ACCOUNTING

CLASSIFICATION OF ASSETS

Tip for the day:
"DON'T MEMORIZE, instead FAMILIARIZE"

BEFORE WE START FROM NEW TOPIC
Let's recall from the start:>

"INTRODUCTION TO ACCOUNTING"

FABM1 means Fundamentals of Accountancy business and management 1

"Fundamentals of Accountancy"
From the word "Fundamental" means "Basic"

Ang ibig sabihin ang subject na ito ay about "BASIC ACCOUNTING"

Accounting
- in broadly speaking, a system that helps business track events that affect them.

Take note:
"Accounting is a process of IDENTIFYING, RECORDING, and COMMUNICATING economic events of an organization to interested users."(WEYGANDT, J.ET.AL)

IDENTIFYING- this involves selecting economic events that relevant to a particular business transactions.

RECORDING- this involves keeping chronological diary of events that are measured in pesos.
TYPES of Diary use in recording
1. Journal
2. Ledger

COMMUNICATING - occurs through the preparation and distribution of financial and other accounting reports

Take note:
ROLE OF ACCOUNTING
-Provide information for managers and owners to use in operating the business.

#REMEMBER:>
Luca Pacioli is the "father of accounting". He wrote "SUMMA DE ARITHMETICA" (contained a detailed chapter of double entry bookkeeping). Last he's profession before is "Mathematician"

"BASIC ELEMENTS OF ACCOUNTING"
There are 3 basic elements of accounting, namely:
- asset
- liability
- owner's equity

Take note:
ASSET- are the resources owned and controlled by the firm

LIABILITY- are debts and obligations of the company to another entity

OWNERS EQUITY/ EQUITY- owners claim in the business
~Kapag pinag minus mo ang asset at liability ito ang lalabas (A-L= OE)

Types Under the Equity
- Capital
- Withdrawal/ Drawings
- Income
- Expenses

CAPITAL- is the value of cash and other assets invested in the business by the owner of the business

WITHDRAWAL/ DRAWINGS
-an action of withdrawing something
-an act of taking money out of an account
~WITHDRAWAL= Withdraw

INCOME- Increase in economic benefits during the accounting period in the form of inflows
- It is also the increase in resources resulting from the operations of business
~INCOME= kita
~Income increases equity

Next..
EXPENSES- is the decrease in economic benefits during the accounting period in the form of outflows
- It is also the decrease in resources resulting from the operation of business
~Expense= gastos
~Expenses decreases equity

----------------(NEW TOPIC)-------------------
#DISCUSSIONS:>
ASSET- are the resources owned and controlled by the firm

There are 2 Classification of asset.
-Current assets
-Non current assets

What is current asset?

1. CURRENT ASSETS
  Are the assets can be realized (collected, sold, used up) one year after year end date

Take note:
CURRENT ASSETS= SHORT-TERM ASSETS (generally, 1 year or less)

Ibig sabihin ang current assets ay "Hindi pang matagalan"