Tell Me About Yourself

I started with SGV & Co 2 years ago, as an auditor. Pursuing public practice after obtaining my CPA
license wasn’t my first choice so I applied as an accountant in a private firm. But after a year, I decided
to leave and apply in SGV where I am still currently working. I admit, I applied for the job out of peer
pressure.

Peer pressure- it pushes you to do things out of your comfort zone. For that, I was grateful. I never
pictured myself working with one of the country’s top auditing firms and one of the Big 4 Firms
worldwide. EY opened up, lot of opportunities for me.

As an external auditor, it’s my responsibility to ensure the company I am assigned for gives a true and
fair view of its financial position. It’s a high pressure role that’s constantly changing.

Pre covid, I spent the majority of my working days out with clients, carrying a large amount of tests and
procedure across many areas.

I think the highlight of my working day is the wide spectrum of people I’ll come into contact with. My
people facing skills has been tested as I regularly communicate with a wide range of external and
internal individuals.

But pandemic happened and we are instructed to do work from home set up. Doing remote audit
especially during busy season as really challenging. But fast forward to today, I was able to survive 2
busy seasons of audit in SGV. Although overwhelming and difficult, it was fulfilling and proud to finish
engagement during this time.

While I am grateful for EY for everything, public practice has become my comfort zone for years now,
and it is time for me to seek a different career path outside of it and make it my new one. I would love
to work and still be surrounded with smart and innovative people where I can share my perspective and
ideas.

Strength

1. I think, I’m quite good in handling stress and pressure, this is one of the things I learned while
working in SGV.

Working with multiple engagements is really overwhelming and stressful. My seniors and managers
would always tell me to plan the day or the whole week already. I ensure to create my to-do-lists and
prioritize my work in order of urgency. Some of the most valuable tips I gathered are time management
strategies. For example, instead of focusing on only one audit area at a time, I learned that I can
manage my time more effectively if I give the client a list of everything I will need for the entire audit.

2. I always see on my senior’s feedback every after the end of an engagement, that I always made
myself available whenever the team needs me. Usually in audit, there’s really no boundary on your work
life and personal space especially during this pandemic. I considered this as strength but also my
weakness since I tend to overwork and compromising my health already. I wish to be in a company that
value the personal space of their employees because I think this is also important to keep someone
motivated to work.
3. My seniors and managers would also tell me that I know how to handle clients quite well. I think,
good communication with clients, be it personal or virtual is really important to keep a healthy working
environment.

How to Explain the Accounting Equation?

A = L+E

Let’s say for example I am planning to sell cakes and pastries and make this as my business. To start my
business, I will need to have the necessary tools and ingredients for baking. Let’s also say I have 2000,
and lend it to my business. In addition, I borrowed another 2000 to my friend to finance my business.

The P4000 cash is the Asset or the stuff the business owns. The same way that I have a liability of 2000,
the stuff that the business owes to a third party or to my friend, and 2000 equity, this is the stuff that
the business owes to the owner.

How to Explain Accounting to a five-year old child.

Accounting is important for anyone who wants to manage money efficiently. Understanding your
cashflows or where your money comes from and where it goes puts you in a solid to make financial
decisions.

If I were to teach a child what is accounting, I will start of with introducing her to personal finance by
keeping track of her own expense by setting up a form or a notebook where she can put the amount of
money she is expecting to receive or have been received in a period of time, in her case, her allowance.
Next is to list all her expenses, such as payment for her food, school supplies, toys, etc. With this, she
would be aware of his money and hopefully at 5, he will understand at a very base level, the value of
money. I think, personal finance is part of the journey and will make her accountable with actual value.
Definitely, this is also a good time to teach her addition and subtraction. Afterall, accounting is the
process of summarizing, recording and analyzing financial transactions.

Sales, Cost, Gross Margin.

As a business owner, you calculate a variety of figures to determine your company’s financial health.
One of these figures to keep on your radar is gross margin.

Gross margin is your business’s net sales minus your cost of goods sold (COGS). Basically, gross margin is
the revenue your company has after incurring direct costs from producing your goods or services.

Your net sales show the revenue your business makes after deducting things like discounts, returns, and
allowances from your profits. To find net sales, subtract deductions (e.g., discounts) from your gross
sales.

Cost of goods sold is how much it costs to produce your products or services. Your COGS can include
things like direct materials and direct labor expenses. To calculate your COGS, add your beginning
inventory and purchases during the period together. Then, subtract your ending inventory.

Gross Margin = Net Sales – Cost of Goods Sold

The higher your gross margin is, the more efficient your business is at producing its goods and services.
Depreciation vs. Amortization

When a company acquires assets, those assets usually come at a cost. However, because most assets
don't last forever, their cost needs to be proportionately expensed based on the time period during
which they are used. Amortization and depreciation are methods of prorating the cost of business assets
over the course of their useful life.

Amortization

Amortization is a method of spreading the cost of an intangible asset over a specific period of time,
which is usually the course of its useful life.

Intangible assets are non-physical assets that are nonetheless essential to a company, such as patents,
trademarks, and copyrights. The goal in amortizing an asset is to match the expense of acquiring it with
the revenue it generates.

Depreciation

Depreciation is a method of spreading the cost of an asset over a specified period of time, typically the
asset's useful life.

The purpose of depreciation is to match the expense of obtaining an asset to the income it helps a
company earn. Depreciation is used for tangible assets, which are physical assets such as manufacturing
equipment, business vehicles, and computers. Depreciation is a measure of how much of an asset's
value has been used up at a given point in time.

Differences

The key difference between amortization and depreciation is that amortization is used for intangible
assets, while depreciation is used for tangible assets.

Another major difference is that amortization is almost always implemented using the straight-line
method, whereas depreciation can be implemented using either the straight-line or accelerated
method.

Finally, because they are intangible, amortized assets do not have a salvage value, which is the
estimated resale value of an asset at the end of its useful life. Depreciated assets, by contrast, often
have a salvage value. An asset's salvage value must be subtracted from its cost to determine the amount
in which it can be depreciated.

When should costs be expensed and when should costs be capitalized?

Costs are reported as expenses in the accounting period when they are used up, have expired, or have
no future economic value which can be measured.

Costs are capitalized (recorded as assets) when the costs have not been used up and have future
economic value.

P500,000 paint, immaterial in terms of total assets

I think it should be capitalized since the paint adds value to the building. Aside from enhancing the look
of the building, having a building painted will protect the building or the structures from the water and
sun, well painted surfaces also are easier to keep and clean I think.

Tho, this is a management decision, as an accountant, my opinion is to capitalized this.

-------------------------

How would you recognize the increase/decrease in value of fixed asset?

KEY TAKEAWAYS

Sometimes, a company's fixed assets - such as property, plant, & equipment - will experience substantial
changes in their market prices.

When this occurs, the company must account for changes in value using either the cost method or
revaluation techniques.

Accounting rules allow for either methodology, so management discretion must be used to choose the
most appropriate model.

Cost Model

The most straightforward accounting approach is the cost model. With the cost model, a company's
fixed assets are carried at their historical cost, minus the accumulated depreciation and accumulated
impairment losses associated with those assets. The cost model does not allow for upward adjustments
in the value of an asset based on the fair market value.

The primary reason companies might choose the cost approach to valuation is that the resulting number
is much more of a straightforward calculation with far less subjectivity. However, this approach does not
offer a way to arrive at an accurate value for non-current assets since the prices of assets are likely to
change with time—and the price doesn't always go down. Quite often, they go up. This is particularly
true for assets such as property or real estate.

Revaluation Model

The second accounting approach is the revaluation model. With the revaluation model, a fixed asset is
originally recorded at cost, but the carrying value of the fixed asset can then be increased or decreased
depending on the fair market value of the fixed asset, normally once a year. If an asset reduces in value,
it is said to be written down. Under International Financial Reporting Standards (IFRS), assets that are
written down to their fair market value can be reversed, while under generally accepted accounting
principles (GAAP), assets that are written down remain impaired and cannot be reversed.
The main advantage of this approach is that non-current assets are shown at their true market value in
financial statements. Consequently, the revaluation model presents a more accurate financial picture of
a company than the cost model. However, revaluation must be re-done at regular intervals, and
management may sometimes be biased and assign a higher revalue than is reasonable for the market.

Revaluation vs. Cost: How Do You Choose?

The decision of choosing between the cost method or the revaluation method should be made at the
discretion of management. Accounting standards accept both methods, so the deciding factor should be
which method is the best fit for the unique needs of the business in question. If the business has a
greater proportion of valuable non-current assets, revaluation might make the most sense. If not, then
management may need to go deeper to reveal the factors needed to make the best decision.

Just remember that for a revaluation model to function properly, it must be possible to arrive at a
reliable market value estimate. If reliable comparisons to similar assets (such as past real estate sales in
a neighborhood) are possible, then the subjectivity of the revaluation is decreased, and the reliability of
the revaluation increases.

Inventory

Free on board (FOB) is a trade term used to indicate whether the buyer or the seller is liable for goods
that are lost, damaged, or destroyed during shipment.

Free on board shipping point indicates that the buyer takes responsibility for loss or damage the
moment the goods get to the shipper.

Free on board destination indicates that the seller retains liability for loss or damage until the goods are
delivered to the buyer.

Inventory costing, also called inventory cost accounting, is when companies assign costs to products.
These costs also include incidental fees such as storage, administration and market fluctuation.
Generally accepted accounting principles (GAAP) use standardized accounting rules to ensure
companies do not overstate these costs.

Inventory costing is a part of inventory control technique. Proper inventory control within a supply chain
helps reduce the total inventory costs and assists in determining how much product a company should
carry. All this information helps companies decide the needed margins to assign to each product or
product type.

Intercompany Accounting

Intercompany accounting is a set of procedures used by a parent company to eliminate transactions

occurring between its subsidiaries. For example, if one subsidiary has sold goods to another subsidiary,
this is not a valid sale transaction from the perspective of the parent company, since the transaction
occurred internally. Consequently, the sale must be removed from the books at the point when the
consolidated financial statements of the parent company are being prepared, so that it does not appear
in the financial statements.

Intercompany accounting is defined as all financial and commercial transactions carried out and
recorded between the different entities of a single group or corporation, as well as the “elimination” of
these flows at the closing of the financial year.

Intercompany accounting is relevant for all companies with external bodies or subsidiaries abroad. In
most jurisdictions, drawing up consolidated accounts for intercompany flows is a requirement for
companies of a certain size. This involves reviewing transactions that are both reciprocal (intercompany
transactions or “intercos”, as they are conventionally known) and non-reciprocal.

What are your thoughts on a work from home arrangement?

You need a lot of self-discipline. Getting up and focusing on work every day when you are in your home
environment takes a great deal of self-discipline and motivation.

It's harder to shut down. There can be less distinction between work and personal life when you work
from home, making it harder to shut down and more likely that you will overwork.

There's less ad hoc learning. Office workers are constantly in a position to learn from their peers. When
you work from home, you will need to make an extra effort to seek out networking and learning
opportunities on your own.

Pros

There is no commute. Not having a long commute to and from work can save a great deal of time and
money. It can even reduce your daily stress levels.

There is greater flexibility. Working from home allows you to work during your most productive times,
wear what you're most comfortable wearing and create a workflow that works for you.

You can reduce distractions. While there may be distractions at home, you control them much easier
than you can control distractions that come from coworkers, employees, and other office-based noise.

Your day is often less stressful. When you work from your home, you have more control over your stress
level and can more easily walk away or take a break when work gets particularly crazy.
You can save money. Not only can you save money by avoiding the long commute, but you can also
write off a portion of your home office expenses on your taxes when you work from home.

You can improve your work/life balance. Many professionals struggle with finding a balance between
work and their personal lives. Working from home can make this balance a little bit easier to find and
maintain.

There is no commute. Not having a long commute to and from work can save a great deal of time and
money. It can even reduce your daily stress levels.

There is greater flexibility. Working from home allows you to work during your most productive times,
wear what you're most comfortable wearing and create a workflow that works for you.

You can reduce distractions. While there may be distractions at home, you control them much easier
than you can control distractions that come from coworkers, employees, and other office-based noise.

Your day is often less stressful. When you work from your home, you have more control over your stress
level and can more easily walk away or take a break when work gets particularly crazy.

You can save money. Not only can you save money by avoiding the long commute, but you can also
write off a portion of your home office expenses on your taxes when you work from home.

You can improve your work/life balance. Many professionals struggle with finding a balance between
work and their personal lives. Working from home can make this balance a little bit easier to find and
maintain.

What would you choose high AP, or high AR?

Accounts Payable pertains to amount you owed to someone. For example, you purchased something
and you have no available cash yet at the moment and agreed to pay in the future.

Accounts Receivable pertains to an amount you are expecting to receive as a payment of something you
have sold or an exchange of a service you rendered.

I would rather choose high AR, since it signifies future cash inflow.

Recognition of customer deposits

Dr Cash; Cr Advances from customer

Considered as a liability until the company performed the services or goods agreed upon.

Dr Advances fro customer; Cr Revenue

Example: Free asset from customer

Let’s say that you enter into a contract with a manufacturing company to process some wood for their
one-off project.
You agree that you will use the client’s wood processing machine.

The contract specifies that the price for the wood processing is CU 1 000 and you can keep the machine
(since the client will not need it anymore and it is not new).

Let’s say that the fair value of a machine is CU 300.

Thus your transaction price is CU 1 300 and you will recognize the machine at its fair value of CU 300 (it
then becomes machine’s cost) at the moment when you gain the full control of a machine.

When that happens?

It depends on the specifics of the contract – sometimes it may happen right in the start of executing the
contract (e.g. you take the machine to your premises and work there), sometimes it may happen in a
different time (e.g. when you can use the machine only at your client’s premises and take it only after
the contract is executed).

If you receive a free asset from a customer outside any contract, then again, you need to find a different
solution. Read on!

Inventory items given for free

We should measure the separate asset at its cost.

We might need to allocate the total purchase price to all assets based on their fair values or current SRP.

Lets say that I purchased a total of P5000 for 5 items of dress, meaning 1000 per item. And separately, I
received one free item. This similar item trades for P500. The total selling price would be 5500.

1000/5500*5000=909*5=4545

500/5500*5000=500=454

The cost of the items will be lower compared to its original price since the additional item is sort of
discount.

How about you sell this free items?

We should recognize the corresponding cost of sale based on the allocated cost.

Dr COS; Cr Inventory

How about you also used this as a free item to your customer.

Since these items are classified as assets, The value of the free items would be whatever it cost your
business to buy them or get them made.

Dr Marketing Expense; Inventory

If may need si client, tapos walang ibang gagawa, gagawin mob a kahit di mo job?
Taking on someone else’s project without a second thought could end up negatively impacting the final
product of both my work and your colleague’s. It’s not actually helpful if I do someone’s work poorly for
them.

I would first need to assess my workload first and see what needs to be prioritized before answering.

If I have a lot on my to-do list, but some of my tasks are able to be pushed back a couple days. I will ask
my senior or manager if there’s anything I can deprioritize in order to help out.

If it’s okay with my superior, I will try to do the job, I think taking on new responsibilities—even if it’s not
entirely in my job description would be an opportunity to learn new skill.

Criteria to recognize liability

The outflow of resources embodying economic benefits (such as cash) from the entity is probable.

The cost / value of the obligation can be measured reliably.

Liability:

present obligation as a result of past events settlement is expected to result in an outflow of resources
(payment)

Contingent liability:

a possible obligation depending on whether some uncertain future event occurs, or a present obligation
but payment is not probable or the amount cannot be measured reliably

Contingent asset:

a possible asset that arises from past events, and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
the entity.

Recognition of a provision

An entity must recognise a provision if, and only if: [IAS 37.14]

a present obligation (legal or constructive) has arisen as a result of a past event (the obligating event),
payment is probable ('more likely than not'), and the amount can be estimated reliably.

An obligating event is an event that creates a legal or constructive obligation and, therefore, results in
an entity having no realistic alternative but to settle the obligation. [IAS 37.10]

A constructive obligation arises if past practice creates a valid expectation on the part of a third party,
for example, a retail store that has a long-standing policy of allowing customers to return merchandise
within, say, a 30-day period. [IAS 37.10]

A possible obligation (a contingent liability) is disclosed but not accrued. However, disclosure is not
required if payment is remote. [IAS 37.86]
Balance Sheet

Finance people often use phrases such as “statement of financial position” and “report on financial
condition” when referring to a balance sheet. This report provides a glimpse into a company’s economic
resources, liabilities and equity items. Reviewing a balance sheet enables investors to answer key
questions about corporate liquidity and solvency. Liquidity is a mark of a profitable activity that
generates more cash than it spends. A solvent initiative or company is one that holds more assets -- the
other name for economic resources -- than debts.

Income Statement

Securities-exchange players -- those who buy and sell stocks and bonds on markets such as the New
York Stock Exchange -- pay attention to an entity’s income statement to figure out specific ways top
leadership is addressing the profitability question. Things they watch closely include policies to grow
sales, blueprints to maintain or expand market share and tactics to reduce expenses and rein in waste
over time. Financial specialists often refer to an income statement as a statement of profit and loss,
report on income or P&L. This financial data summary consists of revenue, expenses and net income --
or loss, if expenses are greater than revenue items.

Statement of Cash Flows

Business reporters often describe a negative statement of cash flows as a symptom of institutional
dysfunction, touting the report as proof that corporate management is not effectively managing
company money. You can see signs of poor or inefficient money management by delving into the three
sections making up a liquidity report: cash flow from operating, investing and financing activities.
Regulatory guidelines require this precise classification to lift the veil on things such as liquidity
management, profitability, investment management and expense reduction. In a financial lexicon, the
terms “statement of cash flows,” “liquidity report” and “cash flow statement” are interchangeable.

Equity Statement

An equity statement showcases which investor group plays a central role in fighting the fundraising
problem a business is facing. In the report, you see elements such as common stockholders and
preferred stockholders. Common stockholders receive periodic dividends, can vote on important
company matters and make money when share prices go up. Preferred shareholders -- the other name
for stockholders -- typically hold the same advantages as common stockholders but have higher priority
in dividend distributions.

What does it mean to have negative working capital?

If your current liabilities outweigh your current assets, then you will have a negative figure, this is known
as negative working capital.
So what does this mean for your business?

Negative working capital is generally seen as a bad thing. On the surface your short term available assets
simply won’t cover your short term debts. It means you might have salaries to pay and not enough
money to pay them!

However, a negative working capital is not always bad.

Why is negative working capital not necessarily bad?

If managed efficiently, a negative working balance doesn’t have to be bad. There are a few reasons why
investors would consider a short term negative working capital a good sign and I’ll explain them below.

A working capital balance arises when the company collects cash upfront and pays back the supplier
with that cash immediately. Supermarkets and restaurants could be an example of such companies. It
reflects efficient management of cash.

Similarly, a company can use the cash collected at the point of sale to invest in the company rather than
paying back the creditors. This would reduce accounts receivable and have no impact on accounts
payable and would result in a reduction in working capital. However, it also suggests business growth
hence; investors would be more likely to invest.

Negative working capital could also result from borrowing a loan from a bank. However, it wouldn’t be
considered bad if the loan has been obtained to invest in the company for example a plant or a new
branch, etc. The loan would increase the turnover of the company but would obviously be paid off
yearly. Hence, the current maturity portion of bank loans would have a negative impact on working
capital as well as the interest cost.

Companies that are subscription-based or contract-based also have a continuous negative working
capital balance; even though the cash is collected, it hasn’t been earned which is why it is classified as an
accrual. A subscription-based company performs its obligations in the long run even though the cash has
already been collected and due to a high accrual balance, it results in a continuous negative working
capital balance at all times.

LIFO

LIFO method means Last In First Out is the method of removing the last entered item. For example in a
clothing store. The clothing store will display the most recent model shirt in the window. This new
model dress is the last one to come. If you put the first item come, then the latest item will be sold for a
long time and there is risk of out of the date style. So the last item received must be sold first. This is
why LIFO only applicable for business long-lasting products, non-perishable, easily stored to distinguish
which inventory is first purchased with the last purchased. Some examples of business that apply this
method are are garment / clothing, electronics or technology products, and bookstores.