Chapter 1 Acctg

Front 1

Accounting defined by the American Accounting Association

Back 1

The process of identifying, measuring, and communicating economic information to permit informed judgements by users of information

Front 2

1. Identifying2. Measuring3. Communicating

Back 2

3 important activities in the acctg process

Front 3

Identifying

Back 3

Involves the recognition and non- recognition of business activities as accountable events

Front 4

Transactions & events

Back 4

Are recognized only if they have effects on assets, liabilities, and owner's equity

Front 5

Identifying

Back 5

Analysis of transactions

Front 6

Identifying

Back 6

Analytical component of acctg

Front 7

Measuring

Back 7

Involves the assigning of monetary amounts to the accountable ecinomic transactions and events

Front 8

Unit of measure

Back 8

Is usually the currency of a country where the business was organized and where the financial statements are submitted to the regulatory agencies

Front 9

Historical cost

Current value

Back 9

Amounts used in measuring financial transactions

Front 10

Historical cost

Back 10

Most common measures of financial transactions

Amounts presented in the general purpose financial statements

Front 11

Current value

Back 11

Is the concept that assets and liabilities be measured at the current value at which they could be sold

Front 12

Accounting

Back 12

The recognition and measurement of economic resources and obligations

Front 13

Accounting

Back 13

The recognition and measurement of economic resources and obligations

Front 14

Accounting

Back 14

Does not measure sociological and psychological matters

Front 15

Communicating

Back 15

Involves the preparation and distribution of accounting reports to potential users of acctg info

Front 16

Communicating

Back 16

Formal component of acctg

Front 17

Acctg information

Back 17

Must be communicated to the end users like the investors, owners, creditors and govt so that they could make informed judgement and appropriate decisions

Front 18

Financial reports

Back 18

Enable users to determine the financial condition, performance and cash flow of an organization

Front 19

Accounting

Back 19

Is considered as the language of business

Front 20

Defined by the Committee on Accounting Terminology of the American Institute of Certified Public Accountants (AICPA)

Back 20

An art of recording, classifying and summarizing

Front 21

1. Recording or journalizing

2. Classifying

3. Sunmarizing

4. Interpreting

Back 21

4 mechanical phases in acctg

Front 22

Recording or journalizing

Back 22

Involves the routine and mechanical process of committing to writing business transactions and events

Front 23

Classifying

Back 23

Involves the sorting or grouping of similar items into their respective kinds

Front 24

Classifying

Back 24

This is done through the process of posting information from the journal to the ledger

Front 25

Summarizing

Back 25

Involves the determination of the balances of each account in the ledger

Front 26

Interpreting

Back 26

Analytical phase of acctg

Front 27

Interpreting

Back 27

Involves giving meanings to the amounts, ratios, trends, and other information derived from the financial statements

Front 28

Defined by the Philippine Accounting Standards Council

Back 28

Acctg is defined as a service activity

Front 29

Philippine Acctg Standards Council (ASC)

Back 29

Function: to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions

Front 30

Luca Pacioli

Back 30

Father of accounting

Front 31

Summa de Arithmetica, Geometria, Porpotioni et Proportionalita

Back 31

Famous book published in Venice in the year 1494

Front 32

Double- entry accounting system

Back 32

The method bookkeeping used by merchants during the Italian Renaissance

Front 33

Merchants

Back 33

Kept their accounts in bilateral form with debits recorded on the left side of the page across from the credits

Front 34

Ledger

Back 34

Includes assets, liabilities, capital, income and expense accounts

Front 35

Certification of books

Ethics and cost acctg

Back 35

Luca Pacioli's books includes topics on:

Front 36

Luca Pacioli

Back 36

He described the year- end closing entries

Front 37

Merely described

Back 37

Luca Pacioli did not invent the double- entry bookkeeping but

Front 38

Oracle, PeopleSoft and SAP (Systems Application Products)

Back 38

Are world players in this re- conceptualization of acctg as a data-base information system

Front 39

Freshbooks

Peachtree Complete Accounting

MYOB

Quickbooks Pro

Back 39

Excellent acctg software packages in the market place

Front 40

Accounting system

Back 40

Generates the much needed financial information for decision making

Front 41

Management

Back 41

Analyzes this information and develops trends when applicable

Front 42

Accounting system

Back 42

These data are processed and summarized in the form of financial statements

Front 43

Nature

Back 43

Man is sinful by

Front 44

Objective and fair

Back 44

Establishment of an effective acctg system and internal control had helped accountants and business people to remain _________ in the preparation of reports and in the management

Front 45

Accounting

Back 45

Serves as an instrument to check and control actions of personnel in business and government.

Helps eliminate doubts on the integrity of people in charge or organizations' cash and other assets

Front 46

Transparency

Back 46

Helps maintain objectivity, honesty and integrity on personal and organizational levels

Front 47

1. Primary users

2. Other users

Back 47

Users of financial information

Front 48

Primary users

Back 48

Are the parties to whom general purpose financial reports are primarily directed

Front 49

Primary users

Back 49

Users that cannot require reporting entries to provide information directly to them

Front 50

Primary users

Back 50

They rely on the general purpose reports

Front 51

A. Existing and potential investors

B. Lenders and other creditors

Back 51

Primary users and their information needs are:

Front 52

Investors or the providers of risk capital

Back 52

Are concerned with the risk inherent in and return provided by their investments

Front 53

Shareholders

Back 53

Are also interested in information which enables them to assess the ability of the entity to pay dividends

Front 54

Other Users

Back 54

Are users of financial information other than primary users

Front 55

Other users

Back 55

Are parties that may find the general purpose financial reports useful but the reports are not primarily connected to them

Front 56

A. Employees

B. Customers

C. Government and their agencies

D. Public

Back 56

Other users and their information needs are:

Front 57

Employees

Back 57

Stability and profitability of their employees so that they can assess the ability of the enterprise to provide: remuneration, retirement benefits, and employment opporrunities

Front 58

Customers

Back 58

Continuance of the enterprise especially on long- term involvements

Front 59

Government and their agencies

Back 59

They regulate the activities of the enterprise

Front 60

Government and their agencies

Back 60

Determine appropriate policies like taxation policies

Front 61

Public

Back 61

Financial statements assist the public by providing information about the trends and range of activities of organizations

Front 62

Business organizations

Back 62

Primary motive - profit

Front 63

1. Sole proprietorship

2. Partnership

3. Corporation

4. Cooperative

Back 63

Legal forms of business in the PH

Front 64

Sole proprietorship

Back 64

Simplest form of business organization

Front 65

Sole proprietorship

Back 65

Owned by only one person who generally acts as the manager

Front 66

Partnership

Back 66

Formed by two or more persons

Agreed to contribute money, property or industry into a common fund with the intention of dividing the profits among themselves (Art. 1767 of the New Civil Code)

Front 67

Corporation

Back 67

Is an artificial being created by operation of law having the right of succession and the powers, attributes and properties expressly authorized by law or incidental to its existence

Front 68

RA No. 11232

Back 68

Known as the Revised Corporation Code of the Philippines

Front 69

Corporation

Back 69

Has a greater source of capital compared to the sole proprietorship and the partnership

Front 70

Cooperative

Back 70

Is an autonomous and duly registered association of persons, with a common bond of interest

Front 71

RA 9520

Back 71

Known as the Cooperative Code of the Philippines of 2008

Front 72

Cooperative Development Authority

Back 72

Is the sole government agency mandated to register all types of cooperatives

Front 73

Limited Liability Company (LLC)

Back 73

A hybrid between a partnership and a corporation

Front 74

1. Service concern

2. Merchandising

3. Manufacturing

4. Agriculture

Back 74

Business firms may also be classified according their nature:

Front 75

Service concern

Back 75

Render services ro client

Front 76

Merchandising

Back 76

Derive their income from the sale of merchandise

Are concerned with the buying and selling of goods in the same form

Front 77

Manufacturing

Back 77

Purchase raw materials, convert them into finished products and sell these finished products at a profit

Front 78

Agriculture

Back 78

Are concerned with the planting of crops or raising animals, and selling of their products wether in raw or finished form at a profit

Front 79

Generally Accepted Accounting Principle (GAAP)

Back 79

Represent the rules, procedures, practice and standards followed in the preparation and presentation of financial statements

Front 80

Securities and Exchange Commission

Back 80

SEC

Front 81

Financial Executives of the Philippines

Back 81

FINEX

Front 82

Bangko Sentral ng Pilipinas

Back 82

BSP

Front 83

Board of Accountancy

Back 83

BOA

Front 84

1. FRSC

2. IASB

3. PICPA

Back 84

Organizations that have contributed to the development of acctg standards in the PH

Front 85

Financial Reporting Standards Council

Back 85

FRSC

Front 86

FRSC

Back 86

Accounting standard setting body

Front 87

FRSC

Back 87

Was created by the Professional Regulation Commission (PRC)

Front 88

FRSC

Back 88

Is composed of 15 members with a term of 3 years and is renewable for another term

Front 89

IASB

Back 89

Replaced the International Accounting Standards Committee (IASC)

Front 90

International Financial Reporting Standards

Back 90

IFRS

Front 91

IFRS

Back 91

Formed part of the Philippine Financial Reporting Standards

Front 92

Philippine Institute of Certified Public Accountants

Back 92

PICPA

Front 93

PICPA

Back 93

Is a national organization of Certified Public Accountants in the PH

Front 94

Members of PICPA

Back 94

Are often involved in the improvement of acctg standards in the PH

Front 95

A. Association of Certified Public Accountants in Public Practice

B. Government Association of Certified Public Accountants

C. Association of Certified Public Accountants in Commerce and Industry

D. National Association of Certified Public Accountants in Education

Back 95

Different Sectoral Organizations

Front 96

Association of CPA in Public Practice

Back 96

ACPAPP

Front 97

Government Association of CPA

Back 97

GACPA

Front 98

Association of CPA in Commerce and Industry

Back 98

ACPACI

Front 99

National Association of CPA in Education

Back 99

NACPAE

Front 100

ACPAPP

Back 100

Perform auditing, taxation, or management advisory services

Front 101

GACPA

Back 101

Employed by the government

Front 102

ACPACI

Back 102

Employed in private firms

Front 103

NACPAE

Back 103

Employed in learning institutions

Front 104

1. Cost principle

2. Liability recognition principle

3. Income recognition principle

4. Matching principle

5. Accrual

Back 104

Examples of accounting principles

Front 105

Cost principle

Back 105

Assets should be recorded initially at original acquisition cost

Front 106

Liability recognition principle

Back 106

A liability is recognized when it is probable that an outflow of resources embodying economic benefits will be required for the settlement of present obligation

Front 107

Income recognition principle

Back 107

Income should be recognized when earned rather than when cash is received

Front 108

Matching principle

Back 108

All costs and expenses incurred in earning revenue should be reported in the same period

Front 109

Accrual

Back 109

Income is recognized when earned regardless of when received and expense is recognized when incurred regardless of when paid

Front 110

Accountancy

Back 110

Is a noble and a prestigious profession

Front 111

1. Public accounting

2. Private accounting

3. Government accounting

Back 111

CPAs generally practice their profession in 3 main areas:

Front 112

Public accounting

Back 112

Accountants who render acctg services on a fee basis

Front 113

Private accounting

Back 113

Accountants employed by a particular business firm or not-for-profit organizations

Front 114

Government accounting

Back 114

Those that render services to the government

Front 115

Cpa

Back 115

Is a person who holds a valid certificate of registration and a valid professionial identification card

Front 116

The Philippine Accountancy Act of 2004 (RA No. 9298)

Back 116

Repealed the revised accountancy law

Front 117

The board of accountancy

Back 117

Is the body authorized by law to promulgate rules and regulations affecting the practice or the accountancy profession in the PH

Front 118

1. Certified Management Accountants Examination

2. Certified Accounting technicians

3. Certified Bookkeeper and Certified Cost Accountant

Back 118

International Examinations

Front 119

CMA exam

Back 119

Is an international examination that is given to financial managers, executives or analysts who have at least 3 years of managerial experience

Front 120

CAT

Back 120

Is an entry qualification im finance and accounting professions designed to equip the students with the necessary skills at a technician

Front 121

Certified Bookkeeper and Certified Cost Accountant

Back 121

Are now administered in the PH for qualified graduates after a review conducted accredited organizations in the Philippines

Front 122

1. Integrity

2. Objectivity

3. Professional Competence and Due care

4. Confidentiality

5. Professional Behaviour

Back 122

Code for professional accountants in the Ph states the ff fundamental principles

Front 123

1. General or financial accounting

2. Auditing

3. Management advisory services or management accounting

4. Tax accounting

5. Accounting system

6. Government accounting

7. Accounting education or instruction

8. Cost accounting

Back 123

Specialized acctg fields

Front 124

1. General or financial accounting

2. Auditing

3. Management advisory services or management accounting

4. Tax accounting

5. Accounting system

6. Government accounting

7. Accounting education or instruction

8. Cost accounting

Back 124

Specialized acctg fields