Accountancy Profession and Financial Reporting

Flashcards covering key terms and definitions related to the accountancy profession and financial reporting standards.

Accounting

A service activity that provides quantitative information financial in nature about economic entities, useful for making economic decisions.

Recognition

The process of identifying an accountable event or transaction that affects assets, liabilities, or equity.

External Transaction

Economic transactions involving different entities, such as purchases or sales.

Internal Transaction

Transactions that occur within a single entity, such as production.

Historical Cost

The original acquisition cost of an asset, which is the most common basis for measurement.

Current Value

The fair value or current cost of an asset measured at its present use.

GAAP

Generally Accepted Accounting Principles, a set of rules, standards, and practices used in the accounting industry.

Financial Reporting Standards Council (FRSC)

The body responsible for establishing and improving accounting standards in the Philippines.

Philippine Interpretations Committee (PIC)

A committee formed to provide interpretations of the Philippine Financial Reporting Standards (PFRS).

Going Concern Assumption

The assumption that an entity will continue to operate indefinitely unless there is evidence to the contrary.

Materiality

The significance of financial information that impacts the economic decisions of users.

Relevance

The capacity of financial information to influence the decisions of users.

Faithful Representation

The obligation to represent economic transactions accurately in financial statements.

Qualitative Characteristics

The attributes that make financial information useful, including relevance and faithful representation.

Public Accounting

Accounting services provided by individual practitioners or firms, including auditing and tax services.

Private Accounting

Accounting functions carried out within an organization, focused on assisting management.

Event after the Reporting Period

Events occurring between the end of the reporting period and the date financial statements are authorized for issue, which may require adjustment or disclosure.

Net Income

The total income reported after expenses and losses have been deducted.

Derecognition

The removal of all or part of a recognized asset or liability from the statement of financial position.

Continuing Professional Development (CPD)

Mandatory education requirements for accountants to maintain their licensure and enhance competence.