Lesson 2

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Hello again everyone, we are going to discuss today the Generally Accepted
Accounting Principles. Ano nga ba itong Generally Accepted Accounting Principles?
Every person doing business in the Philippines must comply with the Philippines
Financial Reporting Standards or PFRS. This PFRS is a set of Generally Accepted
Accounting Principles issued by the Accounting Standards Council to govern financial
reporting. Ito yung mga panuntunan kung paano natin irerecord ang mga transactions at
kung paano natin ipepresent ang ating financial statements. So kailangan meron tayong
manual process flow or documentation and reporting guidelines para alam natin kung
paano natin irerecord ang ating mga transactions at pano natin iprepresent ang ating
financial statements. So ano-ano ng ba itong Generally Accepted Accounting Principles
na ito.

Maraming Generally Accepted Accounting Principles pero ang pag-uusapan lang

natin today ay yung commonly used or commonly practiced principles or commonly
known principles, so. ano ano ba yon? First, we have the Business Entity Concept.
Second is Going Concern Assumption. Third, Time Period Assumption. Fourth, Unit of
Measurement or Monetary Unit Concept. Fifth, we have the Revenue Recognition
Convention. Sixth, we have the Matching Principle and Seventh the Consistency
Principle.

Isa-isahin natin ‘yon. Yung Business Entity Concept, ano ba yun? Ano ba ang
ibig sabihin non? Business Entity Concept, business ang ibig sahin ng word na entity ay
person, so yung business ay kinoconsider natin as person, separate and distinct from
owner or owners. So yung pagkatao ng business ay kanya at yung pagkatao ng owners ay
hindi ihahalo sa pagkatao ng business. Meaning to say, yung transaction ng may-ari as a
person ay hindi pwedeng isama doon sa records ng business. In the same manner, yung
nasa business hindi pwedeng pakialaman nung may-ari without proper recording.

Now, ano yung susunod? We have the Going Concern Assumption. Pag sinabi
nating Going Concern Assumption, inaakala natin na pag tayo ay nagtayo ng negosyo, ito
ay pang habang buhay, hindi tayo nagtayo ng negosyo na “Oh, hanggang ten years ka
lang or hanggang one-year ka lang.” unless merong stipulation, kunyare partnership yon
or kunyare makikita sa act o sa nature ng business na hindi talaga iyon pangmatagalan.
Meron tayong tinatawag na joint venture for a specific project yon, hindi yon pang
matagalan, and this is not the usual assumption. Ang usual assumption ang generally
accepted transaction is that kapag nagtayo ka ng negosyo, ay yung panghabang buhay,
pangmatagalan, katulad ng San Miguel Corporation, tuloy-tuloy ang buhay, tuloy-tuloy
ang kanilang pagnenegosyo.
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GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The next principle is the Time Period Principle, although inaassume natin ang
mahabang buhay ng negosyo natin o ng business natin, itong mahabang buhay na to ay
dinidivide according to period. Hindi tayo magrerecord sa simula at gagawa tayo ng
financial statement pagka-bankrupt na tayo, hindi. Ang ating buhay na mahaba, ang
buhay ng business na mahaba ay pinuputol into segment, pwedeng monthly, quarterly,
semi-annual, or annually, pero ang common ay annualy, kinacapture natin yung
transaction natin on an annual basis, kase ang reporting BIR ay annually ang income tax
mo ang due date non ay April 15th of the following year, although meron tayong
tinatawag na quarterly reporting of financial statements, pero ang due date natin is April
15th of the following year. So kinacapture natin ang transactions ng business natin from
January one to December 31 para maireport natin ng April 15.

Another principle is the Monetary Unit Measurement Assumption or Unit of

Measurement Assumption or Monetary Unit Concept. Anong ibig sabihin non? Sa anong
pera, it should be, financial statements should be recorded in terms of money pero sa
anong currency o pera mo dapat irecord ang transactions mo at yung financial statements
mo? It should be in a currency or in a monetary unit kung saan andoon yung business at
kung saan nagsusubmit ng mga reports yung business, so, sa pilipinas kung nandito sa
pilipinas yung business, ang monetary unit na gagamitin ay peso.

Another, another Generally Accepted Accounting Principles is the Revenue

Recognition Convention. Ano ba yung paamaraan ng pagrecognize ng revenue? So, the
generally accepted principle in recognizing revenue is that when the sale has been made
or the revenue has actually been earned, hindi ka pwedeng magrecord ng future revenue
or future sales or promise to sales or promise to sell. Kailangan consummated yung sales
transaction kahit hindi pa nababayaran pero kung may delivery na, there is already a sales
transaction. So, revenue recognition concept, kailan ba dapat irecord ang income or
revenue?

The next one is the Matching Principle, itong Matching Principle naman pertains
to the expenses kelan mo ba irerecord yung mga expense, so, it should match the revenue
for which the expense was incurred. Anong ibig sabihin non? Kailangan itugma natin
tong expenses na to para doon sa income kung bakit natin nagastos ito, kung baga bumili
ka ng merchandise, ibinenta mo ngayon yung merchandise na ‘yon, dapat yung cost na
nakaattach doon sa merchandise o yung expenses na nakaattach doon sa merchandise na
ibinenta mo and mairecord mo sa panahon na nirecord mo yung revenue doon sa
pagbebenta mo ng merchandise.
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GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

And the last principle is the Consistency Principle. Kapag meron kang method ka
na naadopt, kunyare dito sa record matching of sa revenue recognition principle or
revenue recognition concept, meron tayong tinatawag doong accrual basis of accounting
and cash basis of accounting. Kapag ginamit mo yung accrual basis of accounting,
consistently yun yung gagamitin mo taon-taon, hindi pwedeng ngayong taon accrual ka,
sa susunod na taon cash basis ka, hindi pwedeng ganon. In the same manner meron din
tayong method of recording inventory, yung perpetual method and periodic method
pagaaralan natin yan later on, oh, hindi pwedeng ngayong taon na to periodic, sa susunod
na taon perpetual, pagpapalit palitin mo, hindi pwede. Kunyare, sa depreciation meron
kang allowance method na ginagamit. Kunware double declining, pagaaralan din natin
yan o straight line method, hindi pwedeng ngayong taon double declining sa susunod
straight line method hindi pwede ang ganon. So, ang kailangan, consistent ka sa method
na inadapt mo. Kung ginamit o tong method na ‘to sa taon na to, sa susunod na taon yun
pa rin yung method na gagamitin mo. Unless by the nature of your business hindi mo na
pwedeng gamitin yung method na yon pero kailangan meron kang justification sa
pagbabago ng iyong method., okay?

So, here’s are the principles that govern in the recording of the financial
transaction. Kailangan makabisa natin yan, kailangan matandaan natin yan hindi tayo
record lang ng record. May pamantayan ang pagrerecord natin ng transaction and I hope,
pagdating natin sa bookkeeping, subject na ituturo ko sainyo e maalala niyo ito. Tandaan
niyo itong Generally Accepted Accounting Principles ah. Marami yan, pero ito kase yung
basics e ito yung dapat na matutunan niyo sa pagrerecord niyo especially in bookkeeping.

Ireview atin kung ano-ano ito, we have the number one, Business Entity Concept,
yung business may separate, may separate personality from the owner or owners, hindi
pwedeng pagsamahin yung pera ng owner at yung pera ng business. The second one is
Going Concern Assumption Ang going concern assumption anong ibig sabihin? Hindi ka
nagtayo ng business para lang ihinto mo, habang kayang kumita ng business mo, itutuloy
mo siya at minsan kahit nalulugi ka itutuloy mo parin dahil baka makabawi ka sa susunod
na panahon. Time Period Assumption, anong ibig sabihin ng time period assumption?
Yung buhay ng business ay hinahati natin into periods para macapture natin yung
performance ng ating business. The next is Unit Measurement Assumption or Monetary
Unit Concept. Sa anong pera mo irerecord or isusulat yung mga transactions, kailangan
diba sabi natin in terms of money, so anong money ang gagamitin mo, anong currency
ang gagaimtin mo. So, in the Philippines, we are going to use the Philippine Peso as
currency. The next is the Revenue Recognition Concept. Paano mo irerecord ang revenue,
kelan mo irerecord ang revenue when sale has been made or the revenue was earned or
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GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

has been earned, hindi pwede yung future revenue or future sales ay rerecord kaagad
okay? And then we have the Cost Principle or Matching Principle. Sa matching principle,
kelan irerecord ang expense? Ang expense irerecord natin kung saan yung revenue para
doon ay na recognize, kung kelan narecognize ang revenue para sa expense na yon, dapat
doon natin irerecord and expense. And then the last, Consistency Principle. Kapag
nakaadapt ka na ng method of reporting dapat tuloy-tuloy mo yung gagaimtin, from
period to period, ioobserve mo na yun yung method na ginagamit mo.

So that’s all for this episode, ang next topic na natin ay accounting cycle na so
papasok na tayo sa pagrerecord ng mga transaction. So tandaan niyo tong mga principles
na to ha para pag nandoon na tayo sa bookkeeping alam niyo kung ano yung gagawin na.
Pag nandoon na tayo sa accounting cycle kase yung accounting cycle yun na yung
recording of transaction and recording of transactions and preparation of financial
statements.

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bagong video para may maunawan pa kayo about the basics in accounting. See you again
next time, God bless.