Financial Accounting and Reporting 1 - Lesson 1 Flashcards

Vocabulary flashcards covering fundamental accounting definitions, functions, branches, professional fields, organizations, user types, business types, and forms of business organization.

Accounting (Art Definition)

The 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 results thereof.

Accounting (ASC Definition)

A service activity which function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions, in making reasoned choices among alternative courses of action.

Accounting (CIMA Definition)

The classification and recording of monetary transactions, the presentation and interpretation of the results of those transactions in order to assess performance over a period of time and the financial position at a given time and the monetary projection of future activities arising from the alternative planned courses.

Bookkeeping

The recording of monetary transactions, appropriately classified, in the financial records of an entity in chronological order or according to date of occurrence, by either manual means or otherwise.

Trial Balance

A periodic summary of all accounts with their balances.

Income Statement

A financial report that shows the results of the business operation.

Balance Sheet

Also known as Statement of Financial Position, a financial report that shows the financial condition of the business.

Statement of Cash Flows

A financial report that shows the sources and uses of the organization's funds.

Notes to Financial Statements

A financial report component that focuses on the narrative report of the financial statements.

Financial Accounting

A branch of accounting concerned primarily with the preparation of general-purpose financial statements to communicate the results of operation and financial condition to both external and internal users.

Management Accounting

A branch of accounting focused on providing management with relevant accounting information for decision making, planning, directing, and controlling an enterprise's operations.

Tax Accounting

A branch of accounting focused on the preparation of income tax returns and providing advice to clients on matters related to tax issues.

Cost Accounting

A branch of accounting focused on gathering cost information to determine product or service costs, helping management set prices, plan, control activities, and improve quality and efficiency.

Public Accounting

A field of accounting where an accountant practices as an individual practitioner or partner of an firm rendering professional services such as auditing, taxation, and management consultancy for a fee.

Auditing

The function of a CPA to audit or verify financial transactions and accounting records, examine financial statements, and express an opinion regarding their fairness and adherence to Philippine Standards in Auditing (PSA).

Private Accounting

A field of accounting where accountants are employed in commerce and industry as financial accountants, cost accountants, management accountants, or internal auditors.

Government Accounting

A field of accounting practiced in government agencies guided by the New Government Accounting Standards (NGAS).

PICPA

Philippine Institute of Certified Public Accountants; the national professional accountancy body of the Philippines formed in November 1929.

ACPAE

Association of Certified Public Accountants in Education; an association under PICPA for CPAs who belong to the academe.

ACPACI

Association of Certified Public Accountants in Commerce and Industry; an association under PICPA for CPAs who are employees of private companies.

GACPA

Government Association of Certified Public Accountants; an association under PICPA for CPAs who work in government agencies.

ACPAPP

Association of Certified Public Accountants in Public Practice; an association under PICPA for CPAs who work with accounting firms as external or independent auditors.

Professional Regulation Commission (PRC)

The government agency tasked to promulgate rules and regulations regarding the practice of a profession, including the administration of licensure examinations.

Board of Accountancy (BOA)

An agency under the umbrella of PRC in charge of regulating the accounting profession by setting up rules of conduct and standards.

Internal Users

Users who make decisions directly affecting the internal operations of the business, such as Managers, Employees, Officers, and Internal Auditors.

External Users

Individuals or enterprises that have financial interest in the business but are not involved in the day-to-day activities, such as Business Contacts, Lenders, Customers, Investors, Analysts/advisers, Governments, Independent Auditors, and the Public.

Service Business

A type of business that provides services to customers, such as utilities, telecommunications, transportation, hospitals, and entertainment.

Merchandising Business

A type of business where traders purchase goods and sell them to customers without changing their form.

Manufacturing Business

A type of business that buys raw materials and converts them into finished products.

Sole Proprietorship

A form of business owned and operated by one owner, where the owner is personally liable for the obligations of the business.

Partnership

A form of business formed by two or more individuals (partners) who agree on how profit or loss is divided and are liable for the debts of the business.

Corporation

A business owned by stockholders that has a legal personality separate and distinct from its owners, with ownership divided into shares of stock.