Chapter 1 Flashcards
(119 cards)
1
Q
“Accounting” as 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.
A
Accounting Standards Council
2
Q
Accounting” as the art of recording, classifying, and summarizing in a significant manner in terms of
money, transactions and events which are in part at least of a financial character and interpreting the results
thereof.
A
American Institute of Certified Public Accountants
3
Q
“Accounting” as the
process of identifying, measuring, and communicating economic information to permit informed judgment
and decision by users of the information.
A
Basic Accounting Theory
4
Q
is a body of knowledge which has been systematically gathered,
classified and organized
A
As a social science, accounting
5
Q
requires the use of creative skills and judgment (Millan, 2019)
A
As a Practical Art, accounting
6
Q
It is an event that has a direct effect on the operation of the economic unit and can be expressed in
terms of money.
A
BUSINESS TRANSACTION
7
Q
Ex. Buying and Selling of goods, renting a building, paying employees, buying new office equipment, buying
new office equipment and any other activity of a business that involves exchanges of values in monetary
items
A
BUSINESS TRANSACTION
8
Q
Accounting has a number of components
1. ______________ as the ____________ component
2. ______________as the____________ component
3. ______________ as the ___________component
A
- Identifying as the analytical component
- Measuring as the technical component
- Communicating as the formal component
9
Q
This accounting process is the recognition or non-recognition of business activities as “Accountable events.
A
IDENTIFYING
10
Q
Economic activities may be classified as _________ and __________
A
- external
- internal
11
Q
are those economic events involving one entity and another entity
A
External Transactions or exchange transactions
12
Q
are economic events involving the entity only
A
Internal Transactions
13
Q
is the process by which resources are transferred into products.
A
Production
14
Q
is any sudden and
unanticipated loss from fire, flood, earthquake and other event ordinarily termed as an act of God.
A
Casualty
15
Q
is the assigning of peso amounts to the accountable economic transactions and events. Financial statements without monetary amounts would be largely unintelligible or incomprehensible.
A
MEASURING
16
Q
is the unit of measuring accountable economic transactions.
A
The Philippines peso
17
Q
Four Measurement bases or financial attributes
A
Historical Cost
Current Cost
Realizable Value
Present Value
18
Q
this is identified as the original acquisition cost.
A
Historical Cost
19
Q
this is identified as replacement cost or the current purchase price
A
Current Cost
20
Q
this is identified as current selling price or the amount that could currently be obtained by selling the asset in an orderly disposal
A
Realizable Value
21
Q
This is the discounted value of the future net cash inflows that the asset is expected to generate in the normal course of business.
A
Present Value
22
Q
is the process of preparing and distributing accounting reports to potential users of accounting information. Implicit in the communication process are the recording, classifying and
summarizing aspects of accounting
A
COMMUNICATING
23
Q
is the process of systematically maintaining are cord of all economic business
transactions after they have been identified and measured.
A
Recording or Journalizing
24
Q
is the sorting or grouping of similar and interrelated economic transactions into their respective
classes.
A
Classifying
25
is the preparation of financial statements which include the statement of financial position,
income statement, statement of comprehensive income, statement of changes in equity and statement of
cash flows.
Summarizing
26
The accountant’s interpretation on the financial statement is needed. Analysis reports are
submitted together with the financial statements.
Interpreting
27
TYPES OF INFORMATION PROVIDED BY ACCOUNTING
1. Quantitative Information
2. Qualitative Information
3. Financial Information
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Information expressed in numbers,, quantities, or units
Quantitative Information
29
Information expressed in words or descriptive form. Qualitative
information is found on the notes to financial statements as well on the face of the other components
of the financial statements
Qualitative Information
30
Information expressed in money, financial information is also quantitative
information because monetary amounts are normally expressed in numbers (Millan, 2019)
Financial Information
31
In ______, the first systematic record keeping dealing with the "__________" was formulated by _____________
* 1494
* “double entry recording system”
* Fr. Luca Pacioli
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a Franciscan monk and mathematician.
Fr. Luca Pacioli
33
He is the one who started accounting
Fr. Luca Pacioli
34
Italian Mathematician
Fr. Luca Pacioli
35
15th century
Barter System
36
16th Century
International Trading ( Import & Export )
37
Debtor
Debit - "Dr"
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Creditor
Credit - "Cr"
39
Latin word of Debit
Debere
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Latin word of Credit
Credere
41
19th Century
Accountants
42
20th Century
Digital age
43
Pacioli introduced three important books of records, namely:
a. Memorandum Entry
b. Journal Book
c. Ledger Book
44
For all information on a transaction
Memorandum Entry
45
For the original entry
Journal Book
46
For the final entry
Ledger Book
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Father of Modern Accounting.
Fr. Luca Pacioli
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is being used up to this day.
Double Entry Recording
49
Accounting is often referred to as the “_______________” because it is fundamental to the communication of financial information.
Language of Business
50
Accounting has the following two broad functions in a business:
1. To provide external users with information that is useful in making among others,
investment and credit decisions.
2. To provide internal users with information that is useful in managing the business (Millan, 2019).
51
USERS OF ACCOUNTING INFORMATION
1. Internal Users
2. External Users
52
Those who are directly involved in managing the business.
Internal Users
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Those who are not directly involved in managing the business.
External Users
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TYPES OF ACCOUNTING INFORMATION CLASSIFIED AS TO USER’S NEEDS
1. General Purpose Accounting Information
2. Special Purpose Accounting Information
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It is an information designed to meet the common needs of
most statement users, it is provided by financial accounting and is prepared primarily for external
users.
General Purpose Accounting Information
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Is information designed to meet the specific needs of
particular statement users. It is provided by management accounting or other branches and is
prepared primarily for internal users. (Millan, 2019)
Special Purpose Accounting Information
57
Accounting rules, procedures, and practices came to be known as
Generally Accepted Accounting
Principles (GAAP).
58
represent the rules, procedures, practice and
standards followed in the preparation and presentation of financial statements.”
Generally Accepted Accounting Principles
59
are like Laws that must be followed in financial reporting.
Generally Accepted Accounting Principles
60
The Philippine Institute of Certified Public Accountants, the national professional body of CPA’s in the Philippines, created the __________
Accounting Standards Council
61
In 2004, The Philippine Regulations Commission (PRC) created the_______
Financial Reporting Standard Council
62
The FRSC was created to assist the Board of Accountancy (BOA) to carry out its
powers and functions provided under Republic Act No. 9298 ___________
The Philippine Accountancy Act of 2004
63
The approved accounting standards of the FRSC are known as the _________
* Philippine Financial Reporting
Standards (PFRS)
* Philippine Accounting Standards (PAS)
64
statements of the FRSC are known as
“Philippine Accounting Standards or PAS and Philippine Financial
Reporting Standards or PFRS.”
65
CAREER FIELDS IN ACCOUNTING
1) Public Accounting
2) Private Accounting
3.) Government Accounting
4. Accounting Education
66
composed of individual practitioners, accounting firms and large multinational organizations that render independent expert financial services to the public in a professional fee
basis. (Dean Ester F Ledesma)
Public Accounting
67
Task in Public Accounting
a.) Auditing
b.) Management Advisory Services
c.) Tax Services
68
The accountant makes an independent examination of the
financial statements of a business enterprise. The auditor evaluates the accounting system of business enterprise and carefully examines the records to see to it that transactions have been
properly recorded. After conducting his examination, the auditor issues a report expressing an opinion as to the fairness of the financial statements
Auditing
69
includes the design, installation and improvement of firm’s
general accounting system and other system deemed necessary for controlling and distributing
manufacturing costs. Individuals who provide management advisory services need not be CPA’s.
in fact they need not be Accountants at all. The area of Management A d v i s o r y S e r v i c e s
includes financial planning and control, the
development or improvement of an accounting or computer system, financial forecasting,
and advice on mergers and consolidations.
Management Advisory Services
70
It includes giving advice in the possible tax consequences of a certain financial
decisions, preparing income tax returns and representing clients before government agencies
such as BIR during a tax audit
Tax Services
71
An accounting job done in private business enterprises. The accountant works as
an employee of a business enterprise. They may be employed in various capacities. (Arenas T, Chua,
M. & Villarina F. (2018)
Private Accounting
72
The Chief Accounting Officer of a business enterprise is called _________
Controller.
73
Chief Financial Officer is called ___________
Finance Manager
74
Tasks in Private Accounting
a.) General Accounting
b.) Cost Accounting
c.) Budgeting
d.) Internal Auditing
e.) Accounting/ Management Information System
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performing the entire accounting process, from identifying to recording
transactions and the preparation of financial statements for the use of management.
General Accounting
76
it has something to do with controlling, determining and controlling costs
particularly those costs in producing a product or service.
Cost Accounting
77
Provides management a plan for future operations after this plan has been applied,
summaries and reports comparing the actual accomplishments with the plan are provided.
Budgeting
78
Establishes accounting procedures are being followed throughout the year.
The task of conducting a review of the company’s operations to determine adherence to
management policies and measuring efficiency of operations
Internal Auditing
79
task of designing and setting up a manual or
computerized accounting system.
Accounting/ Management Information System
80
Accounting for the national government and its instrumentalities such as
provinces, towns and cities. They are of concerned with public funds. (Arenas T, Chua, M. & Villarina F. (2018)
Government Accounting
81
is another Professional field where the accountant assumes the role of
researcher, teacher and reviewer. (Vera Cruz- Manuel, Z. (2018)
Accounting Education
82
Task in Accounting Education
* Researcher
* Accounting Professor
* Accounting Reviewer
* Basic Accounting or Bookkeeping
* Financial Accounting
* Cost Accounting
* Managerial Accounting
* Auditing
* Government Accounting
* Fiduciary Accounting
* Environment Accounting
* Social Responsibility Accounting
83
- investigates and makes a study creating, applying, relating or improving accounting theories
and business concepts that suit the changes taking place in a particular business or industry.
Researcher
84
is responsible for the formation of competitive accountants and consultants and
teaching subjects such as accounting, auditing, management advisory services and other subjects
Accounting Professor
85
helps prepare the candidates for the CPALicensureExamination.AREASOF
SPECIALIZATION: (Vera Cruz- Manuel, Z. (2018), (Dean Ester F. Ledesma)
Accounting Reviewer
86
is the routine activity of recording, classifying and summarizing
business transactions in a systematic manner. It is the procedural aspect of accounting.
Basic Accounting or Bookkeeping
87
involves the preparation and interpretation of Financial Statements primarily for
external users.
Financial Accounting
88
deals with the recording, classifying and summarizing the details of material, labor and
overhead necessary to produce and sell a product or service.
Cost Accounting
89
is the presentation of accounting data primarily for management who are
considered the internal users. The special reports will assist managers in planning, directing and
controlling the operation of the business as well as in managing enterprise resources.
Managerial Accounting
90
deals with independent verification and examination of the accounting records for the purpose
of giving an opinion on the fairness of its presentation.
Auditing
91
deals with the administration or uses of public funds, to bring about service to
the community.
Government Accounting
92
Handling of
accounts managed by a person entrusted with the custody and management of property for the benefit of
another. (Examples: Banks, Insurance Companies, Mutual Trust, Pension Plans)
Fiduciary Accounting
93
The area of accounting that focuses on programs, activities and projects that
are focused on care for Mother Earth
Environment Accounting
94
Reporting of programs and projects that have to do with the
upliftment of the welfare of the people of a community or nation.
Social Responsibility Accounting
95
The practice of the accounting profession, among others, is governed by regulatory bodies such as the
Professional Regulation Commission, Board of Accountancy and the Philippine Institute of Certified Public
Accountants. The financial reports prepared are also affected by the rulings and promulgations issued out by the
Securities and Exchange Commission, Bangko Sentral ng Pilipinas, and the Bureau of Internal Revenue.
PHILIPPINE REGULATORY AGENCIES
96
This is a government body in charge of regulating and licensing the practice of a profession like accounting,
medicine, engineering, nursing and others.
Professional Regulation Commission
97
Republic Act 3105 regulated on March 17, 1978, the practice of accounting by creating the Board of
Accountancy. It is under the jurisdiction of the PRC and is tasked in setting up and promulgating a set of
professional standards and ethics in the practice of the accounting profession. It is composed of a chairman
and six members appointed by the President of the Philippines upon the recommendation of the PRC. It
constantly monitors the practice of accountancy in the Philippines by conducting exams to CPA candidates,
granting certificates to board passers, registering and suspending members, conducting dialogues with
accountancy students, examinees, and accountants
Board of Accountancy
98
SEC was established on October 26, 1936, under C.A 83. Its task is to safeguard public interest. It regulates
business operations specifically of partnerships and corporations, entities granted license/ franchise to
operate, and foreign companies doing business in the country.
Securities and Exchange Commission (SEC)
99
BSP Regulates the operations of all banks, as well as all importations (goods coming into the country) and
exportations (goods going out to other countries) of goods. It also closely monitors foreign currency
transactions and the Philippine Peso exchange rate ensuring its stability through a series of measures it
undertakes
Bangko Sentral ng Pilipinas (BSP)
100
BIR ensures compliance of tax and license requirements by all businesses. People and business entities
earning income are required to fill up and submit periodic tax returns and pay for licenses, fees and taxes.
Bureau of Internal Revenue (BIR)
101
is to identify proper accounting practices for the preparation and
presentation of financial statements.
ACCOUNTING STANDARD
102
create a common understanding between preparers and users of financial statements particularly
the measurement of assets and liabilities.
Accounting standards
103
is a necessity to ensure comparability and uniformity in financial statements
based on the same financial statements
accounting standards
104
Established by the Board of Accountancy (BOA) in 2006 under the Implementing Rules and Regulations
of the Philippine Accountancy Act of 2004 to assist the board in carrying out its power and function to
promulgate accounting standards in the Philippines.
FINANCIAL REPORTING STANDARDS COUNCIL (FRSC)
105
is to establish generally accepted accountingprinciples in the Philippines in
achieving this objective the FRSC considers Standards issued by the IASB.
FINANCIAL REPORTING STANDARDS COUNCIL (FRSC)
106
The FRSC is the successor of the _________
Accounting Standards Council (ASC)
107
The approved statements of the FRSC are known as __________
Philippine Accounting Standards
108
Scope of Practice of Accountancy:
* Practice of Public Accountancy
* Practice in Commerce and Industry
* Practice in Education / Academe
* Practice in Government
109
shall constitute in a person, be
it his/her individual capacity, or as a partner or as a staff member in an accounting or auditing
firm, holding out himself/herself as one skilled in the knowledge, science and practice of
accounting, and as a qualified person to render professional services as a certified public
accountant; or offering or rendering, or both,to more than one client on a fee basis or otherwise.
Practice of Public Accountancy
110
shall constitute in a
person:
✓ Involved in decision making requiring professional knowledge in the science of accounting,
(as well as the accounting aspects of finance and taxation).
✓ When the CPA represents his employer before government agencies on tax and other
matters related to accounting.
✓ When such employment or position requires that the holder thereof must be a CPA.
Practice in Commerce and Industry
111
shall constitute in a
person in an educational institution which involve teaching of accounting, auditing, management
advisory services, finance, business law, taxation, and other technically related subjects.
✓ A CPA is considered to be engaged in the practice of accountancy in education / academe if
he/she is employed in educational institutions as teachers of accounting, auditing, MAS,
(accounting aspects of) finance, business law, taxation and other technically related
13
subjects.
✓ Members of the Integrated Bar of the Philippines (IBP) may be allowed to teach law and
taxation subjects.
✓ The position of either the Dean or department chairman (or its equivalent) that supervises
the BSA program of an educational institution is deemed to be in practice of accountancy in
the academic /education and therefore must be occupied only by a duly registered CPA.
Practice in Education / Academe
112
shall constitute in a person who holds, or is
appointed to, a position in an accounting professional group in government or in a governmentowned and/or controlled corporation, including those performing proprietary functions, where
decision making requires.
Practice in Government
113
is the official government agency empowered to enforce RA 9298
BOA
114
is under the supervision and administrative control of the Professional Regulation
Commission (PRC).
BOA
115
a certificate under seal bearing a registration number, issued to an
individual, by the PRC, upon recommendation by the BOA, signifying that the individual has complied
with all the legal and procedural requirements for such issuance including, in appropriate cases,
having successfully passed the CPA licensure examination.
Certificate of Registration
116
a card with validity of 3 years bearing the registration number, date
of issuance with an expiry date, due for periodic renewal, duly signed by the Chairperson of the PRC
issued by the PRC to a registered CPA upon payment of the annual registration fees for 3 years.
Professional Identification Card
117
has no expiry; shall remain in full force until/unless withdrawn,
suspended or revoked
Certificate of Registration
118
subject to expiry; renewable every 3 years
Professional Identification Card
119
