Relevance - - predict and - Notes to Financial are incurred( for example

confirm your material Statement selling, general and

value once you pass Recognition - process that administrative expenses)
1) Predictive Value- classifying as Full disclosure -
Predict future outcome asset,liability, equity, information that would
2) Confirmatory Value- revenue or expense make difference in the
evaluation made by user Entity Assumption - decision process
3) Materiality- affect user Separate corporation or Conceptual Framework for
decision Going concern Assumption Financial Reporting - A
Faithful Representation - - - Entity will continue to complete, comprehensive
Complete neutral is free operate in the foreseeable and single document
from error future. promulgated by the
1) Complete- include all Monetary Unit Assumption International Accounting
information - Measure economic Standards Board.
2) Neutral- free from bias activity Conceptual Framework - A
3) Free from Error- but not Periodicity Assumption - summary of the terms and
required to be perfect Divided into meaningful concepts that underlie the
Enhancing Qualitative time periods quarterly and preparation and
Characteristics - -Compare yearly presentation of financial
verify time to understand Measurement Principle - statements for external
1) comparability- enables allows assets and liabilities users. It is also an attempt
users to identify to be measured at various to provide an overall
similarities and differences bases, including historical theoretical foundation for
among items. example cost, fair value, net reliable accounting
trend analysis, or Apple vs value and present value at Conceptual Framework -
Microsoft various bases Intended to guide standard-
2) Verifiability- Accrual Accounting - setters, preparers and users
independent observers can Record without exchange of financial information in
reach consensus that a for cash the preparation and
particular depiction is 1)Revenue Recognition presentation of statements.
faithfully represented. principle- recognized when Conceptual Framework - It
3) Timeliness- Available to it is earned and when it is is the underlying theory for
users on time realized or realizable the development of
4) Understandability- 2) Expense Recognition accounting standards and
present clearly Recognition Principle- Expense are revision of previously
and measurement in the necessarily incurred to issued accounting
financial statements generate revenue. Expense standards. It is also
Full set of Financial incurred to generate a concerned with general
Statement specific amount of revenue purpose financial
- Statement of financial period are match against statements, including
position(Balance sheet ) that revenue( for example, consolidated financial
-Statement of cost of good sold ). statements.
comprehensive income Expenses that do not have Annually - The financial
- Statement of Cash flow a direct link with revenue statements are prepared at
- Statement of changes in may be recognized when least ___________ and are
owner's equity cash is spent or liabilities directed toward the
common needs of a wide goes through its due entity to pay dividends.
range of users. process of amending a Lenders and other creditors
Conceptual Framework - If Standard. - Are interested in
there is a standard or an Objective of General information which enables
interpretation that Purpose Financial them to determine whether
specifically applies to a Reporting - To provide their loans, interest thereon
transaction, the standard or financial information about and other amounts owing
interpretation overrides the the reporting entity that is to them will be paid when
____________ useful to existing and due.
_______________. potential investors, lenders Lenders - Refer to those
Conceptual Framework - and other creditors in who extend loans. (E.g.,
In the absence of standard making decisions about banks). Other Creditors -
or an interpretation that providing resources to the Refer to those who extend
specifically applies to a entity. others forms of credit.
transaction, management Foundation - The objective (E.g., supplier)
shall consider the of General Purpose Other users - Include the
applicability of the Financial Reporting is the employees, customers,
____________ ______________ of the governments and other
_____________ in Conceptual Framework. agencies, and the public.
developing and applying Primary users - Include the They are users of financial
an accounting policy that existing and potential information other than the
results in information that investors, lenders and other existing and potential
is relevant and reliable. creditors. They are the investors, lenders and other
Philippine Financial parties to whom general creditors. They are the
Reporting Standard/PRFS - purpose financial reports parties that may find the
It is to be stated that the are primarily directed. general purpose financial
Conceptual Framework is They cannot require reports useful but the
not a ______________. entities to provide reports are not directed to
Philippine Financial information directly to them primarily.
Reporting them and therefore must Employees - Are interested
Standards/PFRSs - In case rely on general purpose in information about the
where there is a conflict, financial reports for much stability and profitability of
the requirements of the of the financial information the entity. They are
______________________ they need. Existing and interested in information
__ shall prevail over the Potential Investors - Are which enables them to
Conceptual Framework. concerned with the risk assess the ability of the
Conceptual Framework - inherent in and return entity to provide
The__________________ provided by their remuneration, retirement
______ may be revised investments. They need benefits and employment
from time to time based on information to help them opportunities.
the IASB's experience of determine whether they Customers - They have an
working with it. However, should buy, hold or sell. interest in information
revisions do not Shareholders - Are also about the continuance of
automatically result to interested in information an entity especially when
changes in the Standards- which enables them to they have a long-term
not until after the IASB assess the ability of the inconvenient with or are
dependent on the entity. means of communicating objectives of financial
Governments and other information that relates reporting: a. To provide
agencies - They are directly or indirectly to the information useful in
interested in the allocation financial statements and making decisions about
of resources and therefore significant ratios. providing resources to the
the activities of the entity. Financial Reports - Include entity. b. To provide
These users require not only financial information useful in
information to regulate the statements but also other assessing the cash flow
activities of the entity, information such as prospects of the entity. c.
determine taxation policies financial highlights, To provide information
and as a basis for national summary of important about entity resources,
income and similar financial figures, analysis claims and changes in
statistics. of financial statements and resources and claims.
Public - Entities may affect significant ratios. Financial Existing and potential
these users in a variety of Reports - Include investors - Need general
ways. One example is nonfinancial information purpose financial reports in
when entities make a such as description of order to enable them in
substantial contribution to major products and a making decision Existing
the local economy in many listing of corporate officers and potential lenders and
ways including the number and directors. other creditors - They need
of people they employ and Financial Reporting - Is general purpose financial
their patronage of local directed primarily to the reports in order to enable
suppliers. The financial existing and potential them in making decisions
statements presented by the investors, lenders and other whether to provide or settle
entities could assist these creditors which compose loans and other forms of
users by providing the primary user group. credit. Financial Reporting
information about the trend Primary Users - These are - It should provide
and the range of its the parties and users of information that is useful
activities. financial information that in assessing the amount,
Reporting - The provision provide resources to the timing and uncertainty of
of financial information entity. Other users - prospects for future net
about an entity to external Information that meets the cash inflows to the entity.
users that is useful to them needs of the specified General Purpose Financial
in making economic primary users is likely to Reports - Provide
decisions and for assessing meet the needs of information about the
the effectiveness of the ______________ such as financial position of a
entity's management. employees, customers, reporting entity.
Annual - The principal governments and other Downloaded by James
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statements. Financial for decision making. Position - Information
Reporting - Encompasses Conceptual Framework for about the entity's economic
not only financial Financial Reporting - resources and the claims
statements but also other States the following against the reporting entity.
In other words, it it refers to the entity's effective use of its
comprises the assets, ability to pay short-term resources. Results of
liabilities and equity of an obligations. Solvency - Is operations - The financial
entity at a particular the availability of cash performance of an entity is
moment of time. Economic over a long term to meet also known as
Resources - Are the assets financial commitments ______________________
and claims or the liabilities when they fall due. In _____ and is portrayed in
and equity of the entity. other words, it refers to the the income statement and
Changes in economic entity's ability to meet its statement of
resources and claims - long-term obligations. comprehensive income.
Information on financial Financial Performance - Past Financial Performance
performance(income and Information on - Information about
expenses) and other ______________________ ______________________
transactions and events that _______ helps users assess ________ is usually
lead to changes in financial the entity's ability to helpful in predicting the
position. Economic produce return from its future returns on the
phenomena - Under the economic resources. entity's economic
Conceptual Framework, Downloaded by James resources. Financial
information on economic Camante Performance - Information
resources, claims and (jamescamante@gmail.co about
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resources and claims are 11477470 General purpose ______ during a period is
called financial reports - Also useful in assessing the
______________________ provide information about entity's ability to generate
_. Economic resources and the effects of transactions future cash inflows from
claims - Information about and other events that operations. Management's
the nature and amounts of change the economic Stewardship - Information
an entity's economic resources and claims. on how efficiently and
resources(assets) and Financial Performance - effectively the entity's
claims(liabilities and Changes in economic management has
equity) that can help users resources and claims result discharged its
to identify the entity's from responsibilities to use the
financial strengths and ___________________ entity's economic resources
weaknesses. Financial and from other events or helps users assess the
Position - Information transactions, such as entity's
about issuing debt or equity ______________________
______________________ instruments. Financial __________________.
_______ can help users to Performance - The Accrual Accounting -
assess the entity's liquidity, ______________________ Depicts the effects of
solvency and the need for of an entity comprises transactions and other
additional financing. revenue, expenses and net events and circumstances
Liquidity - Is the income or loss for a period on an entity's economic
availability of cash in the of time. In other words, it resources and claims in the
near future to cover is the level of income periods in which those
currently maturing earned by the entity effects occur even if the
obligations. In other words, through the efficient and resulting cash receipts and
payments occur in a show the value of an entity that the entity will continue
different period. Accrual but the reports provide in operations for the
accounting - The effects of information to help the foreseeable future. Cost
transactions and other primary users estimate the Principle - The going
events are recognized value of the entity. c. concern postulate is the
when they occur and not as General purpose financial very foundation of the
cash is received or paid. reports are intended to _____________________.
Simply stated, it means provide common Downloaded by James
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incurred regardless of purpose financial reports With this assumption,
when paid. Downloaded by are based on estimate and assets are normally
James Camante judgment rather than exact recorded at cost. As a rule,
(jamescamante@gmail.co depiction. Accounting market values are ignored.
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11477470 Accrual basic notions or there is evidence that the
Accounting - Information fundamental premises on entity would experience
about financial which the accounting large and persistent losses
performance measured in process is based. These are or that the entity's
accordance with also known as postulates. operations are to be
______________________ Accounting assumptions - terminated, the going
__________ provides a Serve as the foundation or concern assumption is
better basis for assessing bedrock of accounting in abandoned. Accounting
past and future order to avoid entity - Under this
performance than misunderstanding but assumption, the entity is
information solely about rather enhance the separate from the owners,
cash receipts and payments understanding and managers, and employees
during a period. usefulness of the financial who constitute the entity.
Limitations of Financial statements. Going concern Accordingly, the
Reporting - a. General - The Conceptual transactions of the entity
purpose financial reports Framework for Financial shall not be merged with
do not and cannot provide Reporting mentions only the transactions of the
all the information that one assumption, namely owners. Accounting Entity
existing and potential _________________. - The reason for this
investors, lenders and other Going concern/Continuity assumption is to have a fair
creditors need. These users Assumption - Means that presentation of financial
need to consider pertinent in the absence of evidence statements. The personal
information from other to the contrary, the transactions of the owners
sources for example, accounting entity is viewed shall not be allowed to
general economic as continuing in operation distort the financial
conditions, political events indefinitely. In other statements of the entity.
and industry outlook. b. words, the financial Consolidated Statements -
General purpose financial statements are normally When parent and
reports are not designed to prepared on the assumption subsidiary relationship
exists, two aspects, namely characteristics into
____________________ quantifiability and stability ______________________
for the affiliates are usually of the peso. Quantifiability ____________ and
made because for practical - Means that the assets, ______________________
and economic purposes, liabilities, equity, income _______________.
the parent and the and expenses should be Fundamental Qualitative
subsidiary are a single stated in terms of a unit of Characteristics - These are
economic entity. Time measure which is the peso characteristics that make
Period Assumption - in the Philippines. Stability information useful to users.
Requires that the indefinite of the peso assumption - They relate to the content
life of an entity is Means that the purchasing or substance of financial
subdivided into accounting power of the peso is stable information. They consist
periods which are usually or constant and that its of Relevance and Faithful
of equal length for the instability is insignificant Representation. Relevant
purpose of preparing and therefore may be and Faithfully represented
financial reports on ignored. It is usually an - Information must be both
financial position, amplification of the going ________________ and
performance and cash concern assumption so ___________________ if
flow. One year/12 months - much so that the it is to be useful.
By convention, the adjustments are Downloaded by James
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_____________. One-year power. Accounting m) lOMoARcPSD|
period - The function - The 11477470 Relevance - It is
______________ is ______________________ the capacity of the
traditionally the accounting _ is to account for nominal information to influence a
period because usually it is pesos only and not for decision. The financial
the time after that constant pesos or changes information must be
government reports are in purchasing power. capable of making a
required. Calendar year - A Qualitative Characteristics difference in the decisions
_____________ is a - Are the qualities and made by users. It requires
twelve-month period that attributes that make that the financial
ends on December 31. financial accounting information should be
Downloaded by James information useful to the related or pertinent to the
Camante users. It also identify the economic decision.
(jamescamante@gmail.co types of information that Predictive value and
m) lOMoARcPSD| are likely to be most useful confirmatory value -
11477470 Natural business to the primary users in Financial information is
year/fiscal year - A making decisions using an capable of making a
___________________ is entity's financial report. difference in a decision if it
a twelve-month period that Fundamental Qualitative has _________________
ends on any month when Characteristics and and ________________.
the business is at the Enhancing Qualitative Predictive Value - The
lowest or experiencing Characteristics. - The financial information can
slack season. Monetary Conceptual Framework be used as an input to
Unit Assumption - It has classifies qualitative processes employed by
users to predict future meaning materiality represent economic
outcome or when it can depends on the facts and phenomena or transactions
help users increase the circumstances surrounding in words and numbers
likelihood of correctly or a specific entity. Matter of wherein the descriptions
accurately predicting or Judgment - The and figures must match
forecasting outcome of Conceptual Framework what really existed or
events. Confirmatory and the Standards do not happened. Faithful
Value - The financial specify uniform Representation - Means
information provides quantitative threshold for that the actual effects of
feedback about previous materiality. Thus, the transactions shall be
evaluations or when it materiality is a properly accounted for and
enables users confirm or ___________________. reported in the financial
correct earlier Downloaded by James statements. In other words,
expectations. Interrelated - Camante the financial information
Predictive value and (jamescamante@gmail.co should provide true,
confirmatory value are m) lOMoARcPSD| correct and complete
_________________. 11477470 Relative size - depiction of the economic
Information that has Materiality of an item phenomena that it purports
predictive value is likely to depends on to represent. Completeness
also have confirmatory ____________________ - Requires that relevant
value. Materiality - Is a rather than absolute size. information should be
practical rule in accounting Material - An item is presented in a way that
which dictates that strict ___________ if knowledge facilitates understanding
adherence to GAAP is not of it would affect or and avoids erroneous
required when the items influence the decision of implication. It also
are not significant enough the informed users of the suggests that all
to affect the evaluation, financial statements. information(in words and
decision, and fairness of Material - Information is numbers) necessary for
the financial statements. It _____________ if its users to understand the
is also known as the omission or misstatement phenomenon being
doctrine of convenience. could influence the depicted is provided.
Materiality - A quantitative economic decision that the Completeness - It is the
threshold linked very users make on the basis of result of adequate
closely to the qualitative the financial information disclosure standard or the
characteristics of about an entity. Size - The principle of full disclosure.
relevance. In other words, ______ of the item in Standard Adequate
it is a subquality of relation to the total of the Disclosure/Full Disclosure
relevance based on the group to which the item Principle - Means that all
nature or magnitude or belongs is taken into significant and relevant
both of the items to which account. Nature - The information leading to the
the information relates. _________ of the item preparation of financial
Entity-specific - The may be inherently material statements shall be clearly
Conceptual Framework because it affects economic reported. In other words,
states that materiality is an decision. Faithful Downloaded by James
____________________ Representation - Means Camante
aspect of relevance, that financial reports (jamescamante@gmail.co
m) lOMoARcPSD| accurate in all respects. It __________________ is
11477470 it is best means there no errors in not recognized but
described by disclosure of the description and in the disclosed only. Prudence -
any financial facts process by which the Conservatism is
significant enough to information is selected and synonymous with
influence the judgment of applied. If the information _________________.
informed users. Notes to is an estimate, that fact Prudence - Is the desire to
financial statements - should be described exercise care and caution
Provide narrative clearly, including an when dealing with the
description or explanation of the process uncertainties in the
disaggregation of the items used in making that measurement process such
presented in the financial estimate. Substance over that assets or income are
statements and information form - If information is to not overstated and
about items that do not represent faithfully the liabilities or expenses are
qualify for recognition transactions and other not understated. Enhancing
Neutrality - The depiction events it purports to qualitative characteristics -
is without bias in the represent, it is necessary Relate to the presentation
preparation or presentation that the transactions and or form of the financial
of financial information. In events are accounted in information. These are
other words, the depiction accordance with their intended to increase or
is not slanted, weighted, substance and reality and enhance the usefulness of
emphasized, de- not merely their legal form. the financial information
emphasized or otherwise (E.g., financial lease, that is relevant and
manipulated to increase the computation of earnings faithfully represented.
probability that financial per share) Conservatism - They consist of
information will be Means that when comparability,
received favorably or alternative exist, the understandability,
unfavorably by users. Free alternative which has the verifiability, and timeliness
from bias - Neutrality least effect on equity Comparability - The ability
means that the information should be chosen. In to bring together for the
contained in the financial simplest words, in case of purpose of noting points of
statements must be any doubt, record any loss likeness and difference. It
_______________. and do not record any gain. enables users to identify
Principle of Fairness - Downloaded by James and understand similarities
Neutrality is synonymous Camante and dissimilarities among
with the all-encompassing (jamescamante@gmail.co items. Comparability
___________________. m) lOMoARcPSD| within an entity/Horizontal
Neutral - To be _________ 11477470 Contingent Loss Comparability/Intracompar
is to be fair. Free from - With conservatism, ability - The quality of
error - Means that there are ______________________ information that allows
no errors or omissions in is recognized as a comparisons within a
the description of the provision if the loss is single entity through time
phenomenon or probable and the amount or from one accounting
transaction. However, it can be reliably measured. period to the next.
does not mean that the Contingent Gain - With Comparability between
information is perfectly conservatism, and across
entities/Dimensional full disclosure of the inputs to a model, formula
Comparability/Intercompar change and the peso effect or other technique and
ability - The quality of thereof. Understandability recalculating the inputs
information that allows - Requires that financial using the same
comparisons between two information must be methodology. (E.g.,
or more entities engaged in comprehensible or verifying the carrying
the same industry. intelligible if it is to be amount of inventory)
Comparable - For most useful. The Timeliness - Means that
information to be information should be financial information must
______________, like presented in a form and be available or
things must look alike and expressed in terminology communicated early
different things must look that a user understands. enough when a decision is
different. Downloaded by Accordingly, the user shall to be made. It enhances the
James Camante have an understanding of truism that without
(jamescamante@gmail.co the complex economic knowledge of the past, the
m) lOMoARcPSD| activities, the financial basis for prediction will
11477470 Consistency - accounting process and the usually be lacking and
Implicit in the qualitative terminology in the without interest in the
characteristics of financial statements. future, knowledge of the
comparability is the Verifiability - Means that past is sterile. Downloaded
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____________________. and independent observers (jamescamante@gmail.co
Comparabilty, Consistency could reach consensus, m) lOMoARcPSD|
- although not necessarily 11477470 Older -
______________________ complete agreement, that a Generally, the ________
is the goal while particular depiction is a the information, the less
__________________ is faithful representation. The useful. Cost - Is a
the means of achieving that financial information is pervasive constraint on the
goal. Consistency - Refers supported by evidence so information that can be
to the use of the same that an accountant that provided by financial
method for the same item, would look into the same reporting. Cost
either from period to evidence would arrive at Constraint/Cost-benefit/Re
period within an entity or the same economic asonable assurance -
in a single period across decision or conclusion. It Reporting financial
entities. In other words, it also helps to assure users information imposes cost
is the uniform application that information represents and it is important that
of accounting method from the economic phenomenon such cost is justified by the
period to period within an or transaction it purports to benefit derived from the
entity. However, it does represent. Direct financial information. In
not mean that no change in Verification - Means other words, it is a
accounting method can be verifying an amount or consideration of the cost
made. If the change would other representation incurred in generating
result to a more useful and through direct observation, financial information
meaningful information, for example by counting against the benefit to be
then such change shall be cash. Indirect Verification obtained from having the
made. But there shall be - Means checking the information. The benefit
derived from the Financial statements are entity. Asset - Is defined as
information should exceed designed to provide a resource controlled by
the cost incurred in information about past the entity as a result of past
obtaining the information. events. Information about events and from which
Financial Statements - possible future transactions future economic benefits
Portray the financial and other events is are expected to flow to the
effects of transactions and included in the financial entity. Asset Recognition
other events by grouping statements only if it relates Principle - An asset is
them into broad classes to the past information recognized when it is
according to their presented in the financial probable that future
economic characteristics. statements and is deemed economic benefits will
These are prepared for a useful to users of financial flow to the entity and the
specified period of time statements. Perspective asset has a cost or value
and provide information on adopted in financial that can be measured
assets, liabilities and equity statements - Information in reliably. This principle has
that existed at the end of financial statements is two conditions: a. it is
the reporting period, or prepared from the probable that future
during the reporting perspective of the reporting economic benefits will
period, and income and entity, not from the flow to the entity b. the
expenses for the reporting perspective of any cost or value of the asset
period. Elements of particular group of can be measured reliably
financial statements - Refer financial statement user. Probable - Means that the
to the quantitative Downloaded by James chance of the future
information reported in the Camante economic benefit arising is
statement of financial (jamescamante@gmail.co more likely rather than less
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building blocks from Position - The elements (jamescamante@gmail.co
which financial statements directly related to the m) lOMoARcPSD|
are constructed. The measurement of 11477470 Future economic
presentation of these in the _________________ are: benefit - The
statement of financial a. Assets b. Liabilities c. ______________________
position and the income Equity Financial _ embodied in an asset is
statement involves a Performance - The the potential to contribute
process of classification elements directly related to directly or indirectly to the
and subclassification. the measurement of flow of cash and cash
Comparative Information - ____________________ equivalents to the entity.
To help users of financial are: a. Income b. Expenses Cost principle - Inherent in
statements in evaluating Equity - Is the residual asset recognition is the
changes and trends, interest in the assets of the ___________________.
financial statements also entity after deducting all of Cost Principle - Requires
provide the liabilities. Recognition that assets should be
_____________________ - Means the reporting of an recorded initially at
for at least one preceding asset, liability, income or original acquisition cost.
reporting period. Forward- expense on the face of the Cash Transaction - In a
looking information - financial statements of an _________________, cost
is equivalent to the cash ______ as a consequence related to an increase in an
payments. of a binding contract or asset or a decrease in a
Noncash/exchange statutory requirement. liability has arisen and that
transaction - In a Downloaded by James the increase in economic
_________________, the Camante benefits can be measured
cost is equal to the fair (jamescamante@gmail.co reliably. Thus, this
value of the asset given or m) lOMoARcPSD| principle has two
fair value of the asset 11477470 Constructive conditions: a. it is probable
received, whichever is obligations - Arise from that future economic
clearly evident. Liability - normal business practice, benefits will flow to the
Defined as a present custom and a desire to entity as a result of an
obligation arising from maintain good business increase in an asset or a
past events the settlement relations or act in an decrease in a liability b. the
of which is expected to equitable manner. Income - economic benefits can be
result in an outflow from Is increase in economic measured reliably Point of
the entity of resources benefit during the Sale - The
embodying economic accounting period in the _________________ is the
benefits. Liability form of inflow or increase point of income
Recognition Principle - A in asset or decrease in recognition. Installment
liability is recognized liability that results in method - Revenue is
when it is probable that an increase in equity, other recognized at the point of
outflow of resources than contribution from collection. The amount of
embodying economic equity participants. revenue is determined by
benefits will be required Revenue - Arises in the multiplying the gross profit
for the settlement of a course of the ordinary rate by the amount of
present obligation and the regular activities and is collections. Downloaded
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can be measured reliably. different names including (jamescamante@gmail.co
This principle has two sales, fees, interest, m) lOMoARcPSD|
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that an outflow of rent. Regularity - The method/Sunk Cost method
economic benefits will be essence of revenue is - Revenue is recognized
required for the settlement ________________. Gains also at the point of
of a present obligation b. - Represented other items collection. However,
the amount of obligation that meet the definition of unlike the installment
can be measured reliably income and do not arise in method, all collection are
Legal, Constructive - An the course of the ordinary first applied to the cost of
essential characteristics of regular activities. Earned - the merchandise sold.
a liability is that the entity The basic principle is that Percentage of completion
has a present obligation income is recognized when method - Contract revenue
which may be ________________. and contract costs
_____________ or Income Recognition associated with the
____________________. Principle - Income is construction contract shall
Legally enforceable - recognized when it is be recognized as revenue
Obligations may be probable that an increase in and expenses, respectively,
______________________ future economic benefits by reference to the stage of
completion of the contract accounting period in the revenue shall be reported
activity. Production form of an outflow or in the same period. In
Method - Revenue is decrease in asset or generally speaking, this
recognized at the point of increase in liability that principle facilitates the
production. This method is results in decrease in "There is no gain if there is
applicable to agricultural, equity, other than no pain" rule. Cause and
forest and mineral distribution to equity effect association - The
products. Interest Revenue participants. Expenses - expense is recognized
- Shall be recognized on a Encompasses all losses as when the revenue is
time proportion basis that well as those that arise in already recognized. This
takes into account the the course of the ordinary process, commonly
effective yield on the asset. regular activities. Incurred referred to as the matching
Royalties - Shall be - The basic expense of cost with revenue,
recognized on an accrual recognition principle involves the simultaneous
basis in accordance with means that expenses are or combined recognition of
the substance of the recognized when revenue and expenses that
relevant agreement. _____________________. result directly and jointly
Dividends - Shall be Expense Recognition from the same transactions
recognized as revenue Principle - Expenses are or events. Systematic and
when the shareholder's recognized when it is rational allocation - Some
right to receive payment is probable that a decrease in costs are expensed by
established, meaning when future economic benefits simply allocating them
they are declared. related to decrease in an over the periods benefited.
Installation fees - Are asset or an increase in Downloaded by James
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completion. Subscription measured reliably. Thus, 11477470 Immediate
Revenue - Should be this principle has two Recognition - The cost
recognized on a straight conditions: a. it is probable incurred is expensed
line basis over the that a decrease in future outright because of
subscription period. economic benefits has uncertainty of future
Admission fees - Are occurred as a result of a economic benefits or
recognized as revenue decrease in an asset or an difficulty of reliably
when the event takes place. increase in liability b. the associating certain costs
Tuition fees - Are decrease in economic with future revenue. In this
recognized as revenue over benefits can be measured method, an expense is
the period in which the reliably Matching Principle recognized immediately: a.
tuition is provided. - Expense recognition When an expenditure
Downloaded by James principle is the application produces no future
Camante of the economic benefit. b. When
(jamescamante@gmail.co ______________________ cost incurred does not
m) lOMoARcPSD| ________. Matching qualify or ceases to qualify
11477470 Expense - Is Principle - Requires that for recognition as an asset.
decrease in economic those costs and expenses Measurement - Is the
benefit during the incurred in earning a process of determining the
monetary amounts at The controlling entity is has no practical ability to
which the elements of the called avoid. Legal Obligation -
financial statements are to _________________, An obligation that results
be recognized and carried while the controlled entity from a contract, legislation,
in the statement of is called the or other operation of law.
financial position and ___________________. Constructive Obligation -
income statement. Downloaded by James An obligation that results
Historical Cost/Past Camante from an entity's
Purchase Exchange Price - (jamescamante@gmail.co actions(e.g., past practice
Is the amount of cash or m) lOMoARcPSD| or publishes policies) that
cash equivalent paid or the 11477470 Consolidated create a valid expectation
fair value of the Financial Statements - If a on others that the entity
consideration given to reporting entity comprises will accept and discharge
acquire an asset at the time both the parent and its certain responsibilities.
of acquisition. Current subsidiaries, the reporting Executory Contract - Is a
Cost/Current Purchase entity's financial contract that is equally
Exchange Price - Is the statements are referred to unperformed - neither
amount of cash or cash as party has fulfilled any of
equivalent that would have ______________________ its obligations, or both
to be paid if the same or _______________. parties have partially
equivalent asset was Unconsolidated Financial fulfilled their obligations to
acquired currently. Statements - If a reporting an equal extent. It
Realizable Value/Current entity is the parent alone, establishes a combined
Sale Exchange Price - Is the reporting entity's right and obligation to
the amount of cash or cash financial statements are exchange economic
equivalent that could referred to as resources, which are
currently be obtained by ______________________ interdependent and
selling the asset in an ______________. inseparable. Thus, the two
orderly disposal. Present Combined Financial constitute a single asset or
Value/Future Exchange Statements - If a reporting liability. Favorable,
Price - Is the discounted entity comprises two or unfavorable - The entity
value of the future net cash more entities that are not has an asset if the terms of
inflows that the asset is all linked by a parent- the contract are
expected to generate in the subsidiary relationship, the _________________; a
normal course of business. reporting entity's financial liability if the terms are
Reporting Entity - Is one statements are referred to _____________________.
that is required, or chooses, as Downloaded by James
to prepare financial ______________________ Camante
statements, and is not . Control - Means that the (jamescamante@gmail.co
necessarily a legal entity. It entity has the exclusive m) lOMoARcPSD|
can be a single entity or a right over the benefits of 11477470 Carrying
group or combination of an asset and the ability to Amount - The amount at
two or more entities. prevent others from which an asset, liability or
Parent, subsidiary - accessing those benefits. equity is recognized in the
Sometimes an entity Obligation - Is a duty or statement of financial
controls another entity. responsibility that an entity position. Derecognition - Is
the opposite of recognition. liability. Value in use and ______________________
It is the removal of a Fulfillment value - Reflect _________ (i.e., they
previously recognized entity-specific assumptions reflect prices in acquiring
asset or liability from the rather than assumptions by an asset or incurring a
entity's statement. It occurs market participants. They liability), whereas fair
when the item no longer are measured indirectly value, value in use and
meet the definition of an using cash-flow-based fulfillment value are
asset or liability, such as measurement techniques __________________
when the entity loses similar to those used in (i.e., they reflect prices in
control of all or part of the measuring fair value but selling or using an asset or
asset, or no longer has a from an entity-specific transferring or fulfilling a
present obligation for all or perspective rather than liability). Characteristics of
part of the liability. Unit of from a market-participant the asset or liability and
account - Is the right or the perspective. They do not How the asset or liability
group of rights, the include transaction costs in contributes to future cash
obligation or the group of acquiring an asset or flows - The
obligations, or the group of incurring a liability but ______________________
rights and obligations, to include transaction costs ____________________
which recognition criteria expected to be incurred on and
and measurement concepts the ultimate disposal of the ______________________
are applied. It is selected asset or fulfillment of the __________________
for an asset or liability liability. Current Cost of an affect the relevance of the
when determining how that asset - Is the cost of an information provide by a
asset or liability, and the equivalent asset at the measurement basis.
related income or expense, measurement date, Measurement Uncertainty -
will be recognized and comprising the Arises when a measure
measured. Fair Value - Is consideration that would cannot be determined
the price that would be be paid at the measurement directly by observing
received to sell an asset, or date plus the transaction prices in an active market
paid to transfer a liability, costs that would be and must instead be
in an orderly transaction incurred at that date. estimated. Outcome
between market Downloaded by James uncertainty - Arises when
participants at the Camante there is uncertainty about
measurement date. Value (jamescamante@gmail.co the amount or timing of
in use - Is the present value m) lOMoARcPSD| any inflow or outflow of
of the cash flows, or other 11477470 Current cost of a economic benefits that will
economic benefits, that an liability - Is the result from an asset or
entity expects to derive consideration that would liability. Existence
from the use of an asset be received for an uncertainty - Arises when
and from its ultimate equivalent liability at the it is uncertain whether an
disposal. Fulfillment value measurement date minus asset or liability exists.
- Is the present value of the the transaction costs that Total Equity - It is not
cash, or other economic would be incurred at that measured directly. It is
resources, that an entity date. Entry values, exit simply equal to the
expects to be obliged to values - Current cost and difference between the
transfer as it fulfills a historical cost are carrying amounts of
recognized assets and Offsetting - Occurs when productive capacity at the
recognized liabilities. an asset and a liability with end of the period exceeds
Statistical Mean/Expected separate units of account the productive capacity at
value/Probability-weighted are combined and only the the beginning of the
average - Reflects the net amount is presented in period, after excluding any
average amount within the the statement of financial distributions to, and
entire range, giving more position. Aggregation - Is contributions from, owners
weight to the outcomes the adding together of during the period. Capital
that are more likely. It is assets, liabilities, equity, Maintenance - The concept
not intended to predict the income or expenses that of
ultimate cash have shared characteristics ______________________
inflow(outflow) from an and are included in the _ is essential in
asset(liability. Statistical same classification. distinguishing between a
Median/Maximum amount Financial concept of return on capital and a
that is more likely than not capital - Capital is return of capital.
to occur - Is the middle regarded as the invested Regularity -
amount within the range money or invested Accounting(Accounting
and reflects the probability purchasing power. Capital Standards Council) - It is a
of an inflow or outflow to - Is synonymous with service activity. Its
be no more than that equity, net assets, or net function is to provide
amount. Downloaded by worth. Physical concept of quantitative information,
James Camante capital - Capital is primarily financial in
(jamescamante@gmail.co regarded as the entity's nature, about economic
m) lOMoARcPSD| productive capacity e.g., entities, that is intended to
11477470 Statistical units of output per day. be useful in making
Mode/Most Likely Financial Capital economic decision.
outcome - Reflects the Maintenance - Under this Accounting(Committee on
single most likely ultimate concept, profit is earned if Accounting Terminology
inflow(outflow) from the the net assets at the end of of the American Institute
asset(liability), which is the period exceeds the net of Certified Public
the amount that occurs the assets at the beginning of Accountants) - Is the art of
highest number of times the period, after excluding recording, classifying and
within the range. Cash- any distributions to, and summarizing in a
Flow-Based Measurement contributions from, owners significant manner and in
Techniques - Are not during the period. It can be terms of money,
measurement bases, but measured in either nominal transactions and events
rather used in applying a monetary units or units of which are in part at least of
measurement basis. constant purchasing power. a financial character and
Accordingly, when using Downloaded by James interpreting the results
such technique, it is Camante thereof.
necessary to identify which (jamescamante@gmail.co Accounting(American
measurement basis is used m) lOMoARcPSD| Accounting Association) -
and the extent to which the 11477470 Physical capital Is the process of
technique reflects the Maintenance - Under this identifying, measuring and
factors applicable to that concept, profit is earned communicating economic
measurement basis. only if the entity's information to permit
informed judgment and process of including the - An event wherein there is
decision by users of the effects of an accountable a reciprocal giving and
information. Quantitative - event in the statement of receiving of economic
Accounting is about financial position or the resources or discharging of
__________________ statement of economic obligations
information. Financial in comprehensive income between an entity and an
nature - The information through a journal entry. external party. (Ex. Sale,
provided by accounting is Accountable event - Is one purchase, payment of
likely to be that affects the assets, liabilities, receipt of notes
________________ liabilities, equity, income receivable in exchange for
______ ____________. or expenses of an entity. It accounts receivable, and
Downloaded by James is also known as economic the like.) Non-reciprocal
Camante activity. Economic transfer - Is a one way
(jamescamante@gmail.co Activity - Is the subject transaction in that the party
m) lOMoARcPSD| matter of Accounting giving something does not
11477470 Decision which defines as the receive anything in return
Making - The information measurement of economic while the party receiving
provided by accounting resources and economic does not give anything in
should be useful in obligations. Non- exchange. (Ex. Donations,
_______________ accountable events - Are gifts or charitable
___________. Accounting not recognized but contributions, payment of
- According to American disclosed only in the notes, taxes, imposition of fines,
Accounting Association, if they have Accounting theft provision of capital
the very purpose of relevance. Downloaded by by owners, distributions to
_______________ is to James Camante owners, and the like.)
provide quantitative (jamescamante@gmail.co External event other than
information to be useful in m) lOMoARcPSD| transfer - An event that
making an economic 11477470 Memorandum involves changes in the
decision. Identifying - It is Entry - A non-accountable economic resources or
the analytical component event that has an obligations of an entity
of Accounting. Measuring accounting relevance may caused by an external party
- It is the technical be recorded through a or external source but does
component of Accounting. __________________. not involve transfers of
Communicating - It is the Transactions/Events - resources or obligations.
formal component of Economic activities of an (Ex. Changes in fair value
Accounting. Identifying - entity are referred to as and prices levels,
This accounting process is ____________ which may obsolescence,
the recognition or be classified as external technological changes,
nonrecognition of business and internal. External vandalism, and the like.
activities as "accountable" Events/External Interval events/Internal
events. Identifying - Is the Transactions - Are those Transactions - Are the
process of analyzing events economic events involving economic activities that
and transactions to one entity and another take place entirely within
determine whether or not entity or external party. the entity. Production - The
they will be recognized. Exchange process by which resources
Recognition - Refers to the Event/Reciprocal Transfer are transformed into
finished goods. (Ex. measured are said to be the grouping of similar
Conversion of raw valued by ___________. interrelated items into their
materials into finished (Ex. Estimates of respective classes through
products, production of uncollectible amounts of postings in the ledger.
farm products, and the receivables, depreciation Posting to the ledger -
like.) Downloaded by and amortization expenses Classifying is
James Camante which are affected by accomplished by
(jamescamante@gmail.co estimates of useful life and _________ _____ _____
m) lOMoARcPSD| residual value, estimated _________. Ledger - Is a
11477470 Casualty - Any liabilities such as group of accounts which
sudden or unanticipated provisions, retained are systematically
loss from disasters or other earnings which is affected categorized into asset
events ordinarily termed as by various estimates of accounts, liability
an act of God. (Ex. Loss income and expenses.) accounts, equity accounts,
from fire, flood, and other Fact - When measurement revenue accounts and
catastrophes.) Measuring - is unaffected by estimates, expense accounts.
The accounting process of the items measured are Summarizing - Putting
assigning of peso amounts said to be valued by together or expressing in
or monetary terms to the _________. (Ex. Ordinary condensed form the
accountable economic share capital valued at par recorded and classified
transactions and events. value, land stated at transactions and events.
Historical Cost - It is the acquisition cost, cash This includes the
commonly used measure of measured at face amount.) preparation of financial
financial transactions. Communicating - Is the statements and other
Measurement bases - Are process of transforming accounting reports.
used in accounting which economic data into useful Universal Language of
include, but not limited to, accounting information, Business - Communicating
historical cost, fair value, such as financial process is the reason why
present value, realizable statements and other accounting has been called
value, current cost, and accounting reports, for the
sometimes inflation- dissemination to users. It _____________________.
adjusted costs. Common also involves interpreting Interpreting - It involves
financial denominator - If the significance of the the computation of
Accounting is to be useful, processed information. financial statement ratios.
it must be expressed in Downloaded by James Accounting - Its basic
terms of a Camante purpose is to provide
______________ (jamescamante@gmail.co information that is useful
_____________ m) lOMoARcPSD| in making economic
______________. Costs 11477470 Recording - decisions. Economic
and Values - Financial Refers to the process of entities - Use accounting to
statements are said to be systematically committing record economic activities,
prepared using a mixture into writing the identified process data, and
of ________ ______ and measured accountable disseminate information
________. Opinion - When events in the journal intended to be useful in
measurement is affected by through journal entries. making economic
estimates, the items Classifying - It involves decisions. Economic entity
- Is a separately rights to present represented by the
identifiable combination of consumption in exchange Philippine Financial
persons and property that for rights to future Reporting
uses or controls economic consumption. Investment - Standards(PFRSs). Special
resources to achieve The process of using purpose accounting
certain goals or objectives. current inputs to increase information - Designed to
Downloaded by James the stock of resources meet the specific needs of
Camante available for output as particular statement users.
(jamescamante@gmail.co opposed to immediately This information is
m) lOMoARcPSD| consumable output. provided by other types of
11477470 Not-for-profit Quantitative information - Accounting other than
entity - One that carries out Information provided by financial accounting such
some socially desirable accounting that are as managerial accounting
needs of the community or expressed in numbers, and tax basic accounting.
its members and whose quantities, or units. Accounting as an
activities are not directed Downloaded by James information system -
towards making profit. Camante Accounting measures
Business entity - One that (jamescamante@gmail.co business activities,
operates primarily for m) lOMoARcPSD| processes information into
profit. Economic activities 11477470 Qualitative reports and communicates
- Are activities that affect Information - Information the reports to decision
the economic provided by accounting makers. Financial
resources(assets) and that are expressed in words Statements - These are key
obligations(liabilities), and or descriptive form. It is product of Accounting
consequently, the equity of found in the notes to information system that
an economic entity. financial statements as well composed of documents
Production - The process as on the face of the other that report financial
of converting economic financial statements. information about an entity
resources into outputs of Financial Information - to decision makers.
goods and services that are Information provided by Financial Reporting - Tell
intended to have greater accounting that are us how well an entity is
utility than the required expressed in money. It is performing in terms of
inputs. Exchange - The also quantitative in nature. profit and loss and where it
process of trading General Purpose stands in financial terms.
resources or obligations for Accounting Information - Overall Objective of
other resources or Designed to meet the Accounting - To provide
obligations. Consumption - common needs of most quantitative financial
The process of using the statement users. This information about a
final output of the information is provided business that is useful to
production process. under financial accounting. statement users particularly
Income Distribution - The General Purpose owners and creditors in
process of allocating rights Accounting Information - making economic
to the use of output among Information governed by decisions. Downloaded by
individuals and groups in generally accepted James Camante
society. Savings - The accounting (jamescamante@gmail.co
process of setting aside principles(GAAP) m) lOMoARcPSD|
11477470 Accountant - assumptions/Accounting of Costs and Value - The
The _______________ postulates - Are the measurement basis
primary task is to supply fundamental concepts or appropriate only when the
financial information so principles and basic entity is a going concern.
that statement users could notions that provide the Realizable Value - It is the
make informed judgment foundation of the measurement basis
and better decision. accounting process. appropriate if the entity is a
Decision-usefulness - It is Accounting theory - Is liquidating concern. (Ex.
the essence of Accounting. logical reasoning in the Estimated selling price less
Accounting as a social form of a set of broad estimated costs to sell for
science - Accounting is a principles that (i) provide a assets and expected
body of knowledge which general frame of reference settlement amount for
has been systematically by which accounting liabilities.) Separate
gathered, classified and practice can be evaluated Entity/Accounting
organized. Accounting as and (ii) guide the Entity/Business Entity
practical art - Accounting development of new Concept/Entity Concept -
requires the use of creative practices and procedures. The entity is viewed
skills and judgment. Downloaded by James separately from its owners.
Accounting as a language Camante Accordingly, the personal
of business - Accounting is (jamescamante@gmail.co transactions of the owners
fundamental to the m) lOMoARcPSD| among themselves or with
communication of 11477470 Accounting other entities are not
financial information. Theory - It is the organized recorded in the entity's
Creative Thinking - set of concepts and related accounting records. This
Involves the use of principles that explain and concept defines the area of
imagination and insight to guide the accountant's interest of the accountant.
solve problems by finding action in identifying, Stable Monetary
new relationships(ideas) measuring, communicating Unit/Monetary Unit
among items if accounting Information. It Assumption - Assets,
information. It is most comprises the Conceptual liabilities, equity, income
important in identifying Framework and the and expenses are stated in
alternative solutions. Philippine Financial terms of a common unit of
Critical Thinking - Reporting measure, which is peso in
Involves the logical Standards(PFRSs). the Philippines. The
analysis of issues, using Double-entry system - purchasing power of the
inductive or deductive Each accountable event is peso is regarded as stable
reasoning to test new recorded in two parts - or constant and that is its
relationships to determine debit and credit. Going instability is insignificant
their effectiveness. It is Concern Assumption - The and therefore ignored.
most important in entity is assumed to carry Time
evaluating alternative on its operations for an Period/Periodicity/Account
solutions. Accounting indefinite period of time. ing Period - The life of the
Concepts - Refer to the Meaning, the entity does entity is divided into series
principles upon which the not expect to end its of reporting periods. An
process of Accounting is operations in the accounting period is
based. Accounting foreseeable future. Mixture usually 12 months and may
either be a calendar year or Concept/Cost Principle - Are made only when
a fiscal year. Calendar The value of an asset is required or permitted by
Year - Period starts on determined on the basis of the PFRSs or when the
January 1 and ends on acquisition cost. Lower of change results to more
December 31 of that the cost and NRV relevant and reliable
same year. Downloaded by measurement - Inventories information and are
James Camante are measured at net disclosed in the notes.
(jamescamante@gmail.co realizable value rather than Matching/Association of
m) lOMoARcPSD| at cost. Concept of Cause and Effect - Costs
11477470 Fiscal Year - Articulation - All the that are recognized as
Period also covers 12 components of a complete expenses when the related
months but starts on a date set of financial statements revenue is recognized. RA
other than January 1. are interrelated. No. 10912 - The law
Materiality Concept - Accordingly, when users mandating and
Information is material if use the financial statements strengthening the
its omission or in making decisions, they continous professional
misstatement could need to use each financial development program for
influence economic statement in conjunction all regulated professions,
decisions. It is a matter of with the other financial including the accountancy
professional judgment and statements. Full Disclosure profession. Continuing
is based on the size and Principle - This principle Professional
nature of the item being recognizes that the nature Development/CPD -
judged. Cost-benefit/Cost and amount of information Refers to the inculcation
Constraint/Reasonable included in the financial and acquisition of
Assurance - The cost of statements reflect a series advanced knowledge, skill,
processing and of judgmental trade-offs. proficiency, and ethical
communicating Trade-offs - It strives for and moral values after the
information should not sufficient detail to disclose initial registration of the
exceed the benefits to be matters that make a Certified Public
derived from it. Accrual difference to users, yet Accountant for
Basis of Accounting - The sufficient condensation to assimilation into
effects of transactions and make the information professional practice and
other events are recognized understandable, keeping in lifelong learning. It also
when they occur(and not as mind the costs of preparing raises and enhances the
cash is received or paid) and using it. Downloaded technical skill and
and they are recorded in by James Camante competence of the CPA.
the accounting records and (jamescamante@gmail.co 120 CPD credit Units -
reported in the financial m) lOMoARcPSD| Under the new BOA
statements of the periods to 11477470 Consistency Resolution, all CPAs
which they relate. Income concept - The financial regardless of area or sector
is recognized when earned statements are prepared on of practice shall be
rather than when cash is the basis of accounting required to comply with
collected and expenses are principles that are applied __________ Entity Theory
recognized when incurred consistently from one - The accounting objective
rather than when cash is period to the next. Changes is geared towards the
paid. Historical Cost in Accounting Policies - proper income
determination. Proper concept is used in as depreciation,
matching costs against government and fiduciary amortization and effective
revenues is the ultimate accounting. Realization - interest method of
end. This theory The process of converting allocation. Immediate
emphasizes the income non-cash assets into cash Recognition - Costs that do
statement and is or claims for cash. It is also not meet the definition of
exemplified by the the concept that deals with an asset, or ceases to meet
equation "Assets = revenue recognition. the definition of an asset,
Liabilities + Capital." Prudence/Conservatism - are expensed immediately
Proprietary Theory - The Is the use of caution when such as casualty losses and
accounting objective is making estimates under impairment losses.
geared towards the proper conditions of uncertainty, Financial Accounting - Is
valuation of assets. This such that assets or income the branch of Accounting
theory emphasizes the are not overstated and that focuses on general
importance of the balance liabilities or expenses are purpose financial
sheet and is exemplified by not understated. In other statements and is also
the equation "Assets - words, when exercising governed by the Philippine
Liabilities = Capital." this principle, the one Financial Reporting
Residual Equity Theory - which has the least effect Standards(PFRSs).
This theory is applicable on equity is chosen. Downloaded by James
when there are two classes Cookie Jar Reserve - It is a Camante
of shares issued, i.e, form of fraudulent (jamescamante@gmail.co
ordinary and preferred. reporting wherein during m) lOMoARcPSD|
The equation is "Assets - periods of high profits, 11477470 General Purpose
Liabilities - Preferred liabilities are overstated Financial Statements - Are
Shareholders' Equity = through excessive those statements that cater
Ordinary Downloaded by provisions of expenses or to the common needs of
James Camante non-recognition of income. external users, primarily
(jamescamante@gmail.co Matching Concept/Direct the potential and existing
m) lOMoARcPSD| association of Costs and investors, and lenders and
11477470 Shareholders' Revenues - Costs that are other creditors. External
Equity." This theory is directly related to the Users - Are those who are
applied in the computation earning of revenue are not involved in managing
of book value per share recognized as expenses in the entity. Financial
and return on equity. Fund the same period the related Reporting - Endeavors to
Theory - The accounting revenue is recognized. promote principles that are
objective is neither proper Systematic and Rational also useful in other
income determination nor Allocation - Costs that are financial Reporting. Other
proper valuation of assets not directly related to the financial Reporting -
but the custody and earning of revenue are Comprises information
administration of funds. initially recognized as provided outside the
The objective is directed assets and recognized as financial statements that
towards cash flows, expenses over the periods assists in the interpretation
exemplified by the formula their economic benefits are of a complete set of
"Cash inflows - Cash consumed, using some financial statements or
Outflows = Fund." This method of allocation such improves users' ability to
make efficient economic effectively the entity's Accounting - Refers to the
decisions. Financial management has accounting for the
Statements - Are the discharged its government and its
structured representation of responsibilities to use the instrumentalities, placing
an entity's financial entity's economic emphasis on the custody of
position and results of its resources. Downloaded by public funds, the purposes
operations. They are the James Camante for which those funds are
end product of the (jamescamante@gmail.co committed, and the
accounting process and the m) lOMoARcPSD| responsibility and
means by which 11477470 Management accountability of the
information gathered and Accounting - Refers to the individuals entrusted with
processed are periodically accumulation and those funds. Fiduciary
communicated to users. communication of Accounting - Refers to the
Financial Report - Includes information for use by handling of accounts
the financial statements internal users or managed by a person
plus other information management. Management entrusted with the custody
provided outside the Advisory Services - An and management of
financial statements that offshoot of management property for the benefit of
assists in the interpretation accounting which includes another. Estate Accounting
of a complete set of services to clients on - Refers to the handling of
financial statements or matters of Accounting, accounts for fiduciaries
improves users' ability to finance, business policies, who wind up the affairs of
make efficient economic organization procedures, a deceased person. Social
decisions. Financial product costs, distribution, Accounting/Social and
Reporting - Is the and many other phases of Environmental
provision of financial business conduct and Accounting/Social
information about an entity operations. Cost Responsibility Reporting -
that is useful to external accounting - Is the The process of
users, primarily the systematic recording and communicating the social
investors, lenders, and analysis of the costs of and environmental effects
other creditors, in making materials, labor, and of an entity's economic
investment and credit overhead incident to actions to the society.
decisions. Primary production. Auditing - The Institutional Accounting -
objective of Financial process of evaluating the The accounting for non-
Reporting - To provide correspondence of certain profit entities other than
information about an assertions with established the government.
entity's economic criteria and expressing an Downloaded by James
resources, claims to those opinion thereon. Tax Camante
resources, and changes in accounting - The (jamescamante@gmail.co
those resources. Secondary preparation of tax returns m) lOMoARcPSD|
objective of Financial and rendering of tax 11477470 Accounting
Reporting - To provide advice, such as the Systems - The installation
information useful in determination of the tax of Accounting procedures
assessing the entity's consequences of certain for the accumulation of
management stewardship proposed business financial data and
or how efficiently and endeavors. Government designing of Accounting
forms to be used in data the Philippines. It is knowledge in the science
gathering. Accounting responsible for preparing of Accounting, or where
Research - Pertains to the and grading Philippine civil service eligibility as a
careful analysis of CPA Examination. Practice certified public accountant
economic events and other of Public Accountancy - is a prerequisite.
variables to understand Involves the rendering of Certificate of Accreditation
their impact on decisions. audit or accounting related - It shall be issued to
It also includes a broad services to more than one certified public
range of topics, which may client on a fee basis. accountants in public
be related to one or more Downloaded by James practice only upon
of the other branches of Camante showing in accordance
Accounting, the economy (jamescamante@gmail.co with rules and regulations
as a whole, or the market m) lOMoARcPSD| promulgated by the Board
environment. Bookkeeping 11477470 Practice in of Accountancy and
- The process of recording Commerce and Industry - approved by the
the accounts or Refers to the employment Professional Regulation
transactions of an entity. It in the private sector in a Commission that such
normally ends with the position which involves registrant has acquired
preparation of the trial decision making requiring minimum of three years of
balance. It does not require professional knowledge in meaningful experience in
the interpretation of the the science of Accounting any of the areas of public
significance of the and such position requires practice including taxation.
processed information. that the holder thereof Corporation - The SEC
Accountancy - Refers to must be a certified public shall not register any
the profession or practice accountant. Practice in ___________ organized
of Accounting. Public Education/Academe - for the practice of Public
Practice of Accounting - It Employment in an accountancy. Certificate of
does not involve an educational institution Registration - Upon
employer-employee which involves teaching of recommendation of BOA
relationship. Private Accounting, auditing, the PRC shall issue it to
Practice of Accounting - It management Advisory practice public
involves an employer- services, finance, business Accountancy which shall
employee relationship, law, taxation, and other be valid for 3 years and
meaning the accountant is technically related renewable every 3 years
an employee. RA No. 9298 subjects. Practice in the upon payment of required
- The law regulating the Government - Employment fees. Public
practice of accountancy in or appointment to a Accounting/Public
the Philippines and is also position in an accounting Accountancy - The field of
known as the Philippine professional group in the Accounting that is
Accountancy Act of 2004. Government or in a composed of individual
Board of Accountancy - government-owned and/or practitioners, small
The body authorized by controlled corporation, accounting firms and large
law to promulgate rules including those performing multinational organizations
and regulations affecting proprietary functions, that render independent
the practice of the where decision making and expert financial
accountancy profession in requires professional services to the public.
Controller - It is the assimilation into any action adopted.
highest accounting officer professional practice and Accountancy - It refers to
in an entity. Downloaded lifelong learning. It also the profession of
by James Camante raises and enhances the accounting practice.
(jamescamante@gmail.co technical skill and Financial Accounting - It is
m) lOMoARcPSD| competence of the CPA. primarily concerned with
11477470 Private CPD Credit Units - Refer the recording of business
Accountant - The major to the 120 credit hours transactions and the
objective of the required for the renewal of eventual preparation of
____________ CPA License and financial statements. It
____________ is to assist accreditation of a CPA to focuses on general purpose
management in planning practice the accountancy reports known as financial
and controlling the entity's profession every three statements intended for
operations. And has the years. That is provides internal and external users.
responsibility for the under the new BOA Generally Accepted
determination of the Resolution. 65 years - A Accounting
various taxes the entity is CPA shall be permanently Principles/GAAP -
obliged to pay. Private exempted from CPD Represent the rules,
Accounting - Includes requirements upon procedures, practice and
maintaining the records, reaching the age of standards followed in the
producing the financial ___________. preparation and
reports, preparing the Constructive - Accounting presentation of financial
budgets and controlling is essentially statements and have
and allocating the _____________ in nature. developed on the basis of
resources of the entity. Accounting ceases when experience, reason,
Government Accounting - financial statements are custom, usage and
Its focus is the custody and already prepared. practical necessity. These
administration of public Analytical - Auditing is are like laws that must be
funds. RA No. 10912 - The ___________. The work of followed in financial
law mandating and an auditor begins when the reporting. Political Process
strengthening the work of the accountant - The process of
continuing Professional ends. Downloaded by establishing GAAP is a
development program for James Camante ___________________
all regulated professions, (jamescamante@gmail.co which incorporates
including the accountancy m) lOMoARcPSD| political actions of various
profession. Continuing 11477470 Bookkeeping - It interested user groups as
Professional is procedural and largely well as professional
Development/CPD - concerned with judgment, logic and
Refers to the inculcation development and research. Overall Purpose
and acquisition of maintenance of of Accounting Standards -
advanced knowledge, skill, Accounting records. It is To identify proper
proficiency, and ethical the how of Accounting. accounting practices for
and moral values after the Accounting - It is the preparation and
initial registration of the conceptual and is presentation of financial
Certified Public concerned with the why statements. Accounting
Accountant for reason or justification for standards - Create a
common understanding Financial Reporting Financial Reporting
between preparers and Standards Council/FRSC - Standards/PFRSs - Are
users of financial The accounting standards accompanied by guidance
statements particularly the promulgated by the to assist entities in
measurement of assets and __________ constitute the applying their
liabilities. Comparability highest hierarchy of requirements. Financial
and Uniformity - A set of generally accepted Statements - For
high-quality standards is a accounting principles in ____________________ to
necessity to ensure the Philippines. Philippine be useful, they should be
______________ and Accounting Standards/PAS prepared using Reporting
_____________ in and Philippine Financial standards that are generally
financial statements based Reporting Standards/PFRS acceptable. Generally
on the same financial - The approved statements Acceptable - It means the
information. Downloaded of the FRSC are known as standard has been
by James Camante __________ and established by an
(jamescamante@gmail.co ___________. Philippine authoritative accounting
m) lOMoARcPSD| Financial Reporting rulemaking body, e.g., the
11477470 Accounting Standards/PFRSs - PFRS adopted by the
Standards Council/ASC - Represents the generally FRSC; or the principle has
In the Philippines, the accepted accounting gained general acceptance
development of generally principles(GAAP) in the due to the practice over
accepted accounting Philippines. Financial time and has been proven
principles is formalized Reporting Standards to be most useful, e.g.,
initially through the Council/FRSC - Composed double-entry recording and
creation of the of 15 individuals with a other implicit concepts.
____________________. Chairman who had been or Process of Establishing
Financial Reporting is presently a senior Financial Accounting
Standards Council/FRSC - accounting practitioner and standards - Is a democratic
Replaces the ASC. 14 representative members. process in that majority of
Financial Reporting 3 years - The FRSC practicing accountants
Standards Council/FRSC - Chairman and members must agree with a standard
The accounting standard shall have a term of before it becomes
setting body created by the __________ renewable for implemented. Philippine
PRC upon another term. Philippine Interpretations
recommendation of the Financial Reporting Committee/PIC - Formed
BOA to assist the BOA in Standards/PFRSs - Are by the FRSC in August
carrying out its powers and standards and 2006 and has replaced the
functions provided under interpretations adopted by Interpretations Committee
R.A Act no. 9298. FRSC and comprised of (IC) formed by the ASC in
Financial Reporting PFRSs; PAS and May 2000. Philippine
Standards Council/FRSC - Interpretations. Interpretations
Its main function is to Downloaded by James Committee/PIC - Its role is
establish and improve Camante to prepare interpretations
accounting standards that (jamescamante@gmail.co of PRFS for approval by
will be generally accepted m) lOMoARcPSD| the FRSC and to provide
in the Philippines. 11477470 Philippine timely guidance on
financial reporting issues statements and to promote of PRFS dealing with
not specifically addressed their worldwide acceptance similar and related issues
in current PFRS. and observance. And To b) The Conceptual
Interpretations - Are work generally for the Framework c)
intended to give improvement and Pronouncements of other
authoritative guidance on harmonization of standard-setting bodies d)
issues that are likely to regulations, accounting Accounting Literature and
receive divergent or standards and procedures accepted industry practices
unacceptable treatment relating to the presentation Management - The
because the standards do of financial statements. selection of Accounting
not provide specific and International Accounting policies is the
clearcut rules and Standards Board/IASB - responsibility of the
guidelines. International Publishes standards in a entity's ______________.
Accounting Standards series of pronouncements Downloaded by James
Committee/IASC - Is an called IFRS. And now Camante
independent private sector replaces the IASC. (jamescamante@gmail.co
body, with the objective of International Accounting m) lOMoARcPSD|
achieving Uniformity in Standards Board/IASB - Its 11477470 Accountant -
the accounting principles standard setting process The proper application of
which are used by business includes in the correct Accounting principles is
and other organizations for order research, discussion most dependent upon the
financial Reporting around paper, exposure draft and professional judgment of
the world. It was formed in accounting standard. the _____________.
June 1973 through an January 2005 - The Philippine Interpretations
agreement made by Philippines is fully Committee/PIC - A
professional accountancy compliant with IFRS committee formed by the
bodies from Australia, effective ______________, ASC, the predecessor of
Canada, France, Germany, a process which was FRSC, with the role of
Japan, Mexico, the started back in 1997 in reviewing the
Netherlands, the United moving from USA GAAP interpretations of the
Kingdom and Ireland, and to IFRS. Financial International Financial
the United States of Reporting Standards Reporting Interpretations
America. And is Council/FRSC - Issues Committee(IFRIC) for
headquartered in London, standards in a series of approval and adoption by
UK. Downloaded by James pronouncements called the the FRSC. Board of
Camante PFRS. Hierarchy of Accountancy/BOA - The
(jamescamante@gmail.co Reporting Standards - professional regulatory
m) lOMoARcPSD| When selecting policies, an board created under RA
11477470 International entity considers the No. 9298 to supervise the
Accounting Standards following in descending registration, licensure and
Committee/IASC - Its order: 1)PFRSs 2)In practice of accountancy in
objectives is to formulate absence of PFRS the Philippines. It consists
and publish in the public specifically applies to a of 6 members appointed by
accounting standards to be transaction or event, the President of the
observed in the management shall use its Philippines. It shall elect a
presentation of financial Judgment. a) Requirements vice-chairperson from
among its members for a The standard-setting body organizations and
term of 1 year. Securities of the IFRS Foundation individuals with an interest
and Exchange with the main objectives of in international financial
Commission/SEC - The developing and promoting Reporting. Its role includes
government agency tasked global accounting advising in priorities
in regulating corporations standards and was within the IASB's work
and partnerships, capital established in April 1, program. International
and investment markets, 2001. IASC Foundation - Federation of
and the investing public. Is a non-profit organization Accountants/IFAC - Is a
Some of its rulings affect based in Delaware, USA non-profit, non-
the accounting and is a parent of the governmental, non-
requirements of entities IASB, which was based in political organization of
and the adoption and London. IFRS Foundation accountancy bodies that
application of Accounting - On July 1, 2010, the represents the worldwide
policies. Bureau of Internal IASC Foundation was accountancy profession. Its
Revenue/BIR - renamed to mission is to develop and
Administers the provisions ______________. enhance the profession to
of the National Internal International Financial provide services of
Revenue Code. These Reporting Standards/IFRSs consistently high quality in
provisions do not always - These standards issued by the public interest.
reflect the goals of IASB and that composed International Organization
financial reporting. of IFRSs, IASs and of Securities
However, they do at times Interpretations. Commissions/IOSCO - An
influence the choice of International Financial international body of
Accounting methods and Reporting Interpretations security commissions
procedures. Bangko Committee/IFRIC - Is a wherein the Philippine
Sentral ng Pilipinas/BSP - committee that prepares SEC is a member.
Influences the selection interpretations of how Users' Needs - Financial
and application of specific issues should be Reporting Standards
Accounting policies by accounted for under the continuously change
banks and other entities application of IFRS where primarily in response to
performing banking the standards do not _____________.
functions. Cooperative include specific
Development authoritative guidance and
Authority/CDA - there is a risk of divergent
Influences the selection and unacceptable
and application of accounting practices.
Accounting policies by International Financial
cooperatives. Regulatory Reporting Interpretations
Accounting Principles - Committee/IFRIC - It
Are accounting policies replaced the former
prescribed by a regulatory Standing Interpretations
body such as BSP and Committee in 2002. IFRS
CDA. Advisory
International Accounting Council(previously known
Standards Board/IASB - as SAC) - Is a group of