit constraint

11. Dual aspect concept

states that assets purchased are recorded using the invoice price

states that the revenue is earned when the service is already performed or the goods are already delivered to the customer regardless of the receipt of the cash

states that all costs and expenses that are incurred in the production of revenues must be matched with the revenue in the period in which efforts are expended to generate the revenue

transactions are recognized when they occur

states the only transaction data that can be expressed in terms of money should be included in the accounting records

states that the business entity will continue to operating indefinitely - for a period of time sufficient to carry out its existing objectives

financial records of a business must be kept separate from those of its owners or any other business

Expenses that cannot be classified from the above expenses

a business should report their financial statements appropriate to a specific period of time

- Calendar Year

- Fiscal Year

- Interim Period

A twelve-month period starts on January 1 and ends on December 31

A twelve-month period but starts from any other month than January

A business period within an accounting period

do not arise in the course of ordinary regular activities and include losses resulting from disasters

1. Cost principle

2. Revenue recognition (realization) principle

3. Matching principle

4. Accrual basis

5. Monetary unit assumption

6. Going concern assumption

7. Business entity assumption

8. Time period assumption

9. Materiality constraint

10. Cost-benefit constraint

11. Dual aspect concept

states that assets purchased are recorded using the invoice price

states that the revenue is earned when the service is already performed or the goods are already delivered to the customer regardless of the receipt of the cash

states that all costs and expenses that are incurred in the production of revenues must be matched with the revenue in the period in which efforts are expended to generate the revenue

transactions are recognized when they occur

states the only transaction data that can be expressed in terms of money should be included in the accounting records

states that the business entity will continue to operating indefinitely - for a period of time sufficient to carry out its existing objectives

financial records of a business must be kept separate from those of its owners or any other business

Expenses that cannot be classified from the above expenses

a business should report their financial statements appropriate to a specific period of time

- Calendar Year

- Fiscal Year

- Interim Period

A twelve-month period starts on January 1 and ends on December 31

A twelve-month period but starts from any other month than January

A business period within an accounting period

a threshold that determines whether a certain transaction is significant enough to be in the financial statement

do not arise in the course of ordinary regular activities and include losses resulting from disasters

1. Cost principle

2. Revenue recognition (realization) principle

3. Matching principle

4. Accrual basis

5. Monetary unit assumption

6. Going concern assumption

7. Business entity assumption

8. Time period assumption

9. Materiality constraint

10. Cost-benefit constraint

11. Dual aspect concept

states that assets purchased are recorded using the invoice price

states that the revenue is earned when the service is already performed or the goods are already delivered to the customer regardless of the receipt of the cash

states that all costs and expenses that are incurred in the production of revenues must be matched with the revenue in the period in which efforts are expended to generate the revenue

transactions are recognized when they occur

states the only transaction data that can be expressed in terms of money should be included in the accounting records

states that the business entity will continue to operating indefinitely - for a period of time sufficient to carry out its existing objectives

a threshold that determines whether a certain transaction is significant enough to be in the financial statement

states that the benefit securing the financial information should outweigh the related cost

states that every business transaction affects two or more different accounts