FINANCIAL REPORTING AND ACCOUNTING

BSA12M1
ASSIGNMENT -MARCH 21, 2022

Evon Asly P. Siroy

BSA12M1
EXERCISE #1
Match the term on left column with the description on the right column.
TERMS DESCRIPTION
1. FINANCIAL ACCOUNTING - H a. The procedural aspect of accounting that
2. MANAGEMENT ACCOUNTING - G involves keeping detailed records of business
3. FINANCIAL REPORTING - B transactions.
4. FINANCIAL STATEMENTS - E b. A broad term that describes all information
5. GENERAL PURPOSE ASSUMPTIONS - F provided to external users, including but not
6. INTEGRITY -C limited to financial statements.
7. PUBLIC ACCOUNTING -D c. An important quality of accounting
8. BOOKKEEPING -A information that allows investors, creditors,
management and other users to rely on the
information.
d. The segment of the accounting profession that
relate to providing audit, tax and consulting
services to clients.
e. Statement of financial position, income
statement and statement of cash flows.
f. The fact that the same information is provided
to various external users, including investors
and creditors.
g. The area of accounting that refers to providing
information to support internal management
decisions.
h. The area of accounting that refers to providing
information to support external and credit
decisions.

EXERCISE #2
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BSA12M1
ASSIGNMENT -MARCH 21, 2022

Discuss the ethical choices in the situation below. In each instance, describe the ethical dilemma,
and what your course of action will be.
1. You are the payroll accountant for a small business. A friend ask you how much another
employee is paid per hour.

- For me, it is not a good idea to leak the personal information of the employee. You
need to operate your business legally with confidentiality. It involves protecting the
financial information or data used in the payroll process. As a payroll accountant, it
should take steps to ensure that personal information stays confidential. Therefore, as
a payroll accountant, I will not give or I will refuse to tell the information to my
friend since it is unethical and I must follow the rules and regulations of my duty.

2. As an accountant for branch office of a wholesaler supplier, you discover that several of
the receipts the branch manager has submitted for reimbursement as selling expense
actually stem from nights out with his spouse.

- As an accountant, my response is to have reliable and accurate reports and records

since it is our nature to be relevant, especially to the financial statements. In this kind
of circumstances, I will analyse or investigate whether his selling expenses are his
personal expense. Then if the investigation happened and he has violated the rules of
recording of personal expense is a selling expense, I will tell it to the authority.

3. You are an accountant in the purchasing department of a construction company. When

you arrive home from work on December 22, you find a large ham in a box marked
“Happy Holidays- it's a pleasure to work with you.” The gift was from a supplier who has
bid on contract your employer plans to award next week.

- We all know that every accountant, as well as the other workers, is a professional that
is certainly needed to follow the ethical behaviour that is just something to do when
you are an expert. Therefore, if an accountant receives a gift from a supplier who has
bid on a contract your employer plans to award next few days, then it can call it a
bribe. In case an accountant receives a bribe or a gift from an opponent of his
employer, then it is very evident that the opponent is proposing a bribe in the aspect
of a gift so that he can get valuable information. In other words, if I were the
accountant, I will never accept this kind of bribe or gift and I will not leak some
information about my employer to anyone.

4. As an auditor with one year's experience at a local CPA firm, your are expected to
complete a certain part of an audit in twenty hours. Because of your lack of experience,
FINANCIAL REPORTING AND ACCOUNTING
BSA12M1
ASSIGNMENT -MARCH 21, 2022

you know you cannot finish the job within that time. Rather than admit this, you are
thinking about working late to finish the job and not telling anyone.

- As an auditor, you must know that the job you take is very crucial and it is your
responsibility that your financial reports are thoroughly reasonable since the users of
financial reports will depend on the audit. Therefore, if I was the auditor, I will notify
the authorities that I might lack experience since there are probabilities that I will
make mistakes and it will affect the quality of the reports. Thus, if I will ask for help
from authorities, there are possibilities that someone will assist me without affecting
the quality of the reports.

5. You are a tax accountant of a local CPA firm. You have your neighbor fill out her tax
return, and she pays you P 5,000 in cash. Because there is no record of this transaction,
you are considering not reporting it on your tax return.

- It is unethical to not record it in your tax return even if there is no record of this
transaction since it is our obligation, as an accountant, to be accountable not only to
our employees but also to the community that we live in. Moreover, avoiding
something like tax affects society. Therefore, as a tax accountant, they should record
it on his tax return and pay tax accordingly.

6. The accounting firm for which you work as a CPA has just won a new client, a firm in
which you own 200 shares of stock that you receive as an inheritance from your
grandmother. Because it is only a small number of shares and you think the company
will be very successful, you are considering not disclosing the investment.

- It is unethical to hide the facts that can entail the credibility of the auditor’s report. In
the investment community, disclosing the investment is needed since corporations
issue disclosures is to furnish investors and investment critics with data that could
impact an investor's conclusion on whether to purchase a company's stock. Therefore
it is unethical to evaluate it not disclosing the investment.

REVIEW QUESTIONS
FINANCIAL REPORTING AND ACCOUNTING
BSA12M1
ASSIGNMENT -MARCH 21, 2022

1. Explain briefly the statement, “Accounting is a means rather than an end”

- The primary objective of accounting information is to provide information that
useful in making decisions. Therefore, accounting provides information that
people use to manage and evaluate businesses. Nevertheless, an accountant is a
communicator since accounting is a universal language and accountancy is the art
of communicating financial information to the users. That being the case,
accounting is not an end but rather a means to an end.

2. Define accounting and explain the purpose of accounting information.

- Accounting is a service activity. Its function is to provide quantitative
information, primarily financial, about economic activities that are intended to be
useful in making economic decisions. Also, it's a science and art of identifying,
analyzing, recording, classifying, and summarizing economic events or
transactions systematically. Moreover, according to AICPA, accounting is the art
of recording, classifying, and summarizing in a significant manner and terms of
money, transactions, and events, which are in part at least, of a financial character
and interpreting the result thereof. And lastly, accounting is the universal
language of business since it is useful in making better and more informed
decisions and financial statements tell how well a business is performing and
where does it stand in financial terms. The purpose of an accounting information
system is to measures business activities and processes that information into
reports and communicates the results to decision-makers. It provides accounting
process-tens steps in the accounting cycle, financial statements as results, and also
various users of financial statements make economic decisions.

3. Why has society as a whole become one of the largest users of accounting information?
- Accounting empowers and communicates a valuable role in the business world, it
enables us to seek information when it comes to income and expenditures and
other reports that can be used in making economic decisions. That’s the reason
why accounting information is important not only in the business world but in
society also. And society as a whole become one of the largest users of
accounting information because of the reliable information provided in the
financial statements to be useful for the society to make an economic decision.

4. Identify the uses of accounting information.

- The purpose of accounting is to compile and record financial information about
the performance, financial position, and cash flows of a business. This data is then
utilized to attain decisions about how to operate the business, invest in it, or lend
money to it. This information is collected in accounting records with accounting
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BSA12M1
ASSIGNMENT -MARCH 21, 2022

transactions, which are recorded either through such systematic business

transactions as customer invoicing or supplier invoices or through more
specialized transactions, known as journal entries. There are also types in
financial statements, the Income statement, Balance sheet, Statement of cash
flows, statement of retained earnings, Disclosures that accompany the financial
statements.

5. What is primarily the difference between financial accounting and management

accounting?
- Financial accounting formulates the resources, obligations, and activities of an
entity. It intended to provide financial information and also the financial position
of resources and obligations at a given time, the results of operations during the
year, cash position during the year, changes in owner’s equity during the year.
Moreover, it helps to make a decision making for investors/creditors, like where
to place their limited resources. While management accounting, also known as
managerial accounting, is intended for at helping managers within the
organization makes well-informed business decisions.

6. What organization other than businesses uses accounting information?

- Bank or Lending institutions.

7. Outline how accounting information might contribute to one decision that each major
user group might take.
- Through fundamental qualitative characteristics, this is relevance and faithfully
representation. Also, enhancing qualitative characteristics might contribute to one
decision since it requires understandability, objectivity, comparability, and
timelines to be useful in making decisions. This information must meet the
qualitative characteristics, so we have to be precise, valid, and useful so that users
trust its quality and realism.

8. Give examples of nonfinancial information that users of accounting information often

need.
- The relationship with your suppliers and the diversity of your workplace and
social responsibility.

9. What is the role of accounting in decision making process and what broad business goals
and activities does it help management to achieve and manage?
- Accountancy can support the decision-making process and management activity.
The objective of an accounting system is to provide financial information
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ASSIGNMENT -MARCH 21, 2022

concerning the studied company. The information concerns the financial situation
and the performance of a company and there is intended for the users to make
decisions. And effective planning as a manager averts crises saves money and
reduces stress. Planning is a broad, basic function of management. Examples of
planning include business planning and strategic planning.

10. What role do transactions play in accounting?

- Based on my readings, a transaction involves a monetary exchange for a good or
service. Therefore, the transaction is a business event that has an impact on the
financial statements.

11. Discuss the importance of professional ethics in the accounting profession.

 Give examples of unethical behavior or conduct of a professional accountant.
- Professional ethics is significant to all factors not only in the accounting
profession but also in society. Ethics ensures all users and members of
organizations exemplify the fundamental principles, such as; integrity, objectivity,
professional competence and due care, confidentiality, professional behaviour,
and independence. This is important because this code of ethics can prevent an
event that could be misinformed or harmful to the organization. For example, it is
unethical behaviour if you are the finance manager and you leak some personal
information that can damage your entity. Confidentiality matters for legal and
reputational reasons, and it also matters because your future employment may
depend on it.