Midterms

is an economic entity that produces things of value and is capable of growth.

As defined by the International Financial Reporting Standards, it is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interests) or generating other income from ordinary activities.

This is the starting point of business because this is concerned with the source of funds and assets.

The activities in this group are the main point of operating a business. A company receives an order from a customer, examines the order for credit worthiness, ships goods or provides services to the customer, issues an invoice, and collects paymentwhat

This group is concerned with the purchase of long term assets used in business operations.

Also known as the human resource group, this cluster of activities encompass processes such as hiring, training, promoting, and terminating the services of the company employee.

This group encompasses the ordering of inventory of goods and supplies needed to render services, the receipts of them, and their eventual payment

Also known as the product conversion group or the manufacturing group, is a set of processes in converting raw materials to finished goods.

__________ is the standard of Europe Union (EU) while in the US they use _______.

_____ is more on rule based while the ______ is principle based.

Sectors of Accounting:

Forms of Companies

Types of Companies

Those with total assets of more than 350 million or total liabilities of more than 250 million.

Holders of secondary licenses issued by regulatory agencies, are required to file financial statements for issuing any class of instruments in public market.

Those with total assets of more than 100 million to 350 million or total liabilities of more than 100 million to 250 million.

Those with total assets or total liabilities between 3 million to 100 million.

Those with total assets and total liabilities below 3 million.

Founded in 1929. This group is set to promote and maintain high professional and ethical standards among accountants, advance the science of accounting, develop and improve accountancy education, encourage cordial relations among accountants, and protect the CPA certificate granted by the Philippines.

What PICPA stands for?

is not a professional one, but an organization for undergraduate students of accountancy who will become future CPAs.

What JPIA stands for?

is mandated by law to regulate and supervise the practice of accountancy profession in the Philippines including but not limited to the conduct of the CPA licensure examinations.

What BOA stands for?

is an agency of the Department of Finance that is tasked to collect the taxes of individuals and juridical taxpayers for the government.

What BIR stands for?

is the national government regulatory agency charge with supervision over the corporate sector, the capital market participants, the securities, and investment instrument market, and the protection of investing public (1936).

What SEC stands for?

is an agency under the Department of Finance that supervises and regulates the operations of life and non-life companies, mutual benefit associations, and trust for charitable uses.

What IC stands for?

is the monetary and primary financial system supervisor that supports a strong economy and promotes a high quality life for Filipinos.

What BSP stands for?

regulates and supervises cooperatives in the Philippines

What CDA stands for?

is an independent constitutional commission established by the Constitution of the Philippines. It has the primary function to examine, audit, and settles all accounts and expenditures of the funds and properties of the Philippine Government.

What COA stands for?

is the governing agency tasked to supervise and regulates tertiary education and aims for a Philippine higher education that is locally responsive and globally competitive and serves as a force of lifelong learning, innovation, and social and cultural transformation.

What CHEd stands for?

Qualitative Charactertistics of Financial Statements:

Relevant information is capable of making a difference in the decisions made by users. The relevance of financial information serves as the linkage between the information and the decision being made.

Information is material if omitting, misstating, or obscuring it could reasonably be expected to influence the decision that the primary users of general purpose financial reports make on the basis of those reports, which provide financial information about the reporting entity.

Financial reports represent economic events in words and numbers. They should possess the quality of being reliable, be something sturdy and dependable that users can stand on for decisions. To be useful, financial information must not only represent relevant events, but it must also faithfully represent the substance of the event that it professes to represent.

A complete depiction includes all information necessary for a user to understand the event being depicted, including all necessary depictions and explanation.

A neutral depiction is not slanted, weighted, emphasized, deemphasized, or otherwise manipulated to increase the probability that the financial information will be received favorably or unfavorably by users.

Means that there are no errors or omission in the description of the event, and the process used to produce the reported information has been selected and applied with no errors in the process.

enables users to identify to identify and understand similarities in and differences among items to provide insights on returns (profitability), liquidity, and solvency of the entity relative to other entities and with the same entity of the previous period.

helps assure that the information faithfully represents the economic phenomena it professes to represent

means that the information is available to decision-makers in time to be capable of influencing their decisions.

Classifying, characterizing, and presenting information clearly and concisely makes it understandable.

is a pervasive constraint on the information that can be provided by financial reporting.

Cost Constraints

is the present ability to the direct the use of an economic resource and obtain the economic benefits that may flow from it.

provide information about the elements of financial statements of both the parent and its subsidiaries as a single reporting entity

are designed to provide information about the parent’s financial elements, not those subsidiaries.

this is to help the users of financial statements identify and assess changes and trends, financial statements also provide comparative information for at least one preceding reporting period.

Information about possible future transactions and other possible future events that is useful to the users of financial statements.

Financial statements include information about transactions and other events that have occurred after the end of the reporting period if providing that information is necessary to meet the objective of financial statements.

Financial statements are normally prepared on the assumption that the reporting entity is going concern and will continue to operate for the foreseeable future.

Is a present economic resource controlled by the entity as results of past events. An economic resource is a right that has the potential to produce economic benefits

Criteria of Assets:

Is a present obligation of the entity to transfer an economic resource as a result of past events.

Criteria of Liabilities:

is a duty or responsibility that an entity has no practical ability to avoid.

from an entity’s customary practices, published policies, or specific statements if the entity has no practical ability to act in a manner inconsistent with those practices, policies, or statements.

is the residual interest in the assets of the entity after deducting all its liabilities.

Different classes of equity claims, such as ordinary shares and preference shares, may confer their holders’ different rights.

Sometimes, legal, regulatory, or other requirements affect particular components of equity such as share capital or retained earnings.

Increases in assets or decreases in liabilities that result in increases in equity, other than those relating to distributions to holders of equity claims.

Are decreases in assets or increases in liabilities that result in decrease in equity, other than those relating to distributions to holders of equity claims

Is the process of capturing for inclusion in the statement of financial position or the statement of financial performance, an item that meets the definition of one of the elements of financial statements.

Dare means ?

havere means?

Dare means give.

havere means receive.

Is the removal of all or part of a recognized asset or a liability from an entity’s statement of financial position.

Measures provide monetary information about assets, liabilities, and related income and expenses, using information derived, at least in part, from the prices of the transactions or other events that gave rise to them.

Measures provide monetary information about assets, liabilities, and related income and expenses, using information updated to reflect conditions at the measurement date.

is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The _____ of an asset is the cost of an equivalent asset at the measurement date, comprising the consideration that would be paid at the measurement date plus the transaction costs that would be incurred at that date.

Present and prospective clients are interested in the entity’s ability to provide goods and services in the long term.

Financial reports are the bases of income and other taxes levied by the government.

External, third-party auditors are tasked to examine financial reports to determine if these are prepared in accordance with accounting standards.

Public interest groups like consumer and environmental protection and corporate responsibility advocate groups are interested whether entities fulfill their duties as good corporate citizens beyond attaining their profit goals.

The governing body of the entity is responsible for the stewardship of resources—financial and others.

The most important resources of the entity need financial information for matters concerning their service to the entity—short-term and long-term prospects of employment and benefits.

Categories of Users of Financial Information