Accounting History, Principles, and Fundamental Concepts

Flashcards covering definitions of accounting, primitive record-keeping, historical milestones, business types, MSME criteria, and key Philippine accounting pioneers.

How did the American Institute of Certified Public Accountants (AICPA) define accounting in 1953?

Accounting is an art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the result thereof.

How did the American Accounting Association (AAA) define accounting in 1966?

Accounting is a process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information.

What were 'bullae' in primitive accounting?

They were the first bills of lading used in ancient record-keeping.

What are the seven preconditions for the emergence of systematic bookkeeping listed by A.C. Littleton?

1. Art of Writing, 2. Arithmetic, 3. Private Property, 4. Money, 5. Credit, 6. Commerce, 7. Capital.

What device did the Inca Empire use between the 11th and 14th centuries to keep accounting records?

The quipu, which was a knotted cord of different lengths and colors.

Who is credited as the inventor of double-entry bookkeeping, and what books did he use?

Amatino Manucci. He used 5 books (General Ledger, 2 merchandise Ledgers, Expenses Ledger, Cash book) plus a 6th book called the White Ledger.

Who is known as the Father of double-entry accounting, and what book did he publish in 1494?

Luca Pacioli. He published Summa de Arithmetica, Geometria, Proportioni et Proportionalita.

What accounting principle did Jacques Savary formulate in early accounting literature?

The lower-of-cost-or-market principle.

What contribution did Nicolas Petri make to accounting in the 17th century?

He was the first person to group similar transactions in a separate record and enter the monthly totals in the journal.

What was the earliest known American accounting book, and who published it in 1769?

The American Accountant, published by Benjamin Workman.

How did the expansion of railroads in the late 1800s influence accounting practice?

Railroads were heavy users of debt financing, issued balance sheets to creditors, and created the need for depreciation accounting due to expensive equipment.

Which corporation was the first to publish consolidated financial statements on March 12, 1903?

United States Steel, audited by Price Waterhouse & Company (PW).

Who introduced 'Dynamic Balances' to assist in comparing financial data between companies?

Eugen Schmalenbach, a German academic and economist who wrote The Model Chart of Accounts.

When was the Philippine Bureau of Internal Revenue (BIR) created and made operational?

August 1, 1904.

Who created VisiCalc for the Apple II, making it the first electronic spreadsheet for personal computers?

Dan Bricklin and Bob Frankston.

Under Republic Act No. 9501, what percentage of loan portfolios must banks allocate to MSMEs?

Banks must allocate $10BA$ of their total loan portfolio ($8BA$ for micro and small businesses and $2BA$ for medium enterprises).

What are the asset value and workforce requirements for a Micro Enterprise in the Philippines?

Assets of $3\text{ million}$ pesos or less (before financing) and $1$ to $9$ workers.

What are the asset value and workforce requirements for a Small Enterprise in the Philippines?

Assets of above $3\text{ million}$ to $15\text{ million}$ pesos (before financing) and $10$ to $99$ workers.

What are the asset value and workforce requirements for a Medium Enterprise in the Philippines?

Assets of above $15\text{ million}$ to $100\text{ million}$ pesos (before financing) and $100$ to $199$ workers.

What are the four main phases in the accounting process?

1. Measuring, 2. Classifying, 3. Summarizing, 4. Interpreting.

What three books were described by Luca Pacioli in the Summa?

1. Memorandum, 2. Journal, 3. Ledger.

What are the two major accounting specializations derived from performances and management needs?

Financial Accounting (provides information to owners) and Management Accounting (provides information to managers).

What is the Entity Concept in accounting?

The concept that a business is treated as an entity separate and distinct from its owners.

What are the three criteria for general acceptance of an accounting principle (GAAP)?

1. Relevance, 2. Objectivity, 3. Feasibility.

What does the Historical Cost principle mandate?

Acquired assets should be recorded at their actual cost rather than what management thinks they are worth at the reporting date.

When and where was ASEAN established, and who were its five founding member countries?

Established on August 8, 1967 in Bangkok, Thailand by Indonesia, Malaysia, Philippines, Singapore, and Thailand.

Who was the first registered Certified Public Accountant (CPA) in the Philippines holding certificate number 1?

William F. Larkins.

Who was the first Filipino CPA in the United States and founder of Jose Rizal University in 1919?

Don Vicente Fabella.

Who was the first Filipina CPA and one of the original trustees of Far Eastern University (FEU)?

Belen Enrile-Gutierrez.