FAR1 Basic Accounting Information

Comprehensive vocabulary flashcards covering basic accounting definitions, processes, measurement bases, activities, organizational forms, and regulatory bodies as presented in the FAR1 lecture notes.

Accounting (AAA Definition)

The process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of information.

Accounting (FRSC Definition)

A service activity whose function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions.

Accounting (AICPA Definition)

The art of recording, classifying and summarizing in a significant manner and in terms of transactions and events which are in part at least of a financial character and interpreting the results thereof.

Quantitative Information

Information that refers to numbers.

Financial Information

Information that deals with money.

Production

A type of internal event representing the process by which resources are transformed into finished goods.

Casualty

A type of internal event representing unanticipated losses.

Historical cost

A measurement base defined as the acquisition cost.

Realizable value

A measurement base defined as the current selling price.

Present value

An estimated cost using discounting models; used when there are no other reliable means of measurement.

Current cost

A measurement base defined as the current replacement cost.

Recording

The aspect of communicating involving journal entries.

Classifying

The aspect of communicating involving posting in the ledger.

Summarizing

The aspect of communicating involving the preparation of financial statements.

Interpreting

The aspect of accounting that involves the computation of financial ratios.

Basic Purpose of Accounting

Assistance in decision making.

Sole Proprietorship

A form of business organization owned by a single individual.

Business Partnership

A form of business organization owned by two or more partners.

Corporation

A form of business organization that is a legal entity separate from its owners.

Financing Activities

Business activities involving investing and withdrawing cash, as well as receiving and repaying long-term loans.

Investing Activities

Business activities involving the purchase, exchange, and sale of long-term assets.

Operating Activities

The residual category of business activities defined as all activities not classified as financing or investing.

General Purpose Financial Statements

Statements designed to meet the common needs of most statement users, provided under financial accounting.

Special Purpose Financial Statements

Statements designed to meet specific needs of particular statement users, provided by types of accounting other than financial accounting.

Time Period

The concept that the life of the entity is divided into a series of reporting periods, such as fiscal or calendar periods.

Going Concern

The concept that the entity is assumed to carry on operations indefinitely.

Separate Entity

The concept that the entity is viewed separately from its owners.

Stable Monetary Unit

The concept that assets, liabilities, and equity (A, L, E) are stated in terms of a common unit (peso) and the purchasing power of the peso is stable.

Practice of Public Accountancy

One of the four sectors of accountancy practice, alongside Commerce and Industry, Education/Academe, and Government.

BOA

Board of Accountancy; a relevant regulatory body.

SEC

Securities and Exchange Commission; a relevant regulatory body.

BIR

Bureau of Internal Revenue; a relevant regulatory body.

BSP

Bangko Sentral ng Pilipinas; a relevant regulatory body.

CDA

Cooperative Development Authority; a relevant regulatory body.