What is Accounting?

            Accounting is a service activity which function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.  It identifies, records, and processes business activities to come up with financial reports that are measured in monetary terms to show the financial condition of the business.

Function of Accounting

        Accounting encompasses several function:

        1. The first function is to Identify the different business activities relevant to the operation of an organization.

       2. The second function id the recording of these business activities either manually or electronically.

       3. After recording, financial reports are prepared, analyzed and interpreted to different users of accounting information depending on their economic needs.

       Examples of Financial Reports are:

       1. Income Statement - shows the result of the business operation.

       2. Balance Sheet - shows the financial condition of the business.

       3. Statement of Cash Flows - shows the sources and uses of the organization's funds.

       4. Statement of Changes in Owner's Equity.

Branches of Accounting

       Financial Accounting - is focused on the recording of business transactions and preparation of financial statements to communicate the results of operation and financial condition of the enterprise to the external users.

      Management Accounting - is focused on providing the management with accounting information relevant to the activities of the different managers in enterprise.

The accounting profession

1. Public Accounting - In Public accounting, an accountant may practice as an individual practitioner practitioner or may join an accounting firm.

2. Private Accounting - Not all CPAs are public accountants.  The scope of activities of private accountants is very wide.  Some are financial accountants who primarily records transactions and events, prepare financial statements, and provide timely reports to management.

3. Government Accounting - Accountants are not only working with private companies or accounting firms.  Government agencies like Polytechnic University of the Philippines (PUP) and other state universities and colleges, Commission on Audits (COA), Bureau of Internal Revenue (BIR) Bureau of Customs, National Home Mortgage and other government agencies need the service of accountants.

4. Accounting Education - Educators play a very important role in the development of future professionals like accountants.

Reference:

Fundamentals of Accounting P-1 (Accounting for service, Merchandising and Manufacturing)

By: Gloria Ardaniel Rante