Financial accounting - is the process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties.

Financial statements - are the principal means through which a company communicates its financial information to those outside it.

Financial Statements:

• statement of financial position,

• income statement or statement of comprehensive income

• statement of cash flows

• statement of changes in equity

Objective of financial reporting - to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions about providing resources to the entity.

Financial statements - provide at the least cost the most useful information possible to a wide variety of users.

Financial statements - output where users can use to enhance their decisions.

Equity investors and creditors - are the primary user groups and have the most critical and immediate needs for information in the financial statements.

Entity perspective - that the company is viewed as being separate and distinct from its investors (both shareholders and creditors).

Decision-usefulness - means that information contained in the financial statements should help investors assess the amounts, timing, and uncertainty of prospective cash inflows from dividends or interest, and the proceeds from the sale, redemption, or maturity of securities or loans.

Accounting - information about business.

Business transactions - economic effect that is recognized in books.

Financial Accounting - is focused on the recording of business transactions and the periodic preparation of reports on financial position and results of operations.

Management Accounting - is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of organization’s strategy.

Areas of Accounting:

• Public - Auditing firms

• Private - companies

• Government - BIA, COA, or within government sector.

• Academe - professors or intructors.

Service of Accounting:

• Accounting - financial statements

• Auditing - independent practitioners who checks financial statements. They provide confidence to clients about their decisions.

• Taxation - tax related

• Management Advisory Services - provide consultancy

R.A. 9298 or Philippine Accountancy Act of 2004 - accounting is governed by law. This law outlines regulations of accountancy and gives designation to CPA.

IASB - International Accounting Standards Board

International Accounting Standards Board - the main international standard setting organization that issued IFRS.

International Accounting Standards Board - it replaced IASC in 2001.

International Accounting Standards Board - they hold no authority to require compliance with its accounting standards.

International Accounting Standards Board - it is appointed by trustees that have 14 members where 3 members may be part-time members. They have a term of five years that is renewable once.

IASC - International Accounting Standards Committee

International Accounting Standards Committee - formed in 1973 and issued 41 IAS.

IFRS - International Financial Reporting Standards

IAS - International Accounting Standards

International Financial Reporting Standards - are used by most foreign exchanges.

IFRS Foundation - It appoints members, reviews effectiveness, and helps in fundraising efforts for these organizations.

IFRS Foundation - has 22 trustees with a term of three years that is renewable once.

IFRS Foundation - is the new name of the IASC Foundation which has been approved in January 2010 and the change formally took effect on July 1, 2010.

IFRSIC - IFRS Interpretations Committee

IFRS Interpretations Committee - formerly known as IFRIC.

IFRS Interpretations Committee - assists the IASB through the timely identification, discussion, and resolution of financial reporting issues within the framework of IFRS.

IFRS Interpretations Committee - has 14 members and the term is renewable every 3 years.

IFRS Interpretations Committee - shall meet as and when required and 10 voting members shall constitute a quorum.

IFRS Advisory Council - formerly called the Standards Advisory Council. They provide advice and council to the IASB on major policies and technical issues.

IFRS Advisory Council - has 30 or more members that are appointed by the trustees and has renewable terms of three years. They meet at least two times a year.

ASC - Accounting Standard Council

Accounting Standard Council - the original accounting standard setting body in the Philippines.

Accounting Standard Council - created by PICPA on November 19, 1981.

PICPA - Philippine Institute of Certified Public Accountant

Accounting Standard Council - was composed of 8 members, 4 from PICPA including the chairman, and 1 each from SEC, BSP, CB, PRC, and FINEX.

PAS - Philippine Accounting Standards

Philippine Accounting Standards - adopted from IAS

PFRS - Philippine Financial Reporting Standards - adopted from IFRS.

In 1997, the ASC decided to move to IAS. The Philippine transition to IAS was effective from 2001.

FSRSC - Financial Sustainability Reporting Standards Council

Financial Sustainability Reporting Standards Council - the new accounting standard setting body in the year of 2004 because of R.A. 9298.

Financial Sustainability Reporting Standards Council - has 15 members including the chairman.

PIC - Philippine Interpretation Committee

Philippine Interpretation Committee - formed by FSRSC in August 2006.

Philippine Interpretation Committee - adopted by the FSRSC from IASB.