Conceptual Framework and Accounting Standards – Key Concepts (Pages 3-9)

Flashcards cover key concepts from Pages 3-9, including definitions of accounting, scope, processes, user categories, EPILOC, and career/specialization pathways in accounting.

What are the four descriptions of accounting according to the American Association of Accountants?

A service activity; the language of business; a science and an art; and a process of identifying, measuring and communicating economic information to users who will make judgments or decisions.

According to Millan (2019), what are the three important activities in the definition of accounting?

Identifying, measuring, and communicating.

What are the three activities in the process to convert data into useful information (Identifying, Measuring, Communicating) mapped to?

Recognition; Measurement; Presentation and Disclosure.

What is the product of the financial reporting process that we focus on in this course?

Financial statements.

What term is used to refer to the reports that come from the accounting process?

Accounting reports.

What-term describes the interchangeable set of terms that may be used for accounting-related concepts?

Bookkeeping; accounting; accountancy; and financial reporting.

What is the difference between bookkeeping and accounting?

Bookkeeping is procedural and concerns maintenance of accounting records; accounting is conceptual and concerns the why, reason or justification for actions.

What is the difference between accounting and accountancy?

Accounting refers to the activity or process; Accountancy refers to the profession or practice.

Which has broader scope, accounting or financial reporting?

Accounting has a broader scope; financial reporting focuses on providing financial information to external users.

What does EPILOC stand for?

Existing and Potential Investors, Lenders, and Other Creditors.

Which users are INTERNAL decision-makers?

Owners, Employees, and Managers.

Which users are EXTERNAL decision-makers?

Creditors, Government agencies, Banks, Investors, Suppliers, Customers.

Why do decision-makers need relevant and reliable accounting information?

To assess options, make informed decisions, and avoid adverse domino effects; information supports liquidity, profitability, and solvency judgments.

What are liquidity, profitability, and solvency in accounting terms?

Liquidity: ability to pay short-term obligations; Profitability: ability to generate revenues exceeding costs; Solvency: ability to pay interest and principal on long-term obligations.

How can past events be used in accounting for forecasting?

Past results, if properly identified, measured and communicated, can be used as a basis to forecast possible future sales/revenues and costs/expenses.

What does the phrase 'Accounting' cover compared to 'Financial Reporting' in terms of scope?

Accounting has a broader scope (internal and external users); Financial reporting focuses on providing financial information to external users.

What is the EPILOC mnemonic used for in this course?

Existing and Potential Investors, Lenders, and Other Creditors.

Which four sectors do CPAs in the Philippines align with, as reflected by PICPA's organization structure?

Commerce and Industry; Public Practice; Education or Academe; Government.

Name the four organizations under PICPA for CPAs in the Philippines.

ACPACI – Association of Certified Public Accountants in Commerce and Industry; ACPAPP – Association of Certified Public Accountants in Public Practice; nACPAE – National Association of Certified Public Accountants in Education; GACPA – Government Association of Certified Public Accountants.

What is PICPA?

The Philippine Institute of Certified Public Accountants, the accredited professional organization for CPAs in the Philippines.

Name three additional fields of specialization in accounting listed in Lesson 2.

Financial Statements Audit; Internal Auditing; Accounting Information Systems Specialist.

Name three more fields of specialization in accounting listed in Lesson 2.

Accounting Education; Government Accounting; Forensic Accounting; Environmental Accounting.