ACCOUNTING

An Overview
DEFINITION OF
ACCOUNTING
Accounting is “the process of identifying,
measuring, and communicating economic
information to permit informed judgment
and decisions by users of information.”

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THREE IMPORTANT ACTIVITIES

IDENTIFYING MEASURING COMMUNICATING

Recognition of Accountable Assigning of monetary values Transforming economic data
Events (Journal Entry) to economic activities into useful accounting
information
Non-recognition of non-
accountable events
(Memorandum Entry)

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IDENTIFY

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 TYPES OF EXTERNAL EVENTS

EXTERNAL EVENT
EXCHANGE (RECIPROCAL NON-RECIPROCAL
OTHER THAN
TRANSFER) TRANSFER
TRANSFER
Reciprocal giving and One way transaction Changes in economic
receiving resources or obigations arising
from external factors

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TYPES OF INTERNAL
EVENTS
1. Production – resources to finished goods
2. Casualty – unticipated loss or damage (fortuitous
events)

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MEASURE

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MEASUREMENT
BASES
HISTORICAL COST REALIZABLE VALUE
Original cost of an asset at the time of Amount that can be generated from
acquisition disposal of an asset less cost sell.

FAIR VALUE CURRENT COST

Agreed selling price between the buyer Cost that would be required to replace an
and seller asset in the current period

PRESENT VALUE INFLATION ADJUSTED

Current value of future COST
cash flows given a specified rate of return

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VALUATION BY FACT
OR OPINION
 When measurement is affected by estimates, the
items measured are said to be valued by opinion.
 When measurement is unaffected by estimates,
the items measured are said to be valued by fact.

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COMMUNICATE

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THREE IMPORTANT ASPECTS OF
COMMUNICATING

RECORDING CLASSIFYING SUMMARIZING

Journals Ledgers Financial Statements

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BASIC PURPOSE OF
ACCOUNTING
The basic purpose of accounting is to
provide information about economic
activities of economic entities
intended to be useful in making
economic decisions

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BASIC PURPOSE OF
ACCOUNTING
PROVIDE INFORMATION
Quantitative (numbers)
Qualitative (descriptive)
Financial (money)

ECONOMIC ACTIVITIES ECONOMIC ENTITIES

Affects - Business Entity
Assets, Liabilities, Equity Not-for-Profit Entity

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TYPES OF ACCOUNTING
INFORMATION CLASSIFIED
AS TO USERS’ NEEDS
• General Purpose
o Common needs
o Financial accounting
o GAAP represented by PFRS
• Special Purpose
o Specific needs
o Managerial accounting, tax basis accounting

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BASIC ACCOUNTING CONCEPTS
Double-Entry Stable Monetary
System Unit
Cost-Benefit

Accrual Basis
Going Concern Time Period
of Accounting

Separate Materiality
Entity Concept

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BASIC ACCOUNTING CONCEPTS
Full-Disclosure Residual Equity Prudence
Principle Theory (Conservatism)

Consistency Concept of
Fund Theory Articulation
Concept

Matching Realization
Principle

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COMMON BRANCHES
OF ACCOUNTING
FINANCIAL AUDITING
ACCOUNTING

MANAGEMENT TAX ACCOUNTING

ACCOUNTING

COST ACCOUNTING GOVERNMENT

ACCOUNTING

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ACCOUNTING STANDARDS
IN THE PHILIPPINES
Philippine Financial Reporting Standards
(PFRSs) are Standards and Interpretations
adopted by the Financial Reporting Standards
Council (FRSC).
 PFRS
 PAS
 Interpretations

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THE NEED FOR REPORTING
STANDARDS
1. Entities should follow a uniform set of generally acceptable
reporting standards when preparing and presenting financial
statements; otherwise, financial statements would be
misleading.
2. The term “generally acceptable” means that either:
a. the standard has been established by an authoritative
accounting rule-making body; or
b. the principle has gained general acceptance due to
practice over time and has been proven to be most useful.
3. The process of establishing financial accounting standards is a
democratic process in that a majority of practicing
accountants must agree with a standard before it becomes
implemented.
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QUESTIONS?

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ANG PAGMAMAHAL NG ISANG CPA
Ang pagmamahal ng isang CPA
ay hindi nagde-DEPRECIATE.
RELIABLE regardless of the face and
looks dahil ang prinsipyo nito ay
laging SUBSTANCE OVER FORM.
COMPLETE, yung tipong wala ka ng
hahanapin pa kasi marunong magADJUST.
ANG PAGMAMAHAL NG ISANG CPA
Nagbibigay ng ALLOWANCE at sa lahat ng
ginagawa nya, yung mahal nya ang
laging PREFERRED... laging inuuna.
Palaging meron appropriate DISCLOSURE
para ipakita sa buong mundo ang tunay na
pagmamahal.
ANG PAGMAMAHAL NG ISANG CPA
Kung may samaan ng loob, nara-WRITEOFF
kaagad, kung me tampuhan, nao-OFFSET ng
pagmamahal.
Yung mga nakaraan, iyakan at
lambingan, nake-CARRY FORWARD sa
next FISCAL YEAR.
ANG PAGMAMAHAL NG ISANG CPA
Ang pagmamahal ng isang CPA, it keeps no RECORDS
of wrong
dahil merong REVERSAL of forgiveness at
CORRECTING ENTRY kung kailangan.
Kung meron man fortuitous event dahil
sa third party, anjan parin ang pusong
nakahandang mag-AUDIT dahil ang partnership nila ay
based on TRUST and CONFIDENCE.
ANG PAGMAMAHAL NG ISANG CPA
Sumusunod sila sa IFRS at SARBANES-OXLEY
act pagdating sa lambingan dahil ang bawat isa ay
marunong tumupad sa sinumpaang...
none will commit the ACTS DISCREDITABLE to
the PROFESSION.
ANG PAGMAMAHAL NG ISANG CPA
Ang bawat detalye ng suyuan at tagpuan ay
nakaRECORD sa WORKSHEET ng facebook at
instagram at handang ipahayag for the sake of
TRANSPARENCY.
Kahit wala ng pera ang bawat isa, they
still say that the FINANCIAL STATEMENTS
PRESENTS FAIRLY at FREE OF MATERIAL
MISSTATEMENT.
ANG PAGMAMAHAL NG ISANG CPA
Higit sa lahat... GOING CONCERN kung
magmahal... panghabang buhay