Grade 11 Modules 2021-2022 ABM

FABM 1 (Part 1)

1. What is environmental scanning?
> Determines how companies can be both profitable and environmentally responsible.

2. Discuss the cash in versus cash out technique of determining net profit.
> The cash-in versus cash-out technique of measuring business performance will always result in the correct net profit. This technique involves grouping cash movements into cash-in and cash-out and simply getting the difference between the two. This technique may suffice for now but it should be noted that computing net profit takes more than just getting the difference between total cash-in and cash-out.

3. Define accounting according to American Accounting Association.
> Accounting to American Accounting Association (AAA) accounting is the process of identifying, measuring, and communicating economic information to permit informed judgment and decisions by users of the information.

4. Define accounting according to American Institute of Certified Public Accountants.
> The American Institute of Certified Public Accountants (AICPA) defines accounting as the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events in which are in part at least of financial character, and interpreting the results thereof.

5. Define accounting according to Accounting Standards Council.
> The Accounting Standards Council (ASC) sees accounting as 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.

6. What are the basic financial statements?
> Financial statements are one of the most important documents in starring your own business. Financial statements reflect the financial standing and economic activities of the business. Financial statements is composed of statement of financial position, income statements, statement of changes in equity, statement of cash flows and comprising of a summary of significant accounting policies and other explanatory information.

7. What are the objectives of financial statements?
> The objective of financial statements is to provide information about the financial position, financial performance, and cash flows of a business that is useful to key personalities who are making economic decisions.

8. What are business transactions?
> Business transactions take place once a business venture starts operations. Business transactions are the interactions between businesses and other stakeholders. It includes stakeholders, but are not limited, customers, suppliers, investors, and government offices.

9. Are all business transactions financial in nature? Explain.
> Mostly all of them are financial in nature. A business transaction is an activity or event that can be measured in terms of money
and which affects the financial position or operations of the business entity.

10. Explain briefly why accounting is an art.
> Accounting is considered an art
because it requires the use of skills and creative judgment.

11. Explain briefly why accounting is a process.
> Accounting is a process that sets out to make sense of the everyday financial transactions that a business will encounter. This process deals with the constant stream of paperwork that usually accompanies every financial transaction.

12. Explain briefly why accounting is a means and not an end.
> Accounting is not an end in the sense that the outcome of an accounting process provides information for stakeholders and interested individuals to make decisions.

13. Explain briefly why accounting is a service activity.
> Because it provides quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions, in making reasoned choices among alternative courses of action.

14. Discuss the function of accounting in business terms of stewardship function.
> The stewardship role of accounting is considered to aid the efficiency of contracts that address agency conflicts between these
managers and shareholders.

15. Are bookkeeping and accounting the same? Explain.
> In terms of scope, accounting is broader as it includes the bookkeeping function. Bookkeeping, on the other hand, is just confined with the recording of monetary transactions, which is one part of the accounting process.

16. Narrate how accounting started.
> Accounting's history can be traced back thousands of years to the cradle of civilisation in Mesopotamia and is said to have developed alongside writing, counting and money. The early Egyptians and Babylonians created auditing systems, while the Romans collated detailed financial information.

☆☆☆☆☆

Essay about the difference of public and private accountants/accounting.

Public accounting refers to a business that provides accounting services to other firms. Public accountants provide accounting expertise, auditing, and tax services to their clients. In public accounting, it involves you and other people you know or you don't know and accountants performs or offers to perform any activity that will result to the insurance of an attest report that's in accordance with professional standards. While on the other hand, Private accounting involves only with one user. Private accounting is commonly called industry accounting. Private accountants are considered internal accountants. They work for a single company and help deal with the financial information of that company. They prepare and analyze reports for an internal manager. In involves setting up systems of recording business transactions that are aggregated into finacial statements. Moreover, Public accountants and public accounting firms are not employed solely by any one client, and as such they are not part of the client's business or corporate structure. Private accountants, on the other hand, work for the specific company or business entity for which they offer accounting services.

☆☆☆☆☆