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CONCEPTUAL FRAMEWORK
DEFINITION of Accounting
ASC
Accounting is 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.
AICPA
Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof.
AAA - definition states the very definition of accounting
Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information.
Identifying - analytical component
Measuring - technical component
Communicating - formal component
Information System
Accounting is an information system that measures business activities, processes information into reports and communicates the reports to decision makers.
Key Product - Financial Statements
IDENTIFYING
This is the recognition and non-recognition of business activities as “accountable events”. An accountable/quantifiable event when it has an effect on ALE.
Transactions involve 3rd parties while Events does not involve 3rd parties.
Economic activities are referred to as transactions which may be classified as external or internal. • Production • Exchange • Income distribution • Consumption • Investment • Savings
External/Exchange transactions are those economic events involving one entity and another entity.
Ex. Purchase, Sale, Borrowing, Payment
Internal transactions are transactions are economic events involving the entity only.
Ex. Production, Casualty
MEASURING
This process is the assigning of peso amounts to accountable economic transactions and events.
The measurement bases are historical cost, current cost, realizable value and present value.
DEFINITION of Accounting
ASC
Accounting is 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.
AICPA
Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof.
AAA - definition states the very definition of accounting
Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information.
Identifying - analytical component
Measuring - technical component
Communicating - formal component
Information System
Accounting is an information system that measures business activities, processes information into reports and communicates the reports to decision makers.
Key Product - Financial Statements
IDENTIFYING
This is the recognition and non-recognition of business activities as “accountable events”. An accountable/quantifiable event when it has an effect on ALE.
Transactions involve 3rd parties while Events does not involve 3rd parties.
Economic activities are referred to as transactions which may be classified as external or internal. • Production • Exchange • Income distribution • Consumption • Investment • Savings
External/Exchange transactions are those economic events involving one entity and another entity.
Ex. Purchase, Sale, Borrowing, Payment
Internal transactions are transactions are economic events involving the entity only.
Ex. Production, Casualty
MEASURING
This process is the assigning of peso amounts to accountable economic transactions and events.
The measurement bases are historical cost, current cost, realizable value and present value.