ABMADVOCACY

ACCOUNTANCY, BUSINESS AND MANAGEMENT

ACCOUNTING

American Accounting Association (AAA) is the process of identifying, measuring and communicating, economic information to permit informed judgement and decisions by users of the information.

USERs OF ACCOUNTING INFORMATION

EXTERNAL USERS are parties outside the

operation of a business who use its accounting and financial information in making decisions.

These users do not have direct access to accounting information , they are given access to records by the business in the form of financial information.

External users make their decisions based on the company’s financial information.

INTERNAL USERS those who make decisions

that affect the internal operations of the company. The following are internal users of financial statements:

a) Managers – plan, organize and run business.b) Employees/labor unions - assess the company’s profitability.c) Owners – they provide the capital to the business.

BUSINESS

an organization that utilizes resources and information, supplying the wants and needs of the customers through goods or services, in exchange for money or giving back a different kind of goods or services.

TYPES OF BUSINESS ACCORDING TO OWNERSHIP

1. SOLE/SINGLE PROPRIETORSHIP – A business that is owned by only one individual for the practice of trade or profession. It is the simplest and least costly form of ownership among other forms of business. However, a business under sole proprietorship is quite risky since the owner assumes unlimited liability and in most cases even his or her personal assets on the line if the business cannot pay the creditors. The form of business to small business entities like grocery store, repair shop and beauty parlor.2. PARTNERSHIP – 2 or more persons bind themselves to contribute money, property, or industry to a common fund with the intention of dividing the profit among themselves.

2 Main types of Partnership1. General Partnership – each member has unlimited liability.2. Limited Partnership – creditors cannot go after partners’ personal assets.

3. CORPORATION – an artificial being created by operation by law, having the right succession and the powers, attributes, and properties expressly authorized by law or incident to its existence.

CLASSIFICATION OF CORPORATION AS TO EVIDENCE OF OWNERSHIP: 1. STOCK CORPORATION – a profit corporation that issues shares of stocks to owners or shareholders who are holders of stock certificate. 2. NON-STOCK CORPORATION – a non-profit corporation. It does not issue shares of stocks. Its owners are called members.

BY-LAWS – contains provision for internal administration of the corporation.

4. COOPERATIVE – a business that is owned by a group of individuals who also serve as benefactors to the business endeavor. A cooperative usually requires at least 15 members to function. Usually, board of directors and officers are elected to manage the business operation. Members can become a part of the cooperative by purchasing shares. A cooperative can be either be incorporated and unincorporated.KEY TERMS:1. Incorporators - are the shareholders or members mentioned in the articles of incorporation as originally forming and organizing the corporation and are the signatories thereof.2. Corporators – are the persons whose compose a corporation whether as stockholder in case of stock corporation or as member in case of a non-stock corporation. They are the owners of the corporation.3. Subscriber – are natural or juridical persons who agree to buy the original and unissued shares of stock of a corporation. Once the subscriptions are fully paid for, the subscribers become shareholders of the corporation.

MANAGEMENT

Is the process of coordinating and overseeing the work performance of individuals working together in organizations, so that they could efficiently and effectively accomplish their chosen aims or goals.

MANAGEMENT FUNCTIONS PLANNING – involves determining the organization’s

goals or performance objectives, defining strategic actions that must done to accomplish them, and developing coordination and integration activities.

ORGANIZATION – demands assigning tasks, setting aside funds, and bringing harmonious relations among the individuals and work groups or teams in the organization.

STAFFING – indicates filing in the different job positions in the organization’s structure; the factors that influence this function: size of the organization, types of jobs, number of individuals to be recruited, and some internal and external pressures.

LEADING – entails influencing or motivating subordinates to do their best so that they would be able to help the organization’s endeavor to attain their set goals.

CONTROLLING – involves evaluation and, if necessary, correcting the performance of the individuals or work groups or teams to ensure that they are all working toward the previously set goals and plans of the organization.