Quiz 1 & 2
International Accounting Standards Board (IASB) - International Financial Reporting Standards (IFRSs) are issued by this.
IASB and IASC
The IASB was formed to replace the IASC.
The accounting standards issued by the IASC were adopted by the IASB.
Proper order in the development of an IFRS:
Discussion paper
Exposure draft
Accounting standard
International Financial Reporting Standards Interpretation Committee (IFRS IC) - the committee that develops authoritative interpretations of existing IAS and IFRS and provides guidance on financial reporting issues not specifically addressed by IAS and IFRS.
Professional Regulation Commission - established the Philippine accounting standard-setting body.
Financial Reporting Standards Committee (FSRC) includes the following:
The FSRC replaces the Accounting Standards Council.
The FSRC’s main function is to establish generally accepted accounting principles in the Philippines.
The FRSC was established to assist the Board of Accountancy in carrying out its power and function in promulgating accounting standards in the Philippines.
Philippine Interpretations Committee (PIC) - was established by the Financial Reporting Standards Committee.
Philippine Interpretations Committee (PIC) includes the following:
was established by the Financial Reporting Standards Committee.
The PIC was established to develop authoritative interpretations of existing PAS and PFRS and provide guidance on financial reporting issues not specifically addressed in PAS and PFRS.
A PIC Interpretation becomes part of PFRS once they are approved by the FRSC.
IFRIC and SIC are the international counterparts of PIC.
Philippine Financial Reporting Standards i
Philippine Accounting Standards
Philippine Financial Reporting Standards
Philippine Interpretations Committee Interpretations
R.A. No. 9298 Philippine Accountancy Act of 2004 - the law regulating the practice of accountancy in the Philippines.
Board of Accountancy - the body authorized by law to promulgate rules and regulations affecting the practice of accountancy in the Philippines.
Philippine Institute of Certified Public Accountants - the accredited professional organization of CPAs in the Philippines.
Auditing services - primary service offered by CPAs in public practice.
Commerce and Industry - a profession practiced as a company’s chief accountant.
Academe - this field of practice involves teaching of accounting, auditing, management advisory services, finance, business law, taxation, and other technically related subjects.
Government - an area of the accountancy profession that is heavily focused on the process of analyzing, classifying, summarizing, and communicating transactions involving the receipt and disposition of government funds and property and interpreting the results.
State Government - they license the Certified Public Accountants.
Creditors and investors - they are the ones that financial accounting emphasizes reporting to.
Managerial Accounting - emphasizes developing accounting information within an entity.
Management - has the primary responsibility for properly applying GAAP.
Professional judgment of the accountant - the proper application of generally accepted accounting principles is dependent on this.
Conceptual Framework for Financial Reporting:
The conceptual framework describes the concepts for general purpose financial reporting.
In case of conflict, the requirements of the IFRS prevail over the Conceptual Framework.
Nothing in the Conceptual Framework overrides any specific IFRS.
Conceptual Framework - define the basic terms and concepts of accounting.
Decision-usefulness - the underlying theme of the Conceptual Framework.
Objective of Financial Reporting - to provide information that is useful to assess the amount, timing, and uncertainty of prospective cash receipts.
“Why” of Accounting - the objective of financial reporting.
Primary users of financial information:
Investors
Lenders and creditors
Fundamental Qualitative Characteristics - these qualitative characteristics relate to the content or substance of financial information.
Faithful Representation - the quality of information that means the numbers and descriptions match what really existed or happened.
Neutrality - qualitative characteristics of financial information require that information should not favor one party to the detriment of another party.
Enhancing Qualitative Characteristics - these qualitative characteristics are intended to increase the usefulness of financial information.
Enhancing Qualitative Characteristics of Useful Information:
Comparability
Verifiability
Understandability
Timeliness
Cost - one constraint on useful financial reporting that the Conceptual Framework mentioned.
Annually - the financial statement should at least be prepared for __.
Going Concern - financial statements are prepared under the assumption that the reporting entity will continue in operation for the foreseeable future.
Reporting Entity - is an entity that is required, or chooses, to prepare financial statements.
Unconsolidated Financial Statements - the reporting entity comprises the parent company only.
At a point in time - the elements of financial position describe amounts of resources and claims against resources ___.
Asset - refers to the present economic resources controlled by the entity as a result of past events.
Liability - for it to exist, the settlement is expected to result in an outflow of economic benefit.
Equity - refers to the residual interest in the assets of the entity after deducting all of its liabilities.
Primary distinction between revenue and gain
The nature of the activity that gives rise to the transaction.
Recognition of an Item in the financial statements:
If it meets the definition of asset, liability, equity, income, and expense.
Derecognition normally occurs when:
An item no longer meets the definition of an asset or a liability.
The entity loses control of the asset.
The entity no longer has a present obligation for the liability.
Measurement bases:
Historical Cost
Current Value
Fair Value - is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
Historical Cost - the most adopted measurement basis in preparing financial statements.
Income and Expenses - are classified as profit or loss and other comprehensive income.
Aggregation - it is the adding together of assets, liabilities, equity, income, and expenses that have similar characteristics and are included in the same classification.
Current Cost - it is the measurement basis that the physical capital maintenance concept requires for adoption.
Quiz 1 & 2
International Accounting Standards Board (IASB) - International Financial Reporting Standards (IFRSs) are issued by this.
IASB and IASC
The IASB was formed to replace the IASC.
The accounting standards issued by the IASC were adopted by the IASB.
Proper order in the development of an IFRS:
Discussion paper
Exposure draft
Accounting standard
International Financial Reporting Standards Interpretation Committee (IFRS IC) - the committee that develops authoritative interpretations of existing IAS and IFRS and provides guidance on financial reporting issues not specifically addressed by IAS and IFRS.
Professional Regulation Commission - established the Philippine accounting standard-setting body.
Financial Reporting Standards Committee (FSRC) includes the following:
The FSRC replaces the Accounting Standards Council.
The FSRC’s main function is to establish generally accepted accounting principles in the Philippines.
The FRSC was established to assist the Board of Accountancy in carrying out its power and function in promulgating accounting standards in the Philippines.
Philippine Interpretations Committee (PIC) - was established by the Financial Reporting Standards Committee.
Philippine Interpretations Committee (PIC) includes the following:
was established by the Financial Reporting Standards Committee.
The PIC was established to develop authoritative interpretations of existing PAS and PFRS and provide guidance on financial reporting issues not specifically addressed in PAS and PFRS.
A PIC Interpretation becomes part of PFRS once they are approved by the FRSC.
IFRIC and SIC are the international counterparts of PIC.
Philippine Financial Reporting Standards i
Philippine Accounting Standards
Philippine Financial Reporting Standards
Philippine Interpretations Committee Interpretations
R.A. No. 9298 Philippine Accountancy Act of 2004 - the law regulating the practice of accountancy in the Philippines.
Board of Accountancy - the body authorized by law to promulgate rules and regulations affecting the practice of accountancy in the Philippines.
Philippine Institute of Certified Public Accountants - the accredited professional organization of CPAs in the Philippines.
Auditing services - primary service offered by CPAs in public practice.
Commerce and Industry - a profession practiced as a company’s chief accountant.
Academe - this field of practice involves teaching of accounting, auditing, management advisory services, finance, business law, taxation, and other technically related subjects.
Government - an area of the accountancy profession that is heavily focused on the process of analyzing, classifying, summarizing, and communicating transactions involving the receipt and disposition of government funds and property and interpreting the results.
State Government - they license the Certified Public Accountants.
Creditors and investors - they are the ones that financial accounting emphasizes reporting to.
Managerial Accounting - emphasizes developing accounting information within an entity.
Management - has the primary responsibility for properly applying GAAP.
Professional judgment of the accountant - the proper application of generally accepted accounting principles is dependent on this.
Conceptual Framework for Financial Reporting:
The conceptual framework describes the concepts for general purpose financial reporting.
In case of conflict, the requirements of the IFRS prevail over the Conceptual Framework.
Nothing in the Conceptual Framework overrides any specific IFRS.
Conceptual Framework - define the basic terms and concepts of accounting.
Decision-usefulness - the underlying theme of the Conceptual Framework.
Objective of Financial Reporting - to provide information that is useful to assess the amount, timing, and uncertainty of prospective cash receipts.
“Why” of Accounting - the objective of financial reporting.
Primary users of financial information:
Investors
Lenders and creditors
Fundamental Qualitative Characteristics - these qualitative characteristics relate to the content or substance of financial information.
Faithful Representation - the quality of information that means the numbers and descriptions match what really existed or happened.
Neutrality - qualitative characteristics of financial information require that information should not favor one party to the detriment of another party.
Enhancing Qualitative Characteristics - these qualitative characteristics are intended to increase the usefulness of financial information.
Enhancing Qualitative Characteristics of Useful Information:
Comparability
Verifiability
Understandability
Timeliness
Cost - one constraint on useful financial reporting that the Conceptual Framework mentioned.
Annually - the financial statement should at least be prepared for __.
Going Concern - financial statements are prepared under the assumption that the reporting entity will continue in operation for the foreseeable future.
Reporting Entity - is an entity that is required, or chooses, to prepare financial statements.
Unconsolidated Financial Statements - the reporting entity comprises the parent company only.
At a point in time - the elements of financial position describe amounts of resources and claims against resources ___.
Asset - refers to the present economic resources controlled by the entity as a result of past events.
Liability - for it to exist, the settlement is expected to result in an outflow of economic benefit.
Equity - refers to the residual interest in the assets of the entity after deducting all of its liabilities.
Primary distinction between revenue and gain
The nature of the activity that gives rise to the transaction.
Recognition of an Item in the financial statements:
If it meets the definition of asset, liability, equity, income, and expense.
Derecognition normally occurs when:
An item no longer meets the definition of an asset or a liability.
The entity loses control of the asset.
The entity no longer has a present obligation for the liability.
Measurement bases:
Historical Cost
Current Value
Fair Value - is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
Historical Cost - the most adopted measurement basis in preparing financial statements.
Income and Expenses - are classified as profit or loss and other comprehensive income.
Aggregation - it is the adding together of assets, liabilities, equity, income, and expenses that have similar characteristics and are included in the same classification.
Current Cost - it is the measurement basis that the physical capital maintenance concept requires for adoption.
