01 ACTIVITY 01

Intermediate Accounting

Patrick Jeremel Baesa

BSA2A
Mr. Benzon Parinias
Answer each with no more than 5 sentences. (6 items x 5 points)

1.What is the importance of financial statements in business?

The financial statements are essential in a business, for this will evaluates organizations,
standing and competitiveness in the economy whether the business gains profit or loss. This will also
identify future needs of the organization or business. This also needed not only in the business purposes
but also needed by external users such as government and future investors.

2.What happens if companies do not practice the proper recording of transactions and events?

Companies will not be able to identify their income or loss, the company’s future needs and
other things related to financial needs of an organization. It may lead to absolute chaos and resuts a lot
of problems.

3. What is the importance of accounting?

Accounting is defined as the language of the business, it is therefore the one of the most
important process the business needs. It will identify company’s loss, profit, assets, and liabilities. It will
help you to synchronize all the business transactions orderly to make it easier to understands.

4. What are the historical developments of accounting from Sumerian Times to Modern Accounting?

During the Sumerian times they used stoned or clay tablets to record accounting documents.
Ancient Egyptian practiced accounting by recording their goods. An Archaeologist discovered a 3500
year old bone labels inscribed with marks attached to a bags of oil and linen in Abydos. During Greece
period, implemented a complex accounting system to account all the transaction involved. It was kept
during Byzantine Empire. And later on develop the Birth of Accounting, generally founded by Friar Luca
Pacioli. He public a book entitled, Suma Arithmetica, Geometria, Proportioni et Proportionalita,
discussing the debits and credits.

5.Explain at least one (1) function of any accounting standard-setting bodies for financial reporting in the
Philippines.

FRSC (Financial Reporting Standards Council) is a standard setting body that aims to establish
and improve the accounting standards that will be generally accepted in the Philippines.

6.Enumerate the two (2) qualitative characteristics for financial reporting and its subtopics.

  Timeliness. It means that the information needed by the decision makers must be available in
time to provide a timely decision-making.
Understability. This requires financial information to be presented as clear, intelligible, and
concise. It makes the reason choices in making economic decisions.