Lesson 1. Organizing a Business
Entities in the world of commerce/forms
1. Sole Proprietorship – owned by one owner only
2. Partnership – owned by 2 or more
3. Corporation – 50 owners or more and its capital came from general public.
Types of Business
1. Service – provides service to the customers
2. Merchandising – “trading” /reselling or buy and sell
3. Manipulation – creating new product from raw materials
Lesson 2. Generally Accepted Accounting Principle
PFRS – Philippine Financial Reporting Standards
1. Business Entity Concept – separate record for the transaction of the owner to
the business.
2. Going Concern Assumptions – continuing business amidst bankruptcy
3. Time Period Assumption – long lasting business but divided into
segments/period.
4. Unit of measurement of monetary unit – use the currency based on the
location of the business.
5. Revenue recognition convention (recognition pf revenue or income) – when
the revenue has actually been earned.
6. Matching principle (Recording of expenses) -should match has revenue for
which the expenses has been made.
7. Consistency Principle – using only the same method that you use or adapt.
Lesson 3. Accounting/Basic of accounting
PFRS: a service activity, its function is to provide quantitative information about
economic entities, there is intended primarily financial nature that is intended to be
useful in making economic decisions and in making reason choices among alternative
courses of action.
Lesson 4. Accounting cycle and overview of accounting equation
Assets = liabilities + capital
Capital = beginning capital + additional capital + revenue – expenses -drawing /
withdrawal
Accounting Cycle (5 stages)
1. Recording of external transactions
2. Recording of internal transactions
Entities in the world of commerce/forms
1. Sole Proprietorship – owned by one owner only
2. Partnership – owned by 2 or more
3. Corporation – 50 owners or more and its capital came from general public.
Types of Business
1. Service – provides service to the customers
2. Merchandising – “trading” /reselling or buy and sell
3. Manipulation – creating new product from raw materials
Lesson 2. Generally Accepted Accounting Principle
PFRS – Philippine Financial Reporting Standards
1. Business Entity Concept – separate record for the transaction of the owner to
the business.
2. Going Concern Assumptions – continuing business amidst bankruptcy
3. Time Period Assumption – long lasting business but divided into
segments/period.
4. Unit of measurement of monetary unit – use the currency based on the
location of the business.
5. Revenue recognition convention (recognition pf revenue or income) – when
the revenue has actually been earned.
6. Matching principle (Recording of expenses) -should match has revenue for
which the expenses has been made.
7. Consistency Principle – using only the same method that you use or adapt.
Lesson 3. Accounting/Basic of accounting
PFRS: a service activity, its function is to provide quantitative information about
economic entities, there is intended primarily financial nature that is intended to be
useful in making economic decisions and in making reason choices among alternative
courses of action.
Lesson 4. Accounting cycle and overview of accounting equation
Assets = liabilities + capital
Capital = beginning capital + additional capital + revenue – expenses -drawing /
withdrawal
Accounting Cycle (5 stages)
1. Recording of external transactions
2. Recording of internal transactions
