Exam Flashcards by Haniel Hymn Villanueva

year when the accountancy profession was formally recognized through the passing of the
accountancy law.

1928

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is least known and unpopular because of the nature of services it accorded to its
clients which is handled with much “confidentiality”.

Accountancy

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Number of Registered Certified Public Accountant in 1923

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There were 43 Registered Certified Public Accountant in what year?

1923

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April 2006 CPA number

116,697

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CPA number is 116,697 in what year and month?

April 2006

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2023 number of CPA and according to who?

200,000 - (Records of the Professional Regulations Commission(PRC)

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Under this field we are in public practice. In which
case, we are to render services to the public for a fee.

PUBLIC ACCOUNTING

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Examples of Public Accounting

Individual Practitioner
Join Partnership

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Duties of Public Accounting

Auditing
Taxation
Management Services

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The examination of financial statements and report our findings
to the management.

AUDITING-

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The preparation of Income Tax Return (ITR).

TAXATION-

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Design and installation of accounting system

MANAGEMENT SERVICES-

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What association should one join if s/he will choose the field of Public Accounting?

(Association of CPA’s in Public Practice(ACPAPP).

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-Under this field, we are to render services to the government.

GOVERNMENT ACCOUNTING

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If we render service as a government accountant, where will we be employed under?

National Government Agencies(NGA).

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When you choose the field of Government accounting, we will become a member of?

Government Association of CPA’s
(GACPA).

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-Under this field, you will be employed in private firms and hold positions as Chief Accountant,
Accounting Manager, Internal Auditor, Finance Manager or the highest accounting officer of an enterprise which is known as “Comptroller”.

PRIVATE ACCOUNTING

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When you choose the field of private accounting, you will become member of?

Association of CPA’s in Commerce and
Industry(ACPACI).

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-Under this field you will become the accounting professor of CPA reviewer, the heroes who will
prepare the candidates to the difficult examinations for Certified Public Accountant.

ACCOUNTING PROFESSOR or CPA REVIEWER

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When you choose the field of ACCOUNTING PROFESSOR or CPA REVIEWER, you will become member of?

Association of CPA’s in Education (ACPAE).

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All CPA’s are member of the national professional organization known as?

“Philippine
Institute of Certified Accountants “(PICPA).

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knowledgeable expert professional in the field of
accounting.

ACCOUNTANT-

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The accumulated accounting data that
are stored in the books of accounts and transformed into a
report.

FINANCIAL STATEMENTS-

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The most sensitive aspect of accounting, these financial data provides the management with guide and basis for formulating and adopting financial plans and policies that will lead to efficient management, thereby goals and objectives for the business is attained.

ANALYZING AND INTERPRETING

The primary motive of persons engaged in business.

This is an instance wherein total sales or income earned and total costs and expenses incurred

BREAK-EVEN

The records that are used and kept for this purpose.

Books of Account-

The data that are stored in the book of accounts which are of financial character.

Accounting Data

Accounting data is processed and transformed into report.

Financial Statement-

Requires all corporations, companies, partnerships or persons which are required by the law to pay internal revenue taxes to keep books of account and records in accordance with the standard accounting system.

Internal Revenue Code of the Philippines (Section 232A)

-Are uniform set of accounting rules, procedures, practices and standards that are followed in preparing the financial statements.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES THAT ARE FOLLOWED AND ARE STILL APPLICABLE FOR USE:

1. Cost Principle 2. Objectivity Principle 3. Materiality Principle 4. Matching Principle 5. Consistency Principle 6. Adequate Disclosure Principle

this principle requires that assets should be recorded at original or acquisition cost.

Cost Principle-

this principle requires that accounting records should be based on reliable and verifiable data as evidence of transactions.

Objectivity Principle-

this principle dictates practicability to rule over theory in determining the valuation of an items. To determine whether the items is material or not, it is a matter of professional judgement on the part of the accountant.

Materiality Principle-

this is the combined concept of Revenue Recognition and Expense Recognition Principle. Revenue should be recognized when earned and corresponding expense should be recognized when incurred during the same period as revenue is earned.

Matching Principle-

this principle requires that accounting methods and procedures should be applied on a uniform basis from period to period to achieve comparability in the financial statements.

Consistency Principle-

this principle requires that financial statements should be free from any material misstatement; that if there is any, proper disclosure should be made.

Adequate Disclosure Principle-

An entity that is separate and distinct from the owner or management.

Accounting Entity-

The business is assumed to have a continuous life of existence. Thus, it will continue to operate for an indefinite period of time, so that financial statements are prepared in a going-concern unless there is a specific evidence to the contrary where departure from and abandonment of this assumption warrant.

Going-Concern Assumption-

This assumption states that businesses should report their financial position, results of operations, and cash flows at regular intervals.

Time-Period Assumption (accounting period)-

this means that financial statements should be prepared and presented in a way that it can be understood by the users.

Understandability-

financial information should carry the degree of “confidence” when used by interested parties. It must be fairly presented and free from bias.

Reliability-

this means that financial statements are prepared intended to help users make informed economic decisions.

Relevance

this means that financial statements prepared are worth comparing for with other companies of the same line of business by pointing out similarities and differences.

Comparability-

once a method or practice is selected from alternatives, it should be followed from period to period.

Consistency-

they need information to help them determine whether they should buy, hold, or sell.

Investors-

interested in information about the stability and profitability of the enterprise.

Employees-

interested in information which enables them to determine whether their loans and interest thereon will be paid when due.

Lenders-

these users are interested in information which enables them to determine whether amounts owing to them will be paid on maturity.

Suppliers and other trade creditors-

interest in information about the continuance of an enterprise especially when they have long-term involvement with or are dependent on the enterprise.

Customers-

the accounting period will begin on January 1 and will end on December 31 of the same year.

Calendar Year-

the accounting period will begin on the first day of any month of the year except January and will end on the last day of the twelfth month completing the one year period.

Fiscal Year-

is a twelve month period that ends on any month when the business is at the lowest or experiencing slack season.

Natural Business Year

this assumes that in the Philippines we used the “peso” as a unit of measure. Peso as a unit of measure is assumed further to have a “stable value” which means that purchasing power of peso is “constant” regardless of inflation rates of fluctuation in money values.

Stable Monetary Unit (Unit of Measure)-

this assumes that the recording of income and expense follow the accrual basis of accounting. Under accrual basis, income is recognized when earned regardless of when received and expense is recognized when incurred regardless of when paid.

Accrual Basis-

is anything that has current or future economic value to a business. Essentially, for businesses, assets include everything controlled and owned by the company that's currently valuable or could provide monetary benefit in the future. Examples include: motor vehicles, buildings, machinery, equipment, cash, land, inventories, accounts receivable.

Assets-

is a financial obligations of the business to its creditors.

Liabilities-

is the amount of money or value of property put by the proprietor into the business to start with the operations which is referred to as “Initial Investment” or “Initial Capital”.

Owner’s Equity or Capital-

Formula of Capital

Asset-Liabilities=Owner’s Equity or Capital

_______ is considered as the income that the business derived from its primary business activities. The _____ are regarded as the income available from other business activities that do not form part of the ordinary course of the business operation.

1. Revenue 2. Gains-

____ are necessary costs of doing business, while _____ are unplanned and often unexpected.

Expenses and Losses-

is a financial statement which shows the financial position of an enterprise as of particular date.

Balance Sheet-

Purpose of balance sheet

measures and evaluates in terms of the enterprise’ liquidity, solvency, financial structure and capacity for adaptation.

Purpose: Income Statement-

Helps you understand the financial health of your business, whether a company is making profit or loss for a given period.

is a financial statement which shows the performance of the enterprise for a given period of time.

Income Statement-

a financial statement that summarizes the changes in equity for a given period of time.

Statement of Changes in Equity-

Purpose: Statement of Changes in Equity-

to furnish shareholders with information that can further inform their investment strategy, and strengthen investor trust in your company.

is a financial statement that provides information about cash inflows(receipts) and cash outflows(payments) of an entity for given period of time.

Statement of Cash Flows-

Purpose: Statement of Cash Flows-

to show what caused the change in cash from the beginning of the period to the end of the period.

this is an integral part of the financial statements.

Accounting Policies and Notes to Financial Statements-

Purpose: Accounting Policies and Notes to Financial Statements-

it provide information about the methods, assumptions, and judgments used to prepare the financial statements.

these users require information to regulate the activities of the enterprise, determine taxation policies and as a basis for national income and similar statistics.

Government and their agencies

enterprise affects members of the public in a variety of ways. For example, enterprises makes substantial contributions to the local economy in many ways including the number of people they employ and their patronage of local suppliers. Financial statements may assist the public by providing information about the trends and recent developments in the prosperity of the enterprise and the range of its activities.

Public

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