Reviewer in Financial Accounting and Reporting

Reviewer in Financial Accounting and
Reporting
Chapter 1
Luca Pacioli Income

- Father of Accounting - Increase assets, decrease
- Born between 1446 to 1448 liabilities
- Second introduced Double - Increase equity
Entry System Bookkeeping Expense
- Franciscan Friar and - Decrease assets, increase
Mathematician liabilities
- Teacher of Leonardo De Vinci - Decrease equity
Accounting Financial Statement (Results of Financial
- Process of identifying, Statement) report of A, L and Stockholders
measuring and Equity
communicating - Balance Sheet or Statement
- It is an art of recording, of Financial Position
classifying and summarizing - Income Statement
- Service activity - Statement of Changes in
Three (3) Important activities and its Equity
definition - Statement of Cash Flows
- Identifying – analyzing events - Notes to Financial Statement
and transactions (FS)
- Measuring – assigning Forms of Business Organization
numbers in monetary term - Sole Proprietorship – small
- Communicating – process of business type and single
transforming economic data owner
Double Entry Bookkeeping - Partnership – business
- Introduced in 13th century owned by two or more
- Debit and Credit to record persons
business transaction - Corporation – business
- Debit (debere) to owe owned by STOCKHOLDERS
- Credit (credere) to entrust Types of business Operation
Assets - Service Business –
- Present Economic Resources performing services, (ex.
Liabilities Salon, jeepney operators,
- Present Obligations of the doctors, spas)
entity - Merchandising Business –
Owner’s Equity earned by buying and selling
- Residual interest in the of goods (ex. Walter mart,
assets sari-sari store, RTW)
- Manufacturing Business –
Buying raw material (ex.
Shoe factory)
Book of Accounts - Unearned Revenue –
- Journal – Merchant’s Private business entity receives
Book payment
- Ledger – Last book or - Accrued Liabilities – amount
Alphabetical listing of all the owed to others
business account. - Current Portion of long-term
debt – are portion of
Accountable Transaction mortgage notes
- To be recorded at the book Non-Current Liabilities
of journals. - Mortgage payable – records
Current Assets long-term debt of business
- Cash – any medium of entity
exchange - Bonds Payable – obtain funds
- Cash Equivalent – per Pas in issuing bonds
no.7, highly liquid investment ASEAN – Association of Southeast Asian
- Prepaid Expense – paid for by Nations
the business in advance GDP – Gross Domestic Products
- Accounts Receivable - claims Three Pilar of GDP
against customer - Political Security Community
- Notes Receivable – is a - Economic Community
written pledge - Socio-Cultural Community
- Inventories – Per Pas no. 2, ATIGA – ASEAN trade in Goods Agreement
sale in the ordinary course of ACIA – ASEAN Comprehension Investment
business Agreement
Non-Current Assets AFAS – ASEAN Framework Agreement on
- Property, Plant, and Services
Equipment – per Pas no. 16, MRAs – Mutual Recognition Agreements
tangible assets held by NAB – National Accountancy Body
enterprise PRA – Professional Regulatory Authority
- Accumulated Depreciation – ACPACC – ASEAN Chartered Professional
it is a contra account Accountant Coordinating Committee
- Intangible assets – per pas ACPA – ASEAN Chartered Professional
no. 38, identifiable, Accountant
nonmonetary assets ACPAR – ASEAN Chartered Professional
Accountant Register
Current Liabilities RFPA – Registered Foreign Professional
- Accounts Payable – Accountant
represents the reverse AQRF – ASEAN Qualification Reference
relationship Framework
- Notes Payable – business
entity is the maker of the
note
Types of Business Operating Activities
Service - Use of resources to DESIGN,
- Selling people’s time PRODUCE, DISTRIBUTE and
Trader MARKET GOODS and Services
- Buying and selling products
Manufacture Debet Dare
- Designing products - should give
- Aggregating components and Debet habere
assembling finished products - should have or should
Raw Materials receive
- Growing or extracting raw Summa
materials - 36 short chapters on
Infrastructure bookkeeping
- Selling utilization of 3 essential things
infrastructure - Sufficient cash or credit
Financial - A good bookkeeper
- Receiving deposits - An accounting system to
- Lending and investing money view the business affairs at a
Insurance glance.
- Pooling premiums of many to Memorandum
meet claims of a few - Book where all transactions
Micro are recorded
- Less and employ not more Fundamental Concepts
than 9 workers - Underlined the accounting
Small process
- Employ 10 – 99 workers Entity Concept
Medium - Most basic concept
- Employs 100 – 199 workers - Is an organization or a
Three types of Organizational Activities section of organization
Financing Activities
- Uses to obtain financial Periodicity Concept
resources - Allows users to obtain timely
Investing Activities information
- Uses capital from financing Stable Monetary Unit Concept
activities - Allows accountant to add
- Transformation process and subtract peso amounts
Efficient Business Going Concern
- Provides goods and services - Underlies the depreciation
at low cost assets
Effective business Basic Principles
- Successful in providing goods Objectivity Principle
and services - Accounting records and
statements are based on the
most RELIABLE data.
Historical Cost GAAP
- Acquired assets should be - Generally Accepted
recorded at their actual cost Accounting Principles
Revenue Recognition Principle - Encompass the conventions,
- Revenue is to recognized in rules and procedures
accounting period Three (3) Criteria
Expenses Recognition Principle - Relevance – its results
- Expenses is to recognized in information that is
the accounting period meaningful and useful
Adequate Disclosure - Objectivity – resulting
- Requires all RELEVANT information is not influenced
information - Feasibility – it can be
Materiality implemented without undue
- Depends on the size and Accountancy Act of 2004
nature of the item - Republic Act No. 9298
Consistency Principle - Philippine Accountancy Act
- Firms should use the same of 2004
accounting methods - President Gloria Macapagal
Branches of Accounting Arroyo (May 13, 2004)
Auditing Section 4 – Scope of Practice
- Most significant service to - Practice of Public
the public Accountancy – individual
Bookkeeping capacity, partner, staff
- Mechanical task involving the member
collection of basic financial - Practice in Commerce and
data Industry – decision making
Cost Bookkeeping requiring professional
- Recording of cost data knowledge
- Practice in
Education/Academe –
Cost Accounting involve teaching of
- Used of those date once they accounting
have been extracted - Practice in Government –
Management Accounting who holds or is appointed to
- Incorporates cost accounting a position in a accounting
data Section 5 – The Professional Regulatory
Taxation Board of Accountancy and its Composition
- Preparations of TAX - Bored under the supervision
RETURNS and administrative control
Government Accounting
- The identification of sources
- Uses of resources
Section 6 – Qualification of Members of the - Shall submit to the
Professional Regulatory Board commission the ratings
- Natural born citizen obtained by each candidate
- Resident of the Philippines Section 18 – Failing Candidates to take
- Registered CPA at least 10 Refresher Course
years of working - Shall be disqualified from
- Not have any pecuniary taking another set of
interest examinations
- Not be director or officer Core Competencies Framework for
Section 13 – The Certified Public Accountant Accountants
Examination Knowledge
- Required to undergo a General Knowledge
Licensure Examination - Are gaining an understanding
- Republic Act no. 8981 of the different cultures in
Section 14 – Qualification of Applicant for the world
Examination Organizational and Business Knowledge
- Shall established the - Core knowledge in
following requisites economics, quantitative
- Filipino citizen methods and business
- Good moral character statistics, organization
- Holder degree of BSA behavior, marketing and
- Not been convicted of any operation management.
criminal offense Information Technology Knowledge
Section 15 – Scope of Examination - IT concepts for business
- Shall cover but are not systems
limited to the following Accounting Knowledge
aspects: - Related to accounting and
 Theory of Accounts related areas
 Business Law and
Taxation Skills
 Management Services Intellectual
 Auditing Theory - Ability to carry out abstract
 Auditing Problems logical thinking
 Practical Accounting Interpersonal
Problem I and II - Ability of CPAs to work in
groups
Section 16 – Rating in the Licensure Communication
Examination - Ability to communicate
- Must obtain general average effectively one’s points of
of (75%) no lower than (65%) view
Section 17 – Report of Ratings Values

Professional Ethics - Cost of Sales – cost incurred to
- To work in accordance with purchase or to produce
the highest standard - Salaries or Wages Expenses – all
professionalism payments as a result of an
Moral Values employer-employee
- Able to discern between - Telecommunication, Electricity, Fuel,
what is morally right and and Water Expenses – expenses
wrong. related to itself
Chapter 2 - Rent Expense – space, equipment
and other asset rentals
Types and Effects of Transactions - Supplies Expense – expense of using
Source of Assets (SA) supplies
- Asset account increases and - Insurance Expense – portion of
a corresponding claims premium paid on insurance
account decreases coverage
Exchange of Assets (EA) - Depreciation Expense – cost of a
- One asset account increases tangible assets
and another asset account - Uncollectible Account Expense –
decreases amount of receivables estimated
Use of Assets (UA) - Interest Expense – related to use of
- Asset account decreases and borrowed funds
corresponding claims
account decreases
Exchange of Claims
- One claims account increases
and another claims account
decreases
Owner’s Equity
- Capital – from Latin word
capitalis. Original and
additional investment of the
owner
- Withdrawals – business
entity withdraws cash
- Income Summary - It is a
temporary account
Income
- Service Income – Revenues earned
by performing services
- Sales – Revenues earned as a results
of sales of merchandise
Expenses

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Reviewer in Financial Accounting and Reporting

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Reviewer in Financial Accounting and

Luca Pacioli Income

Section 17 – Report of Ratings Values

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