Sunday, December 11, 2022

ACCCOB2 Reviewer

CH1. Intro to Accounting

- Users: Internal and External(/Primary)

• Internal

- Management

- As needed (Daily, Weekly, Monthly)

- Present and forecasts (future)

- Flexible

• External

- Investors, Employees, Customers, etc.

- Annually

- “Financial Accounting”

- General Purpose Financial Statement for historical data

- Follow International Accounting Standards Board and Philippine Financial

Reporting Standards

* IASB = makes and approves IFRS; IFRS = International Financial Reporting

Standards to bring standards*

- Statement of Profit or Loss /OR/ Statement of Income: total of income less

expenses, excluding the components of other comprehensive income

- Income is the increase in economic benefits, enhancements of assets, decrease in

liabilities

- Expenses is decrease version

- Statement of OTHER comprehensive income: items of income and expense not

recognized in income statement because of PFRS

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- Statement of TOTAL comprehensive income shows CHANGE in equity during a
period resulting from transactions

- Statement of changes in equity: transactions with the entity’s owners

- Statement of Cash Flows: entity’s ability to generate cash and cash equivalents and
the need to utilize those cash flows (Inflow and Outflow)

- Notes to financial statements: self explanatory

Chapter 2: Cash and Cash Equivalent

Cash

- Cash is cash UNLESS it is restricted (not allowed to move)

- Cash and C. Equivalent are current assets (must be used within the year)

- Must be readily available

Categories of Cash

- Cash on Hand: undeposited collections like bills or coins and checks not yet
deposited to the bank.

- Cash in Bank: Savings account and etc.

- Cash set aside for current use: petty cash fund, payroll, interest, dividend, tax funds

Cash Equivalents

- maturity should be three months or less

- time of purchase must be three months or less before maturity

*undeposited receipts or undeposited collections*

*postdated checks = accounts receivable?*

*Cash in foreign currency follows the currency rate upon closing*

*Bond sinking fund = used to pay liabilities*

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*IOUs from officers = accounts receivable*

*NSF check = insufficient funds*

*Bank overdraft = liability (checking account)*

*Petty Cash Fund = cash on hand when you can’t pay through check* ((bills & coins of
8,000) means etc and natitira)

*Stale Check = was not claimed for six months from date of check*

*Postage Stamps

*Vouchers = deduct*

Bank Reconciliation

- Reconciling items due to timing difference

- Deposit in Transit - will deposit when the bank is available again. will be added
balance per bank.

- Outstanding check - Check written but not chased/ deposited. will be deducted
from the balance per bank

- Bank debit memos - deductions made by the bank from our account that we don’t
know about (NSF check, cost of check books, reduction of loan, bank service
charges/penalties, interest on loan) will be deducted balance per book.

- Bank credit memos - additions made by the bank for our acc. (Collections directly
made to the bank, interest earned on the entity’s account, proceeds of loan
granted by bank) Will be added balance per book.

- Reconciling items due to errors made by the bank

Format of Bank Reconciliation Statement

- Book to bank

- Bank to book

- Adjusted Balance Method - the most common method. The adjusted will be
presented in the Statement of Financial Position.

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Chapter 3: Receivables

Accounts Receivables

- Short term receivables

- 2/10, n/30

- Oral or Implied promise

- INTIAL recognition - recorded at face value (expected to be collected within one

year)

NOTES Receivable if there is a PROMISSORY NOTE

- SUBSEQUENT Recognition

- Net Realizable Value

- recorded through an adjustment recognizing probable loss

*Derecognition - contractual rights expire or transfer of receivable and transfer qualifies

for derecognition.*

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable, end

x Estimated loss %

= Require allowance

- Allowance for doubtful before adjustment

= Doubtful accounts expense

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Chapter 4

Investments in Equity and Debt Instruments

- Financial Instrument - Contract that gives rise to a financial asset of holder and a
financial liability or equity instrument of debtor

- Contractual cash flow test - Holder’s purpose is for collection of dividends and
interest. We buy stocks to collect dividends and interest.

- Business model test - Holder’s purpose depends on the decision of entity’s

management

Investments are debt or equity instruments of another entity mainly held for passive
income, proving one’s financial stability

- Equity Instruments - shares of stocks bought by an investor from a corp

- FA-FVPL = asset x share

- Sold all shares = derecognized sa Statement of Fin Position and a gain or loss
sa profit or loss statement

- Transaction cost was expense outright

- FV-OCI

- Transaction cost will be added to purchase price of investment

- Any unrealized gain will be added to other comprehensive income

- Cumulative unrealized loss = comparing the first and last

- Investment in Associate

- more than 20% of shares

- dividend will be deducted from carrying amount

- percent x income earned by invested ((added to carrying amount)

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- Debt Instrument bonds ISSUED by the borrower whereby investor earns interest
from bond investments

Chapter 5: Investors
Chapter 6: PPE
Property, Plant, Equipment

- Also includes parking btw

- Not intended to be sold

- Long term in nature (these guys grow old and depreciate)

- Tangible meaning you can touchy touchy

- It’s an asset if you use it to generate revenue

- Measured at cost at the time they are incurred

- Cash discount whether taken or not is deducted from the invoice price when valuing
the asset

(but wait there’s more)

Chapter 7: Intangible Assets

Chapter 8: Liabilities
Chapter 9: Corporations, Organization, and Shared
Capital
Chapter 10: Retained Earnings