Basic Accounting

Question 1

It is the first among the professions in the Philippines to be included in the World Trade Organization (WTO) policy of liberalization of services.

Answer 1

Accountancy

Question 2

The set of standards that has been adopted by Accounting Standards Council (ASC) to achieve uniformity in the application of accounting principles and standards which are used by business and other organizations for financial reporting around the wory as required by World Bank, Asian Development Bank, and World Trade Organization.

Answer 2

International Accounting Standards (IAS)

Question 3

An act that created the new Accounting Standard setting-body known as the Philippine Financial Reporting Standard Council (PFRSC) to replace the old Accounting Standards Council (ASC).

Answer 3

Philippine Accountancy Act of 2004

Question 4

The standard that was renamed from the previously issued Statement of Financial Accounting Standards (SFAS) by the ASC to conform with its counterparts, the International Accounting Standards.

Answer 4

Philippine Accounting Standards (PAS)

Question 5

What knowledge is needed in the study of accounting?

Answer 5

1. Ability to identify and acquaint with the proper use of business documents before recording in the booky of accounts.
2. Analytical ability regarding the transactions and situational problem requirements.
3. Stock knowledge in arithmetic and not mathematics.
4. Psychological factor behind, “Yes, I can.”

Question 6

It regulates the practice of accountancy in the Philippines.

Answer 6

Professional Regulations Commission (PRC)

Question 7

They are accounting technicians whose basic knowledge, experiences and technical skills in accounting afforded them woth opportunities to handle accounting works but they are prohibited by law to practice public accounting. They perform the traditional accounting works under the supervision of a CPA that includes recording in the books of accounts and preparation of financial reports.

Answer 7

Bookkeepers

Question 8

They are tasked by the business-management to review the financial reports submitted by the bookkeeper before handing these over to the external auditor.

Answer 8

Certified Public Accountant (CPA)

Question 9

They are holders of baccalaureate degree in Bachelor of Science in Accountancy (BSA) who have taken and passed the difficult and competitive licensure examination for Certified Public Accountants and carry the title as “C.P.A.” who is under the supervision of the Professional Regulation Commission.

Answer 9

Professional Accountants

Question 10

What are the four major areas that a professional accountant can work with?

Answer 10

1. Practice in the government
2. Practice in commerce and industry
3. Practice in public accountanc
4. Practice in education/academe

Question 11

It is the accredited professional organization (APO) of CPAs by the Professional Regulation Commission (PRC) and the prestigious national organization composed of CPAs. No

Answer 11

Philippine Institute of Certified Public Accountants (PICPA)

Question 12

It is the “life blood” of a nation which serves as the funds to defrat expenses of the government in delivering basic services, social and economic reforms, infrastructure projects, and other programs beneficial to its constituents.

Answer 12

Taxes

Question 13

The number of years that is required by the Bureau of Internal Revenue (BIR) to preserve the books of accounts and other business documents which will undergo actual examination and review whether income taxes are correctly computed and paid.

Answer 13

5 years

Question 14

These documents serve as the “bridge of communication” between the business and the owner or management and other various users/decision makers which made accounting to be considered as the “language of business”.

Answer 14

Financial Statements

Question 15

”It 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.”

Answer 15

Accounting Standards Council (ASC) – in its old Statement of Financial Accounting Standards (SFAS)

Question 16

“It is the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information.”

Answer 16

American Accounting Association (AAA) – which is composed primarily of educators who sponsored the Accounting Education Change Commission

Question 17

The time-honored and widely accepted definition of accounting, “It is an art of recording, classifying, summarizing in a significant manner and in terms of money, transactions, and eventi which are, in part at least, of a financial character, and interpreting the results thereof.”

Answer 17

Committee on Accounting Terminology of the American Institute of Certified Public Accountants (AICPA) – which is the largest organization of practicing accountants

Question 18

The three most important points of accounting.

Answer 18

1. Accounting is about quantitative information.
2. The information is of financial in character.
3. Usefulness of information in decision making.

Question 19

It involves the routine and mechanical process of writing down the business transactions and events in the books of accounts in a chronological manner (in order of the date of occurrence) called journalizing.

Answer 19

Recording

Question 20

There should be a basis of determining whether such were business transactions or not and as a rule, only transactions with financial bearing to the business are recognized.

Answer 20

Identifying

Question 21

There should be a “dual effect” normally the value received and the value parted with of the transactions.

Answer 21

Analyzing

Question 22

The assigning of monetary values involved in a transaction. (Peso is the common financial denominator used in the Philippines)

Answer 22

Measuring

Question 23

It involves sorting or grouping of similat transactions and events into their respective kind and classes. It is the actual process of transferring the entries from the journal to the ledger calles “posting”.

Answer 23

Classifying

Question 24

It involves the completion of the financial statements and the accounting requirements that starts from striking a trial balance, plotting down of adjusting entries in the worksheet and the preparation of closing entries, post-closing trial balance and reversing entries.

Answer 24

Summarizing

Question 25

It involves the “analytical and interpretative works” wherein financial statements are analyzed, interpreted, and communicated to those interested parties.

Answer 25

Interpreting

Question 26

He is a Franciscan monk, a celebrated mathematician, and the father of accounting because he wrote the first book that described double-entry accounting processes.

Answer 26

Luca Pacioli – the father of double-entry system

Question 27

What is the title of the book, published by Luca Pacioli, that includes “Particularis de Camputis et Scripturis” or “Details of Calculation and Recording” which described the double-entry system of bookkeeping?

Answer 27

Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Everything about Arithmetic, Geometry, Proportions and proportionality)

Question 28

When did Luca Pacioli published his book that contains the primary principles of mathematics and incidentally a set of accounting principles?

Answer 28

As early as November 1494 — in Venice

Question 29

What is the primary motive of a person engaged in business?

Answer 29

Profit