Day 2 Crash Course PDF

DAY 2
CRASH COURSE
Contents
Accounting Standards 01
PFRS 02
Conceptual Framework 03
Qualitative Characteristics 04
Regulatory Bodies 05
BREAK 06
Types of Major Accounts 07
Charts of Accounts 08
Need for Accounting Standards
For financial statements to be useful, they should be
prepared using reporting standards that are generally
acceptable. Otherwise, each entity would have to
develop its own standards.
Businesses can just present any assets or income it

wants and omit any expense or liability it has and they
can just get away with it.
There would be fraudulent reporting and economic

decisions would be greatly incorrect.
Accounting Standards
PFRS
The Philippine Financial Reporting

Standards (PFRS) represent the generally
accepted accounting principles (GAAP) in
the Philippines.
Financial Reporting Standards Council (FRSC) adopts the
standards that comprises the PFRS which contains the
following:
1. Philippine Financial Reporting Standards (PFRSs)
2. Philippine Accounting Standards (PASs) 3.
Interpretations
PAS (old) -> PFRS (new)

Conceptual Framework
The primary purpose of the Conceptual Framework was to assist the IASB in the
development of future IFRSs and in its review of existing IFRSs
The Conceptual Framework may also assist preparers of financial statements in

developing accounting policies for transactions or events not covered by
existing standards
In rare cases, the IASB might need to issue a new or revised IFRS that conflicts
with some aspects of the Conceptual Framework. If so, the IASB would need to
describe and explain that departure from the Framework in the basis for
conclusions on the IFRS?
HEIRARCHY OF
REPORTING STANDARDS
FSRSC PIC
Financial and Sustainability Philippine Interpretations
Reporting Standards Council Committee
Official accounting REGULATORY Reviews the interpretations

01 02
standard setting body in the of the IFRIC for approval and
Philippines created under the BODIES adoption by the FSRSC
Philippine Accountancy Act of
2004.
Composed of 15 Members
BOA SEC
Board of Accountancy Securities and Exchange
Commission
Supervises the registration,
licensure and practice of REGULATORY Regulates corporations and
accountancy in the Philippines. 01 02
partnerships, capital and
BODIES investment markets, and the
Consists of a Chairperson and 6 investing public.
members appointed by the
President of the Philippines
BIR BSP
Bureau of Internal Revenue Bangko Sentral ng Pilipinas
Administer the provision of the Influences the selection and

National Internal Revenue REGULATORY application of accounting
Code.
These provision sometimes 01 02
policies by banks and other
influence the choice of BODIES entities performing banking
accounting methods and functions
procedures.
QUALITATIVE
CHARACTERISTICS
Qualitative characteristics are the qualities or attributes that
make financial accounting information useful to users.
Under the Conceptual Framework for Financial Reporting,

qualitative characteristics are classified into fundamental
qualitative characteristics and enhancing qualitative
characteristics.
FUNDAMENTAL QUALITATIVE
CHARACTERISTICS
These characteristics address the content or
substance of information. The fundamental
qualitative characteristics are relevance and
faithful representation.
RELEVANCE
Capacity of information to make a difference in a decision
made by users.
Predictive Value - the information can help users
increase the likelihood of correctly predicting or
forecasting outcome of events. Confirmatory Value -
the information enables users confirm or correct earlier
expectations
Materiality
the omission or misstatement of information causing
to influence the decision of the users.
FAITHFUL REPRESENTATION
means that the information provides a true, correct and
complete depiction of the economic phenomena that it
purports to represent. To be a perfectly faithful
representation, a depiction should have three ingredients,
FAITHFUL REPRESENTATION
a) Completeness – all information necessary for users to
understand the phenomena depicted is provided, whether in
words or in numbers.
b) Neutrality – means that the financial statements should not be

prepared so as to favor one party to the detriment of another
party.
c) Free from error – in this context, free from error does not mean
perfectly accurate in all respects. Free from error means there are
no errors or omissions in the description of the phenomenon, and
the process used to produce the reported information has been
selected and applied with no errors in the process.
Enhancing Qualitative
Characteristics
(VCUT)
01 Verifiability Comparability 02
different users could reach a general Information is comparable if it helps users

agreement as to what the information identify similarities and differences
purports to represent. between different sets of information
Enhancing Qualitative
Characteristics
(VCUT)
03 Understandability Timeliness 04
It is presented in a clear and concise means having information available to

manner. decision makers in time to influence
their decisions.
BREAK TIME
and assessment hehe

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DAY 2

Businesses can just present any assets or income it

There would be fraudulent reporting and economic

The Philippine Financial Reporting

PAS (old) -> PFRS (new)

The Conceptual Framework may also assist preparers of financial statements in

Official accounting REGULATORY Reviews the interpretations

Administer the provision of the Influences the selection and

Under the Conceptual Framework for Financial Reporting,

b) Neutrality – means that the financial statements should not be

different users could reach a general Information is comparable if it helps users

It is presented in a clear and concise means having information available to

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