ACC 111

The 1966 definition from this body describes accounting as the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions.

American Accounting Association (AAA)

The 1983 definition from this body describes accounting as a service activity whose function is to provide quantitative, primarily financial information useful in making economic decisions.

Accounting Standards Council (ASC)

The 1953 definition from this body describes accounting as an art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events.

American Institute of Certified Public Accountants (AICPA)

The 1978 definition from this body describes accounting as an information system that measures, processes, and communicates financial information about an economic entity.

Financial Accounting Standards Board (FASB)

The classic figurative term used to describe accounting because of its role in measuring, processing, and reporting vital information to help organizations communicate.

Language of Business

A mechanical process that focuses solely on collecting, classifying, and recording the routine daily economic transactions of a business in chronological books.

Bookkeeping

The specific branch of accounting concerned with recording transactions and preparing periodic reports primarily intended for external users like stockholders and creditors.

Financial Accounting

The branch of accounting that provides internal users, such as managers and owners, with the operational and strategic financial information they need to make decisions.

Managerial Accounting

The branch of accounting that involves investigating and reporting on financial crimes, fraud, and harmful business practices to be presented as legal evidence in court.

Forensic Accounting

The branch of accounting concerned with tracking and managing taxes to ensure compliance with governmental rules and the Internal Revenue Code.

Tax Accounting

The branch of accounting concerned with the identification of the sources and uses of resources consistent with the provisions of local, provincial, or national laws.

Government Accounting

The branch of accounting focused on recording and analyzing various costing problems and cost data in the books of accounts for large-scale manufacturing.

Cost Accounting

The specialized branch of accounting used by organizations incorporated to benefit the public or club members rather than making a profit.

Non-Profit Accounting

The Franciscan friar and celebrated mathematician who wrote the 1494 textbook explaining the double-entry bookkeeping system in Venice.

Fra Luca Pacioli

The title of the 1494 Venice-published math and bookkeeping text written by Fra Luca Pacioli.

Summa de Arithmetica, Geometria, Proportioni et Proportionalita

The three essential things Pacioli stated a merchant must have to be successful in business.

Sufficient cash or credit, a good bookkeeper, and an accounting system

The Italian city-state where double-entry bookkeeping records first appeared in formal ledgers around 1340 A.D.

Genoa

The group of early professionals whose bookkeeping methods in 1340 A.D. formed the basis for systematic, although primitive, record-keeping.

Florentine Bankers

The historical individual regarded by scholars as the actual inventor of double-entry bookkeeping, who utilized five integrated record books.

Amatino Manucci

The five books utilized by inventor Amatino Manucci in his double-entry recording system.

General ledger, two merchandise ledgers, expenses ledger, and cash book

The geographic area where archaeologists found keeping of accounts through clay tokens dating as far back as 8500 B.C.

Mesopotamia

The ancient clay balls where clay tokens were sealed to prevent theft and served as the very first historical bill of lading.

Bullae

The ancient Babylonian set of laws requiring merchants trading goods to provide buyers with a sealed memorandum containing the agreed price before it can be legally enforced.

Code of Hammurabi

The title of the ancient public official or record-keeper who recorded business agreements, wages, and transactions on clay tablets.

Scribe

The 17th-century scholar who was the first to group similar transactions in a separate record and enter monthly totals in a journal rather than recording in series.

Nicolas Petri

The author of 'The American Accountant', the earliest known American accounting textbook published by a colonial educator.

Benjamin Workman

The major historical era from the mid-18th to mid-19th century that transformed handcraft production into the factory system, prompting the emergence of cost accounting.

Industrial Revolution

The heavy user of debt and capital that was the first American firm to issue balance sheets to absentee creditors, standardizing accounting procedures.

Railroad Industry

The massive industrial conglomerate that published consolidated financial statements with Price Waterhouse & Company's assurance that they were audited and correct.

United States Steel

The German academic and economist who published 'The Model Chart of Accounts' to allow meaningful comparison of financial data across different companies.

Eugen Schmalenbach

The Emperor of the Xin Dynasty who is historically recorded as having instituted the very first income tax in the year 10 CE.

Emperor Wang Mang

The first electronic spreadsheet program written for the personal computer (specifically the Apple II) by Dan Bricklin and Bob Frankston in 1979.

VisiCalc

The regional economic integration initiative whose vision is to establish a stable, prosperous, and highly competitive economic region with free flow of goods and services.

ASEAN Economic Community

The Monitoring Committee registration that a Filipino CPA must successfully apply for to be legally eligible to practice their profession across the ASEAN region.

ASEAN Chartered Professional Accountant (ACPA)

The common regional framework designed to enable the comparison of qualifications of skilled labor across ASEAN Member States.

ASEAN Qualifications Reference Framework (AQRF)

The accounting concept stating that a business is a separate economic unit, distinct from its owners and any other business.

Economic Entity Assumption

The assumption that a business will continue to operate indefinitely and remain in business unless there is clear evidence of impending liquidation.

Going-concern Assumption

The accounting concept that allows an entity's indefinite life to be subdivided into equal, artificial time periods for reporting purposes.

Periodicity / Time Period Concept

The assumption that business transactions must be measured and recorded in terms of a stable, single monetary denomination of the country where the business operates.

Stable Monetary Unit

The basic principle requiring assets to be recorded in the books of accounts at their actual purchase cost, rather than what management thinks they are worth.

Historical Cost Principle

The principle requiring that all accounting records and financial statements be backed by the most reliable, verifiable evidence to eliminate personal bias.

Objectivity Principle

The principle stating that revenue should be recognized in the accounting period when goods are delivered or services are performed, regardless of when cash is collected.

Revenue Recognition Principle

The principle stating that expenses should be recognized in the same period as the revenues they helped to generate, rather than when the cash is actually paid.

Expense Recognition Principle (Matching Concept)

The principle requiring that all circumstances, events, and situations relevant to a user's understanding of the financial statements be fully disclosed.

Adequate Disclosure Principle

The principle stating that the significance of an item must be considered; an item is significant if its omission or misstatement would influence a user's decision.

Materiality Concept

The principle requiring a firm to use the same accounting methods and principles from period to period to ensure comparability over time.

Consistency Principle

The principle dictating that when choosing between two acceptable solutions, the one that results in a less favorable or more cautious outcome should be selected.

Conservatism (Prudence)

The accounting standard criterion measuring whether the standard results in information that is meaningful and useful to those who need to make credit/investment decisions.

Relevance

The accounting standard criterion measuring whether a standard can be implemented without introducing undue complexity or prohibitive costs.

Feasibility

The regulatory rule indicating which standards govern when there is an irreconcilable conflict between financial GAAP standards and the National Tax Code.

Tax Code Prevails

According to Dr. Alexander Osterwalder, this term describes the rationale of how an organization creates, delivers, and captures value.

Business Model

The three primary operating forms of business organizations based on how they structure their ownership.

Sole Proprietorship, Partnership, Corporation

A form of business owned by a single individual who receives all profits, absorbs all losses, and is personally liable for all business debts.

Sole Proprietorship

A contract where two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing profits.

Partnership

An artificial being created by operation of law, having the right of succession and powers authorized by law, owned by stockholders.

Corporation

The corporate owners whose ownership is represented by shares of stock and who are distinct from the managers of the firm.

Stockholders (Shareholders)

A type of business that performs intangible activities or services for a fee, such as law firms, accounting firms, and dry cleaners.

Service Company

A type of business that purchases completed goods that are ready for sale and then sells them directly to customers without changing their form.

Merchandising Company (Trading)

A type of business that buys raw materials, uses labor and factory resources to convert them into finished products, and sells them to consumers.

Manufacturing Company

The Philippine law signed on May 23, 2008, by President Arroyo to address capital shortages and credit access barriers for small businesses.

Republic Act No. 9501 (MSMED Act)

The mandatory percentage of their loan portfolios that banks must allocate to micro, small, and medium enterprises under RA 9501.

At least 10% (8% to Micro/Small, 2% to Medium)

The classification for a business with total assets before financing of Php 3 Million or less and employing 9 or fewer workers.

Micro Enterprise

The classification for a business with total assets before financing of above Php 3 Million to Php 15 Million and employing 10 to 99 workers.

Small Enterprise

The classification for a business with total assets before financing of above Php 15 Million to Php 100 Million and employing 100 to 199 workers.

Medium Enterprise

Business activities that involve using resources to design, produce, distribute, and market goods or services, including paying operating expenses and current liabilities.

Operating Activities

Business activities involving the selection, acquisition, management, and disposal of long-term non-current assets and resources.

Investing Activities

Business activities focused on obtaining capital and financial resources from owners (investors) and creditors, and managing those resources.

Financing Activities

The four distinct, consecutive phases of the accounting process.

Recording, Classifying, Summarizing, Interpreting

The first phase of accounting where transactions are identified, measured, and entered chronologically, also known as journalizing.

Recording

The second phase of accounting where journal transactions are transferred and grouped into their respective general ledger accounts, also known as posting.

Classifying

The third phase of accounting where ledger balances are compiled to prepare the trial balance, worksheet, and formal financial statements.

Summarizing

The fourth phase of accounting where financial statements are analyzed to evaluate the liquidity, profitability, and solvency of the enterprise.

Interpreting

The Philippine law signed by President Gloria Macapagal-Arroyo on May 13, 2004, regulating the practice of accountancy in the country.

Republic Act No. 9298 (Philippine Accountancy Act of 2004)

The Professional Regulation Commission (PRC) body composed of a Chairman and six members responsible for standardizing accounting exams and education.

Professional Regulatory Board of Accountancy (BOA)

The standard-setting body that replaced the Accounting Standards Council (ASC) to establish and improve accounting standards in the Philippines.

Financial Reporting Standards Council (FRSC)

The professional organization founded on November 18, 1981, by PICPA to establish the country's first generally accepted standards.

Accounting Standards Council (ASC)

The Philippine government tax agency created through the passage of Reorganization Act No. 1189 on July 2, 1904.

Bureau of Internal Revenue (BIR)

The first registered Certified Public Accountant in the Philippines, holding Certificate Number 1.

William F. Larkins

The first Filipino CPA in the United States and the founder of Jose Rizal University in 1919.

Don Vicente Fabella

The founder and first President of Far Eastern University, which originally started in 1928 as the Institute of Accountancy.

Dr. Nicanor Reyes

The first Filipina Certified Public Accountant and one of the original FEU trustees appointed in 1933.

Belen Enrile-Gutierez

The legendary founder of SGV & Co. who served as the only Asian President of the International Federation of Accountants (IFAC).

Washington SyCip

The legislative act regulating public accounting in the Philippines passed on March 17, 1928, which created the original three-member Board.

Act No. 3105

The four sectors of professional accounting practice defined under Section 4 of the Accountancy Act of 2004.

Public Practice, Commerce and Industry, Academe/Education, Government Service

To pass the CPALE, a candidate must obtain a general average of 75% with no grade lower than this in any subject.

65%

The academic requirement for candidates who fail two complete consecutive CPA Board Examinations.

Refresher Course (24 units of board subjects)

The three categories of professional competencies required of modern accountants under the PRC framework.

Knowledge, Skills, Values

The fundamental ethical principle requiring a professional accountant to be straightforward, honest, and truthful in all professional and business relationships.

Integrity

The fundamental ethical principle dictating that an accountant must not allow bias, conflict of interest, or undue influence to override professional judgment.

Objectivity

The ethical duty to maintain professional knowledge and skill at the required level and act diligently in accordance with technical and professional standards.

Professional Competence and Due Care

The ethical principle stating that an accountant must respect the privacy of information acquired through business relationships and not disclose it without authority.

Confidentiality

The ethical principle requiring accountants to comply with relevant laws and regulations and avoid any action that would discredit the profession.

Professional Behavior

The three parts of the Code of Ethics for Professional Accountants in the Philippines.

Part A (Fundamentals), Part B (Public Practice), Part C (Business)

The cornerstone mathematical relationship of financial accounting represented as Assets = Liabilities + Owner's Equity.

Basic Accounting Equation

An account used to accumulate and record the gradual allocation of the cost of a tangible long-lived asset over its estimated useful life.

Accumulated Depreciation (Contra-Asset)

The side of an account (debit or credit) where increases are recorded based on its element classification.

Normal Balance

A trial balance error that occurs when reversing the order of numbers (e.g., writing 54 instead of 45), always resulting in a discrepancy divisible by 9.

Transposition Error

A trial balance error occurring when a decimal point is moved one or more places to the left or right (e.g., writing 5,400 instead of 540), also divisible by 9.

Sliding Error

The formal document used as a control device to list all accounts with their respective debit or credit balances to verify mathematical equality.

Trial Balance

The accounting basis where transactions are recognized in the period they occur regardless of when cash is actually received or paid.

Accrual Basis