Lecture Notes: Conceptual Framework & Accounting Standards (VOCABULARY Flashcards)

Vocabulary flashcards covering key concepts, processes, information types, users, branches, fiduciary topics, and business structures from Pages 1–5 notes.

Accounting (service activity)

The function of providing quantitative financial information about economic entities to aid economic decision making.

AICPA

American Institute of Certified Public Accountants; defines accounting as the art of recording, classifying, summarizing in money terms, and interpreting transactions and events of a financial character.

AAA (American Accounting Association)

American Accounting Association; views accounting as the process of identifying, measuring, and communicating economic information to permit informed judgement and decision by users.

Accountancy Act of 2004 (RA 9298)

Regulatory law governing the practice of accountancy in the Philippines, including standardization/regulation of education, CPA licensure examination, and supervision/regulation of the profession.

Scope of Practice (Accounting)

Areas where accountants provide services: Public Practice, Private Accounting, Government Accounting, and Academic settings.

Public Practice Accounting

Accounts offering professional services to clients for a fee (accountant–client relationship).

Private Accounting

Accounting performed within private enterprises or nonprofit organizations; characterized by an employer–employee relationship.

Government Accounting

Accounting focused on the custody and purposes of government funds, typically used for national government and instrumentalities.

Academic Accounting (Education)

Accounting used in academic settings; teaching and study of accounting concepts.

Accounting Education

Involves teaching accounting, taxation, and related business subjects.

Identifying Process (Analytical Component)

Analyzing events and transactions to determine whether and how they will be recognized in financial statements.

External Events

Transactions involving the entity and another external party.

Exchange

Reciprocal giving and receiving of economic resources or extinguishment of obligations.

Non-reciprocal Transfer

One-way transaction where the entity gives without receiving anything in return.

Other than Transfer

Event that changes the entity’s resources or obligations caused by an external party and not involving a transfer.

Internal Events

Events that do not involve an outside party.

Measuring Process (Technical Component)

Determining the monetary amounts at which elements of financial statements are recognized and carried in the balance sheet and income statement.

Recording

Documenting or writing down financial transactions in the accounting records.

Classifying

Grouping recorded transactions into accounts for reporting.

Quantitative Information

Numerical, measurable accounting data.

Qualitative Information

Non-numeric information describing the quality or attributes of accounting data.

General Purpose Accounting Information

Information designed to meet the common needs of most statement users.

Special Purpose Accounting Information

Information designed to meet the specific needs of particular statement users.

Investors

Users concerned with risk and return of investment and the ability to pay dividends.

Lenders / Creditors

Users concerned with liquidity and solvency of the entity.

Employees

Users concerned with stability and profitability of the entity.

Customers

Users concerned with the continuity of the entity’s operations.

Government (Regulatory)

Users concerned with regulatory compliance and government oversight.

Public (Users)

General public users with interest in various branches of accounting.

Financial Accounting

Branch focusing on general-purpose financial statements for external users.

Management Accounting

Branch for internal users; accumulation and communication of information for management.

Cost Accounting

Systematic recording and analysis of production costs (materials, labor, overhead).

Auditing

Process of evaluating the assertion data against established criteria and expressing an opinion.

Tax Accounting

Preparation of tax returns and advisory services on tax matters.

Fiduciary Accounting

Handling accounts managed by a person entrusted with custody and management of property for the benefit of another.

Estate Accounting

Handling accounts for fiduciaries who wind up the affairs of a deceased person.

Sole Proprietorship

Business owned by a single person; advantages include easy formation; unlimited liability; profits taxed to owner; limited life.

Partnership

Business owned by two or more persons; advantages include easy formation and pooling of resources; unlimited liability; cons include limited life and potential joint liability.

Corporation

A separate legal entity with limited liability for shareholders, perpetual existence, and ability to raise capital; governance by board; subject to government regulation and taxation.