ACCCOB2 Flashcards
(137 cards)
1
Q
art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events that are, in part at least, of a financial character, and interpreting the results thereof
A
Accounting
2
Q
procedural or mechanical aspect of accounting. It involves the set-up, update, and maintenance of accounting records
A
bookkeeping
3
Q
summary of all the transactions of the business over a period of time
A
financial information
4
Q
Primary Users
A
investors, government, lenders and creditors
5
Q
need information to help them determine whether they should buy, hold, or sell their investments
A
Investors
6
Q
they are interested in information that enables them to determine whether their loans and the interest will be paid when due
A
Lenders and Creditors
7
Q
they require information in order to regulate the activities of enterprises, determine taxation policies and bases of statistics helpful and addressing some concerns
A
Government
8
Q
Other Users
A
Manangement and Employees
9
Q
they need information to guide them in maintaining the entity’s profitable and stable existence
A
Management
10
Q
they are interested in information which enables them to assess the ability of the enterprise to provide remuneration, retirement benefits and employment opportunities
A
Employees
11
Q
process of preparing financial statements that companies use to show their financial performance and position to people outside the company
A
Financial accounting
12
Q
Produce general purpose financial statements for external users
A
Financial accounting
13
Q
Requires the financial statement preparers to follow the guidelines, conventions, and framework set by the International Accounting Standards Board (IASB). In the Philippines, the framework used is the Philippine Financial Reporting Standards (PFRS)
A
Financial accounting
14
Q
involves preparing detailed reports and forecasts for managers inside the company
A
managerial accounting
15
Q
Produce reports and provides information to be circulated inside the company
A
managerial accounting
16
Q
More flexible - rules and conventions being used to produce certain information may be added or reduced, changed, or even disregarded by the entity to support its needs information-wise
A
managerial accounting
17
Q
comprised of different standards and interpretations that lay out the guidelines and principles to be followed in the presentation of the items shown in the general purpose financial statements, as well as their disclosures
A
Philippine Financial Reporting Standards (PFRS)
18
Q
help minimize, if not totally eliminate, the occurrence of information asymmetry
A
Philippine Financial Reporting Standards (PFRS)
19
Q
allow for comparability
A
Philippine Financial Reporting Standards (PFRS)
20
Q
the essential characteristics
A
Fundamental Characteristics
21
Q
Fundamental Characteristics
A
relevance faithful representation
22
Q
improves the quality of financial information
A
Enhancing Characteristics
23
Q
Enhancing Characteristics
A
comparability, consistency, verifiability, timeliness, understandability
24
Q
Underlying assumptions
A
going concern, accrual basis
25
structured representation of the financial position and financial performance of an entity
financial statements
26
show the results of management’s stewardship of the resources entrusted to it. These results are shown in the financial statements that the entity is required to issue at least every year
financial statements
27
shows the entity’s assets, liabilities, and equity as of a particular date
SFP
28
proves that the assets (entity’s resources) are equal to the sum of the liabilities (claim of outside parties) and equity (claim of owner/s)
SFP
29
presents the entity’s profit or loss, total other comprehensive income, and comprehensive income for the period
tpl and oci
30
where we see the entity’s income, expenses, gains, and losses that were recognized during the period
tpl and oci
31
provides users of financial statements with a basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to utilize those cash flows
SCF
32
shows how the entity was able to handle one of its most important and delicate resources, cash
SCF
33
All statements are created based on accrual basis except this one
SCF
34
contain information in addition to that presented on the other financial statements
notes
35
provide narrative descriptions or disaggregation of items presented on the statements and information about items that do not qualify for recognition on those statements
notes
36
present economic resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity
Asset
37
present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits
Liability
38
residual interest in the entity’s assets after deducting it liabilities
Equity
39
represents the claim of the owners on the assets of the equity
Equity
40
represents increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases in liabilities that result in increases in equity, other than those relating to contributions from equity participants
Income
41
arises in the course of the ordinary activities of an entity
revenue
42
decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants
expenses
43
arises in the course of the ordinary activities of an entity
expense
44
includes checks on hand, manager’s checks, traveler’s check, cashier’s check, and bank drafts
cash on hand
45
Used to pay something if you only have a savings account
Requested check from the bank
Manager's check and cashier's check
46
in foreign currency
Traveler's check
47
savings and checking account
Cash in Bank
48
petty cash fund, payroll fund, tax fund, etc
Cash set aside for current use
49
Any person, natural or juridical, may open foreign currency deposit accounts with any Philippine Bank, provided the foreign currencies to be deposited are acceptable as part of the international reserve
Foreign Currency Deposit Act of the Philippines
50
Short-term, highly liquid investments that are readily convertible to known amounts of cash which are subject to an insignificant risk of changes in value
Cash Equivalents
51
minimum balance that an account holder should maintain in his bank at all times (reported as cash or other assets)
Compensating balance
52
checks that bear future date on its face (recorded as cash on the specified date on its face)
Post dated checks
53
checks received but not yet negotiated with bank within a significant period of time, usually after 6 months from the date written on its face (not cash)
Stale checks
54
Other Notes
compensating balance, post dated checks, stale checks
55
issuer does not have sufficient balance at the time when the entity presents the check for negotiation (not cash)
NSF Check
56
since this is not readily available for use in the ordinary course of business, it should be reclassified as a non-current asset (not cash)
Cash set aside for acquisition of non-current assets
57
withdrawals made or checks issued that would exceed the balance of the amount the entity currently has with the bank is treated as a current liability (not cash
Bank overdraft
58
A method of authorizing and controlling cash disbursements.
Prevents indiscriminate and unauthorized purchases and incurrences of expense
Voucher system
59
document that supports a cash transaction. It is filled out to identify what is to be paid, the amounts to be paid, and the accounts to be recorded
cash voucher
60
Cash receipts are deposited intact daily to the bank and all payments of assets, liabilities, and expenses should be made by check except for small or petty expenditures
Imprest system
61
Purchase of small items like office supplies, fare of the company’s messenger, and snack items for officers and employees during staff meetings are usually paid out of the
petty cash fund
62
petty cash fund is under the responsibility of
petty cash custodian
63
Whenever a payment is to be made from the fund, the party who needs the fund fills out a -BLANK - and thereafter signs the same upon receipt of the requested amount
petty cash voucher
64
Actual Cash < Calculated Cash Balance =
Shortage
65
Actual Cash > Calculated Cash Balance =
Overage
66
At the end of the month, cash shown in the company’s records is called
balance per books
67
The cash balance shown in the records of the bank is called
balance per bank
68
deposit is already recorded by the entity but is not yet recognized by the bank
deposit in transit
69
check issued and recorded by the entity but the payee has not yet negotiated it with the bank
outstanding check
70
these are items deducted by the bank from the entity’s account but not yet recorded by the entity itself
bank debit memos
71
these are items added by the bank to the entity’s account but not yet recorded by the entity
bank credit memos
72
financial asset that represents a contractual right to receive cash or other financial asset from another entity
receivable
73
types of receivables
trade receivables, other receivables
74
represents amounts expected to receive from an insurance company for any claims in one’s insurance policy
claims receivable
75
represents the amount of interest already earned but not yet received as of the end of the year
interest receivable
76
represent amounts given in advance to employees and suppliers
advances to affiliates
77
short term receivables arising from the ordinary course of trade or business
accounts receivable
78
recorded at cost
initial recognition
79
at the end of the reporting period, accounts receivable is reported at its net realizable value (NRV)
subsequent recognition
80
account receivable is derecognized, or removed from the books
derecognition
81
more formal claim which can be short-term or long-term
notes receivable
82
When the accounts receivable is deemed worthless, it has to be
written off
83
written promise to pay a certain sum of money at a specific future date
notes receivable
84
used to quantify a company’s effectiveness in collecting its receivables
accounts receivable turnover
85
refers to the number of days that an entity is able to collect from its credit customers
average collection period
86
technique undertaken by entities to expedite cash flows from their accounts receivable, which would involve selling, pledging, assigning, and factoring of customers accounts
receivable financing
87
Accounts receivable is offered as a collateral against an existing loan
pledging
88
The entity who is called the assignor obtains a loan from a creditor called assignee
assignment
89
The entity actually sells outright its accounts receivable to a buyer called factor
factoring
90
The entity endorses the note to a financial institution which is usually a bank
discounting of notes receiavble
91
If the Effective rate of interest < Nominal rate, the note is recorded at a
premium
92
If the Effective rate of interest > Nominal rate, the note is recorded at a
discount
93
determines the cash that the payee will receive regularly from the note
nominal or coupon rate
94
reflects the true amount of interest due on any interest-paying investment when the effects of compounding over time are taken into account
effective interest rate or market rate
95
A fundamental characteristic of a financial information which enables it to influence the decision of financial statement users
relevance
96
Non-inclusion of such information could change the decision a financial statement user makes on the basis of the financial information of a specific entity
materiality (material)
97
A fundamental qualitative characteristic of a financial information which states that the information should be complete, neutral, and free from material mistakes
faithful representation
98
Without partiality in the selection or presentation of financial information
neutrality
99
Qualitative characteristic that allows users to compare and contrast items presented in the financial information, whether from the same entity at different periods or with different entities in the same period
comparability
100
Refers to the application of the same procedures for the same items, either from across periods within a reporting entity or in a single period among different reporting entities
consistency
101
Different informed and independent observers could reach the same conclusion, although not necessarily complete agreement, that a particular financial information is faithfully presented
verifiability
102
Having available information to decision makers just in time to allow them to make their decisions
timeliness
103
Classifying, characterizing, and presenting information plainly and succinctly
understandability
104
Assumes that the entity has neither the intention nor the need to liquidate or reduce materially the scale of its operations
going concern
105
A present economic resource controlled by the entity as a result of past events (asset does not need to be of legal ownership)
asset
106
A present obligation of the entity to transfer an economic resource as a result of past events
liability
107
Residual interest in the assets of the entity after deducting all its liabilities
equity
108
Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants
income
109
Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants
expenses
110
Process of incorporating on the statement of financial position or profit or loss statement an item that meets the definition of an element (when it is recorded in financial records; if does not meet the criteria for recognition it is not included)
recognition
111
Process of determining the monetary amounts at which the elements of the financial statements are to be recognized and carried on the statement of financial position and profit or loss statement
management
112
Amount of cash or cash equivalents given or the fair value of the asset exchanged to obtain an item at the time of its acquisition
historical cost
113
Amount of cash or cash equivalents that would have to be paid if the same or an equivalent asset is acquired currently
current cost
114
Amount of cash or cash equivalents that could currently be received through the sale of an asset in an orderly manner (can sometimes be different from the current cost
fair value
115
A particular form of general-purpose financial reports that provide information about the reporting entity’s assets, liabilities, equity, income and expenses
general-purpose financial statements
116
Standards and interpretations issued by the International Accounting Standards Board
International Financial Reporting Standards (IFRS)
117
They Contain information that supplements the information already presented on the face of the financial statements
Notes to Financial Statements
118
Items of income and expense that are not recognized in profit or loss as required or permitted by other PFRSs (not arising from normal course of business)
other comprehensive income
119
Total of income less expenses, excluding the components of other comprehensive income
profit or loss
120
Change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners
total comprehensive income
121
The financial statement that shows an entity’s assets, liabilities, and equity as of a particular date
statement of financial position
122
Shows the entity’s profit or loss, and its components, during a particular period
statement of comprehensive income
123
The financial statement that shows the changes in the entity’s net assets during a particular period
statement of changes in equity
124
Inflows and outflows of cash equivalents
Statement of Cash Flows
125
represent open accounts with customers
notes receivable
126
upon initial recognition, accounts receivable are measured at
maturity value
127
trade receivable that are expected to be collected within 12 months after the reporting period shall be presented in the statement of financial position at
face amounts
128
receivables denominated in a foreign currency should be
translated to local currency using the exchange rate at closing rate
129
valuation allowance is a proper deduction from trade accounts receivable in arriving at estimated realizable value
130
trade receivable are classified as current assets when they are reasonably expected to be collected
within one year or within the normal operating cycle whichever is shorter
131
nontrade receivables are classified as current assets only if they are reasonably expected to be realized in cash
within one year or the normal operating cycle, whichever is longer
132
discount given to a customer for purchasing a large volume of merchandise is typically referred to as
size discount
133
cash includes
any negotiable instrument including promissory notes
134
to be reported as cash and cash equivalents the cash equivalent must be
deposited in a financial institution, particularly a bank
135
outstanding checks
unreleased checks
136
deposits in foreign countries that are also subject to certain foreign exchange restrictions should be
valued at historical exchange rates and presented as current assets
137
