FAR 2 - Theoretical Foundation of Accounting and the Philippine Accountancy Profession

Vocabulary flashcards covering key terms and concepts from FAR 2: Theoretical Foundation of Accounting and the Philippine Accountancy Profession.

Accounting

A service activity and information system that records, measures, classifies, summarizes, and communicates financial information about economic entities to support users' decision-making.

Accountancy Profession

The professional field of accounting, comprising four main areas: public practice, private practice, government accounting, and accounting in education.

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

Philippine law regulating the practice of accountancy, establishing the framework for examination, registration, licensure, and the governance of the profession.

Professional Regulatory Board of Accountancy (BOA)

The board under the Professional Regulation Commission that regulates the practice of accountancy in the Philippines, sets rules, qualifications, and standards.

Public Practice

Accountancy work provided to the public, including auditing, taxation, and management advisory services.

Private Practice

Accountancy work within commerce and industry, aiding management in planning, controlling, and decision making.

Government Accounting

Accounting in the public sector, involving analysis, classification, summarization, and reporting of government funds and property.

Accounting in Education

Teaching and scholarship in accounting and related subjects in higher education institutions.

Double-entry bookkeeping

A recording system where each transaction affects at least two accounts with debits and credits to maintain duality.

Amatino Manucci

Early practitioner (1299–1300) of double-entry bookkeeping; partner in Gioanni Farolfi and Company; pioneer of the method.

Luca Pacioli

15th-century Italian mathematician known as the ‘father of double-entry bookkeeping’; described the method in Summa (1494).

IASC (International Accounting Standards Committee)

International body established in 1973 to develop international accounting standards; later replaced by IASB.

IASB (International Accounting Standards Board)

Board established in 2001 to replace IASC and develop IFRS.

Norwalk Agreement

2002 agreement between FASB and IASB to converge US GAAP and IFRS.

ASEAN Mutual Recognition Arrangements for Accountancy (2014)

Agreement among ASEAN members to recognize accountancy qualifications to facilitate cross-border practice.

FRSC (Financial Reporting Standards Council)

Philippine body responsible for setting financial reporting standards; replaced ASC.

ASC (Accounting Standards Council)

Predecessor to FRSC; established guidelines for accounting standards in the Philippines.

CPD (Continuing Professional Development)

Ongoing education and training after initial licensure to maintain and improve professional competence.

Certificate of Accreditation to Practice Public Accountancy

Certificate allowing public accountancy practice; requires 3 years of relevant experience and 120 CPD units; valid for 3 years.

CPD credit requirements for renewal

Renewal of CPA license requires 15 CPD credits within a 3-year period; accreditation requires 120 CPD credits in 3 years.

PICPA (Philippine Institute of Certified Public Accountants)

National professional organization representing CPAs in the Philippines.

Professional Regulatory Board of Accountancy qualifications

Board members must be natural-born Filipino CPAs with at least 10 years experience, good moral character, and no conflicting interests; term is 3 years with possible extensions.

Scope of accounting - Identifying

Analytical component; recognizing or not recognizing business activities as accountable events; events are accountable if they affect assets, liabilities, and equity (external or internal transactions).

Scope of accounting - Measuring

Technical component; assigning peso values to accountable events; includes valuation by opinion (estimates) and by fact (no estimates).

Scope of accounting - Communicating

Formal component; preparing and distributing accounting reports; includes recording (journalizing), classifying (posting), and summarizing (financial statements).

Journalizing

Recording transactions in the journal after identification and measurement.

Valuation by opinion

Measurement based on estimates or judgments.

Valuation by fact

Measurement based on actual quantities without estimates.

External Transactions

Economic events involving interactions between two or more entities.

Internal Transactions

Economic events occurring within a single entity; internal movements and changes.

US GAAP and IFRS convergence

Efforts to align US Generally Accepted Accounting Principles with International Financial Reporting Standards.

IFRS (International Financial Reporting Standards)

International accounting standards developed by the IASB for global use.