Accounting Research (1st Sem AY 2020-2021) Assignment 6

Marbella, Melch Yvan R. October 14, 2020

The Environment of Accounting Research dealing with :

a. Rule-Based vs Principles-Based Accounting Standards

 Rules based accounting standards basically are a set of rules that must be

followed otherwise, they would be facing sanctions whilst, Principle Based

accounting standards are guidelines, in layman’s term, suggestion which

imposes no penalties or whatsoever for noncompliance. [ CITATION Tho19 \l

1033 ]

 Some accounting systems, usually consists of both Rule-based and

Principles-based. For instance, principles are needed for recording new

assets, whilst rules are useful on protecting investors. [CITATION Eri17 \l 1033 ]

b. Financial Accounting and Reporting Standards

 The nature of Financial Accounting and Reporting Standards is that it keeps

track of an institution’s financial transactions, using standardized guidelines,

the transactions are recorded summarized and presented in a financial

statement.[ CITATION Ave20 \l 1033 ]

c. Governmental Accounting Standards

 Governmental accounting standards primarily focuses on maintaining tight

control over resources, while also allocating funds into different activities. This

approach is used by ALL types of government entities. The primary

organization that is responsible for creating and updating these standards

is the Governmental Accounting Standards Board (GASB). The GASB is

tasked with the development of accounting and financial reporting

standards for state and local governments [ CITATION Ste19 \l 1033 ]

Accounting Research (1st Sem AY 2020-2021) Assignment 6
Marbella, Melch Yvan R. October 14, 2020

d. Other Organizations Influencing Accounting Standards

 Financial reporting—balance sheets—income statements—financial notes

and disclosures—is the language we use to communicate information about

the financial condition of a company, public or private, a not-for-profit

organization, or a state or local government. In the United States, the

organizations that greatly influence the accounting standards are as follows:

o Financial Accounting Standards Board (FASB)

 Equivalent to the Philippines’s own FASB

o American Institute of Certified Public Accountants (AICPA)

 The counterpart of Philippine Institute of Certified Public

Accountants or commonly known as PICPA

o Securities and Exchange Commission (SEC)

 Equal to Philippines’s SEC

o Internal Revenue Services

 The Philippines’s BIR’s Counterpart

[ CITATION Gen \l 1033 ]