Reviewer
PREPARERS OF FINANCIAL STATEMENT-
Conceptual Framework for Financial Accounting
HIERARCHY OF STANDARDS
1. SPECIFIC PHILIPPINE FINANCIAL
REPORTING STANDARDS PFRS
2. RELATED STANDARD- KUNG WALANG
SPECIFIC STANDARD PUNTA SA
RELATED
3. CONCEPTUAL FRAMEWORK- KUNG
WALA PARIN DITO NA PAPASOK SI C.F
4. OTHER APPLICABLE ACCEPTED
ACCOUNTING PRINCIPLES WHAT IS C.F?
BOOK (GENERAL TERMS & CONCEPTS THAT IS
USED IN PREPARATION AND PRESENTATION OF
FINANCIAL STATEMENTS)
ANONG URI NG FINANCIAL STATEMENT
2 TYPES OF FINANCIAL STATEMENT
1. SPECIAL PURPOSE FINANCIAL
STATEMENT – FROM THE WORD ITSELF
SPECIAL MEANS IT IS CREATED FOR
“SPECIFIC PURPOSE” ONLY
 EX. YOU ARE A NON-PROFIT
ENTITY OR RELIGIOUS ENTITY NA
HINDI NAG P’PROFIT THAT
MEANS IT WILL FALL UNDER
S.P.F.S AND HINDI SIYA SAKOP NI
C.F. GENERAL PURPOSE F.S LANG
MAGAGAMIT MO.
2. GENERAL PURPOSE FINANCIAL
STATEMENT- IF YOU ARE ACCOUNTANT,
YOU CAN USED G.P.F.S KUNG WALA
KANG NAKITANG STANDARD OR
RELATED DOON SA NEED MONG GAWIN
 IT IS THE ONLY SCOPE OF C.F
PURPOSES OF CONCEPTUAL FRAMEWORK:
1. INTERNATIONAL ACCOUNTING
STANDARDS BOARD (IASB)- IN
DEVELOPING IFRS BASED ON
CONSISTENR CONCEPTS
 ACCOUNTING SETTING BODY
(KUNG BAGA SILA YUNG
GUMAGAWA NG MGA
STANDARDS)
 THROUGH THE USED OF C.F
MAKAKAPAG DEVELOP NG IFRS
BASED ON
CONSISTENTCONCEPTS
 SO SA PAG DEDEVELOP NG
ACCOUNTING SETTING BODY
THEY CAN USED C.F
2.
TO DEVELOP CONSISTENT ACCOUNTING
POLICY FOR TRANSACTIONS
 WHEN WE ARE MAKING F.S WE
NEED TO BE CONSISTENT EX.
KUNG ANONG GINAWA NATIN
LAST YEAR GAWIN DIN NATIN
THIS YR AS LONG AS IT IS
APPLICABLE TO THE ENTITY
 SO THOUGHT THE USED OF C.F
MAKAKAPAG DEVELOP SI
PREPARER NG FS. NG
CONSISTENT ACC POLICIES FOR
THE TRANSACTIONS THAT
NEEDED IN OUR F.S
3. ALL PARTIES-TO UNDERSTAND AND
INTERPRET STANDARD
 TO ALL USERS
LIMITATION OR AUTHORITATIVE STATUS IF C.F
(hanggang saan lang power ni c.f)
 Note: c.f is not a standard, hence it does not
define any standard for any particular
measurement or disclosure issue.
 laman lang talaga ni C.F. General Concepts
UNDERLYING ASSUMPTIONS (these are concepts
and theories where accounting process is pattern or
based.)
 accounting assumptions or accounting
postulates are the basic notions or
fundamentals premises on which the
accounting process is based.
 the Conceptual Framework for Financial
Reporting mentions only one
assumption, namely:
“GOING CONCERN”
1. Going Concern (CONTINUITY
ASSUMPTION)- means the accounting entity is
viewed as continuing in operation indefinitely in
the absence of evidence to the contrary.
 when we are making a F.S and by next
year hindi mag cloclose, inaassume
natin na yung nip’present natin na F.S
yung balance don is patuloy lang, means
walang katapusan.
 ex. We have non and current assets,
yung pag lagay natin ng non and current
ginagamitan to ng going concern. Once
nilagay, means nag aassume ka na yung
business is going concern ang company.
 current asset (u will realize it within 1
year)
 noncurrent assets ( it will be realize
more for than 1 year)
  Going Concern lang ang kinikilala ni
C.F
2. Accrual Principle- addresses the recognition of
income and expenses against the cash basis
principle
 recording income rendered, regardless of
collection. while expense, recording expense
incurred regardless of payment.
 nag rerecord tayo income once na perform mo
na yung service regardless kung kailan mo
macocollect yung payment.
3. Accounting Entity Concept- under this concept,
the entity is viewed separately from its
owners,managers, and employess who constitute
the entity.
 si company or business mo is the artificial
person and you is the natural person.
 in the financial accounting it is the specific
business organization, which may be a
proprietorship, partnership or corporation.
 the reason for the entity assumption is to have a
fair presentation of financial statements.
4. Time Period Principle- under this principle, the
life of the entity is divided into the series of
reporting periods.
 it is a completely accurate report on the financial
position and performance of an entity cannot be
obtained until the entity is finaly dissolved and
liquidated.
 inaassume natin dito , every now and then
kailangan natin ng acc record or naka pag report
tayo para makita natin if yung business is still
working perfectly fine.
 even thou indefinite yung business need parin
natin mag reporton a certain time of period.
2 type of accounting time period
 Accounting period or Fiscal period-is 1 years or
a period or 12 months
A. Calendar Year- yung reporting mo is start ng
January 1 and mag eend ng dec 31
B. Natural Business Year-12 months period that
ends in any month
 One-year period- is the traditionally the
accounting period because usually it is after 1
year that the government reports are required.
5. Monetary Unit Principle- under this principle,
the accounting information should be stated in a
common measurement basic to the useful
 dapat bawat geographic dapat meron ginagamit
na basic para maging uniform
 in our country we used PHP (PHILIPPINE
PESO)
 it is also recognized “NO CHANGE, OF
PURCHASING POWER” means bulag si F.S
pag dating sa INFLATION & DEFLATION,
means constant or stable
 Ex. You bought equipment worth 10,000 in the
year 2018, so this 2022 that same equipment is
still worth of 10,000.
 it assumes that the concept that the purchasing
power of the peso is regarded as constant or
stable.
2 ASPECTS OF MONETARY UNIT ASSUMPTION
1. Quantifiability aspect – means that the asset,
liabilities, equity, income and expenses should
be stated in terms of unit measure which is the
peso of the Philippines.
2. Stability of Peso- assumption means that the
purchasing power of the peso is stable or
constant and that its insignificant and therefore
may be ignored
CHAPTER 1: OBJECTIVE OF FINANCIAL
REPORTING
 Chapter 1- it is the foundation, dito lahat nag
sisimula dahil may objective.
USERS CONCERN(S)
Investors a. A risk & return of
investments.
b. Ability to pay dividends
Lenders & other Liquidity
Creditors Solvency
Employees Stability
Profitability
Customers Continuity
Government Regulatory
Public Various
USERS OF FINANCIAL INFORMATION
A. PRIMARY USER- these are the existing &
potential investors, lenders and other creditors.
B. OTHER USERS- these include the employees,
customers, governments, and their agency and
the public.
1. INVESTORS- if u are an investor and you want
to see the F.S of the company your concern is
the risk and return of investments.
a. you need to analyze the F.S of that company
because you want of see the ability na
maibalik yung investments mo and syempre
yung value ng investment mo like tumaas
b. if you have stocks, you are expecting atleast
na may natatanggap ka na dividends income
 Dividend income-is a short-term
income na maaari mong makuha
once na nag invest ka sa company,
usually annual ang pag bibigay ng
 corporatin, however it is not a
requirement kahit di sya annually
mag bigay ng dividend income.
2. LENDERS AND OTHER CREDITORS- kapag
ikaw ay mag papautang sa isang company ang
unang gagawin mo ay hingin ang F.S ng isang
company, because you need to see the liquidity
and solvency of the company
 LIQUIDITY- “short term”,
kakayahang mag bayad ng utang ni
company ng mga short term
 SOLVENCY- “short- & long-term
obligations” all obligation. Ability
na makapag bayad.
3. EMPLOYEES- you need to see the stability and
profitability
 STABILITY- is the company is unstable
baka di ka mabayaran ng sahod
 PROFITABILITY- to see the F.S to see
if nag p’profit or not ba yung company
then you have the rights to demand na
itaas yung sahod mo.
4. CUSTOMERS- (continuity) you would like to
see the F.S to have a long-term R.L with your
supplier.
5. GOVERNMENT- would like to see the F.S of
the company para malaman niya if the company
is following the rules and regulations
6. PUBLIC- (various) any users na may concern
BAKIT NGA BA MAYROONG “Financial Reporting”?
 (OBJECTIVE) -its principal or overall objective
is to provide financial information about the
reporting entity that is useful to existing and
potential investors, lenders, and other creditors
in making decisions about providing resources
to the entity.
LIMITATIONS OF FINANCIAL REPORTING
1. Do not and cannot provide all of the information
that existing and potential investor,lenders and
other creditors need.
 hindi kayang ibigay lahat ni F.S means general
purpose lamang yung kayang ibigay (common
needs lang ng mga users). Then yung mga
special purpose naman ay hindi sakop ng F.S
using C.F
2. Another user to control
 hindi ito designed to show the value of the entity
 general purpose financial reports are not
designed to show the value of an entity, but the
reports provide information to help the primary
users estimate the value of the entity
 Bakit hindi kayang ipakita ng fs ang true value
ng entity kung mga numbers naman sila
3. Hindi kayang ipakita ang true value nung fs
because most of the amount in the f.s are only
based on estimates and judgments
 general purpose financial reports are intended to
provide common information to users and
cannot accommodate every request for
information.
CHAPTER 2: QUALITATIVE CHARACTERISTICS
OF USEFUL INFORMATION
 (anong klaseng information ba ang meron dapat
sa F.S, ito ay mga useful information)
 dapat merong fundamental and enhancing
QUALITATIVE CHARACTERISTICS
 FUNDAMENTAL QUALITATIVE
CHARACTERISTICS
 ENHANCING QUALITATIVE
CHARACTERISTICS
CHAPTER 3: THE FINANCIAL STATEMNTS AND
THE REPORTING ENTITY
REPORTING ENTITY-
 AS A RESULT, WE HAVE A FEW TYPES OF
FINANCIAL STATEMENTS
 EX. Jollibee corpo, meron siyang sister
company like inasal, chowking, red ribbon and
jolibee is the parent or the king.
1. CONSOLIDATED- pag si parent
gumawang f.s at isa lang with sisters like
Jollibee and inasal (PARENT PLUS
SUBSIJERY)
2. UNCONSOLIDATED/INDIVIDUAL-
gumawa si jolibbe ng fs na sya lng, lsame
kay chowking, inasal etc
3. COMBINED- next pag nag sama yung 2
sisters, like si inasal and chowking nag
combing sa iisang F.S.
Chapter 4: ELEMENTS OF FINANCIAL
STATEMENTS
 refer to the quantitative information
shown in the statement of the financial
position and statement of
comprehensive income.
Financial position Financial Performance
asset Income
liability expense
equity

a. Assets- resources controlled by entity from past
event that brings economic entity
 resources meaning hindi required na
may physical formed kasi meron tayong
tangible and intangible asset
 controlled meaning is the power to
govern
 hindi importante yung ownership yung
importante yung control
 past event meaning it cannot arise from
future event
 economic entity means pag pasok ng
benefits through asset
b. Liabilities- is a present obligation of the entity to
transfer an economic resource as a result of past
event
 Take note: hindi ni rerequire ni fs kung kanino
ka may utang plus hindi mo alam kung kailan
mo I sesettle, ang mahalaga inaacknowlegde mo
na may liabity ka.
c. Equity- is the residual interest in the assets of
the entity after deducting all of its liabilities
 tinatawag din siyang net asset
d. Income- is an inflow of future economic benefit
that increase equity, other than contributions by
owners
 May income pag nag increase in asset and equity
that’s income and decrease in liabilities and
increase in asset that’s all an income.
REVENUE GAIN
Arises from Ordinary course of Incidental or
business peripheral
operations
Presentation At gross amount At net amount
in the FS
Expense
Chapter 5: Recognition and Derecognition
 Recognition- is a term which means the process
of reporting an asset, liability, income or
expense on the
Recognition Criteria:
1. It meets the de finition of an asset, liability,
equity, income or expose and
2. Recognizing it would be useful information
 Expense Recognition is the application of
MATCHING PRINCIPLE
 NOTE: MATCHING PRINCIPLE IT
REQUIRES THE COST AND EXPENSE
INCURRED IN EARNING A REVENUE
SHALL BE REPORTED IN THE SAME TIME
PERIOD
3 APPLICATIONS OF THE MATCHING
PRINCIPLE
1. Cause and effect association- means hanggat
walang related revenue walang expense.
 Ex. Warranty expense like warranty sa cp
hanggang wala kang binebenta na cp wala kang
I miminus another yung sales commition yung
mga nag bebenta ng sasakyan or car
2. Systematic and Rational Allocation- yung cost
mo inaallocate mo over
 benefit of the use
3. Immediate Recognition- taliwas . okay lang na
walang renuew pwede kang mag expense like
hindi lahat pwede.
 Derecognition- is the opposite of recognition
Chapter 6: Measurement
 is the process of determining the monetary
amounts at which the elements of the financial
statements are to be recognized and carried in
the statement of financial position and income
statement.
1. Historical Cost- meaning original cost
 2018 10k yung equipment then 2022 ngayon mo
lang naisipan na gamitin 10k parin
2. Current cost- it is the amount na gagastusin
mo
 The historial cost and current cost are called
“entry values”
Current Value
1. Fair Value- kung ibebenta mo today
mag kano kaya sa market
 your basis is the market
 remember since sa market manggagaling it is
not a entity specific measurement
2. Value in Use- kapag ginamit mo
continuously nung asset imbes ibenta
gagamitin mo nalang magkano yung
value
Exit Value
CHAPTER 7: Presentation and Disclosure
Effective communication makes information useful. It
requires:
1. Focusing on presentation and disclosure
objectives and principles rather than on rules
2. Classifying information by groupings similar
items and separating dissimilar items.
3. Aggregation information in a manner that it is
not obscured either by excessive details or by
excessive summarization
CHAPTER 8: CONCEPTS OF CAPITAL AND
CAPITAL MAINTENANCE
-The capital maintenance approach means that the net
income occurs only after the capital used from the
beginning