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    CFAS Chapter 1 The Accountancy Profession

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    Karen Cael
    1. Accounting provides quantitative financial information to help users make economic decisions. It involves identifying, measuring, communicating, and interpreting financial transactions and events. 2. Accounting aims to be decision-useful by producing financial statements that show an entity's financial performance and position. It follows generally accepted accounting principles to ensure comparability. 3. In the Philippines, the practice of accountancy is regulated by the Accountancy Act and the Board of Accountancy. Certified Public Accountants must be licensed and can practice public accounting by performing audits, tax work, and other services.

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    CFAS Chapter 1 The Accountancy Profession

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    Karen Cael
    754 views1 page
    1. Accounting provides quantitative financial information to help users make economic decisions. It involves identifying, measuring, communicating, and interpreting financial transactions and events. 2. Accounting aims to be decision-useful by producing financial statements that show an entity's financial performance and position. It follows generally accepted accounting principles to ensure comparability. 3. In the Philippines, the practice of accountancy is regulated by the Accountancy Act and the Board of Accountancy. Certified Public Accountants must be licensed and can practice public accounting by performing audits, tax work, and other services.

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    1. Accounting provides quantitative financial information to help users make economic decisions. It involves identifying, measuring, communicating, and interpreting financial transactions and events. 2. Accounting aims to be decision-useful by producing financial statements that show an entity's financial performance and position. It follows generally accepted accounting principles to ensure comparability. 3. In the Philippines, the practice of accountancy is regulated by the Accountancy Act and the Board of Accountancy. Certified Public Accountants must be licensed and can practice public accounting by performing audits, tax work, and other services.

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    Download as docx, pdf, or txt
    754 views1 page

    CFAS Chapter 1 The Accountancy Profession

    Uploaded by

    Karen Cael
    1. Accounting provides quantitative financial information to help users make economic decisions. It involves identifying, measuring, communicating, and interpreting financial transactions and events. 2. Accounting aims to be decision-useful by producing financial statements that show an entity's financial performance and position. It follows generally accepted accounting principles to ensure comparability. 3. In the Philippines, the practice of accountancy is regulated by the Accountancy Act and the Board of Accountancy. Certified Public Accountants must be licensed and can practice public accounting by performing audits, tax work, and other services.

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    I

    Conceptual Framework and Accounting Standards - helps an entity to plan and control operations
    - maintains records, produce financial reports, prepare budgets, controlling and
    CHAPTER 1 allocating resources, determines taxes to be paid
    The Accountancy Profession
    3. Government Accounting - custody and administrating government funds in these
    branches of the government:
    ACCOUNTING IS... a. Bureau of Internal Revenue
    Accounting is a service activity. It’s function is to provide quantitative information b. Securities and Exchange Commission
    primarily financial in nature, about economic entities that is intended to be made c. Department of Budget and Management
    useful in making economic decisions. d. Bangko Sentral ng Pilipinas
    - (Accounting Standards Council, 1983) e. Commission on Audit

    Accounting is an information system that measures, processes, and communicates 4. Academe - sa pag-aaral ng accounting
    financial information about an economic entity.
    - (Accounting Standards Board, 1978) Continuing Professional Development (RA 10912) - improvement ng mga
    professions
    Accounting is the process of identifying, measuring, and communicating economic - it helps CPAs to learn more in advance holistically and enhances technical skills and
    information to permit informed judgement by users of the information. competence to prepare one for a lifelong practice and learning
    - (American Accounting Association, 1970)  CPD Credit Units - or credit hours required for renewal of CPA license (15
    CPD units), for BOA Accreditation, (120 CPD Units = 30 for Technical
    Accounting is an art of recording, classifying and summarizing in a significant Competence + 5 for Professional Skills + 5 for Professional Values, Ethics and
    manner and in terms of money, transactions and events which are in part at least, of a Attitudes + 80 flexible units)
    financial character, and interpreting the results thereof.  Exemption from CPD - pag 65 years old, exempted from license renewal pero
    - (American Institute of Certified Public Accountants, 1953) hindi for accreditation of public practice

    Important Points: (From the ASC definition)  ACCOUNTING VS AUDITING


    1.)
    About quantitative information, 2) Info is most likely financial in nature, Accounting - constructive, ends when FS are done
    3)
    Info is useful in decision making Auditing - analytical, begins when accountants end
     ACCOUNTING VS BOOKKEEPING
    Components of Accounting (From the AAA definition) Accounting - conceptual, answers the why, reason and justifies
    1. Identifying - recognition or nonrecognition of accountable (quantifiable and has Bookkeeping - procedural, answers the how, develops and maintains the
    effect on ALE) events accounting records
     External and Internal Transactions (economic activities)  ACCOUNTING VS ACCOUNTANCY
    a. External transactions - entity and another Accounting - refers to specific fields
    b. Internal transactions - entity ALONE Accountancy - profession of accounting practice
    b1. Production - resources to products  FINACC VS MANACC
    b2. Casualty - sudden and unanticipated loss (acts of God) FinAcc - focuses on FS creation for all users (creditors and investors)
    2. Measuring - assignment of peso amounts (transactions must have common ManAcc - financial reports for within the entity
    financial denominator para comparable)
    a. Historical Cost - most common measure GAAP - Generally Accepted Accounting Principles
    b. Current Value - may be fair value, value in use, fulfillment value or current cost - are rules, procedures, practice and standards followed to form FS
    * Fair Value - cost of an asset as a result of agreed upon orderly - are used to set a common understanding when it comes to preparation and
    transaction among market participants presentation of FS
    * Value in Use - net present value of an asset’s cash flow while it is being used - to ensure comparability and uniformity
    * Fulfillment Value - parang value in use pero for liabilities
    * Current Cost -
    3. Communicating - preparing and distributing accounting info FINANCIAL REPORTING STANDARDS COUNCIL - The highest hierarchy
     Implicit in the communication process (From AICPA definition) - Accounting Standards Council nagdedevelop ng GAAP, FRSC na ngayon
    a. Recording or Journalizing - systematically keeping record of ALL economic - standard setting body created by PRC with the recommendation of BOA with the
    business transaction goal of establishing and improving the standards (PAS and PFRS)
    b. Classifying- sorting and grouping of similar transactions by posting in the ledger  Composition of FRSC - 3 year term, renewable for another term
    (group of accounts in A.L.E.R.Ex. accounts) 1 Board of Accountancy, SEC, BIR, BSP, COA, FINEX
    c. Summarizing - preparation of FS 2 Public, Commerce and Industry, Government, Academe or Education

    Accounting as an Information System (From ASB Definition) PHILIPPINE INTERPRETATIONS COMMITTEE (August 2006)
    - the key product of IS is the SET OF FS or Financial Reports (tells both the financial - para siyang nagiging fallback for those events na hindi nakalagay sa PFRS
    performance and position of the entity)
    INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE (June 1973)
    Overall Objective - provide quantitative information that is useful in making - formed with the goal of having uniformity for accounting principles
    economic decisions  Objectives:
    - essence of accounting is DECISION-USEFULNESS 1. To formulate and publish in the public interest accounting standards
    “AN ACCOUNTANT’S PRIMARY TASK IS TO SUPPLY FINANCIAL INFO TO 2. To work generally for the improvement and harmonization of regulations
    MAKE USERS MAKE DECISIONS”
    INTERNATIONAL ACCOUNTING STANDARDS BOARD - pinalitan yung
    THE ACCOUNTANCY PROFESSION IASC, publishes IFRS but still adopts standards from the IASC that is now called as
    - R.A. 9298 “Philippine Accountancy Act of 2004” IAS.
    - Dapat BSA Graduate bago mag-take ng boards by the BOA
    * Board Of Accountancy - authorized by law para mag-implement ng rules and
    regulations regarding accountancy in the Philippines
    - Computer-based boards made every May and October annually

    Limitation of the Practice of Public Accountancy - Single Proprietors and


    Partnerships (strictly no corpos) shall be registered in SEC as CPA in the Philippines
    with the requirement of abiding by the rules set by the BOA and approved by PRC of
    having THREE MEANINGFUL YEARS OF PUBLIC PRACTICE. They will be given
    CERTIFICATE OF ACCREDITATION.

    Accreditation to Practice Public Accountancy - registration of CPAs, firms,


    partners, staffs shall be issued a CERTIFICATE OF REGISTRATION under PRC by
    recommendation of BOA for 3 years, and renewable after paying fees

    CPAs could practice under:


    1. Public Accounting - can be individuals, small firms to big multinational companies
    to give independent services
    a. Auditing - examination of FS. Primary job of CPAs.
     Internal Auditors - usually involved in the operation (inside entity)
     External Auditors - usually examines FS for fairness (outside entity)
    b. Taxation - prepares annual tax returns and inaalam ang possible tax consequences
    of certain business endeavors.
    c. Management Advisory Service - walang precise coverage, parang overall

    2. Private Accounting - lowest is accounting clerk while highest is controller


    Padayon, Future CPA! In God’s perfect time
    Reviewer prepared by: Cael, Michelle Karen Joy

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