ACCOUNTING
Accounting is an 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 financial character, and interpreting the results thereof. - AICPA
"Financial Statements" refer to companies' financial reports on the performance of the resources company's resources. Stakeholders would refer to these financial measures as part of their basis for decision-making. "Stakeholders" or "users" are institutions that the reporting company could be connected to/ concerned with. They can be the SEC, BIR, employees, owners, prospect investors, contracted suppliers, or contracted customers.
These financial reports are in the form of Financial Statements (FS) which usually follow a standard format (although companies can present financial reports in their unique ways). Also, their FSs can contain items that are significantly more or less than someone else's.
These are the five FSs accounting produces:
1. Balance Sheet (A.K.A. Statement of Financial Position)
2. Income Statement (A.K.A. Statement of Financial Performance)
3. Statement of Changes in Equity
4. Cash Flows Statements
5. Notes to Financial Statements
**Advanced Topics**
2. Statement of Comprehensive Income
2. Statement of Retained Earnings (for corporations)
3. Statement of Shareholders' Equity (for corporations)
These reports are fruits of the "Double-entry Accounting System." Here, Debit and Credit are used. Debits and Credits are devices developed by Fra Luca Pacioli in the 15th Century (1400s). "Double entry" in the sense that, every transaction always affects at least two "Accounts": one in the debit and one in the credit.
