CONCEPTUAL FRAMEWORK
CHAPTER 1 - ACCOUNTANCY
PROFESSION TYPES OF TRANSACTIONS
1. External
Definitions of Accounting - involving one entity and another entity.
1. Accounting Standards Council 2. Internal
- Accounting is a service activity. The - entirely within the entity only.
Accounting function is to provide - ex. production and casualty
quantitative information, primarily financial
in nature, about economic entities, that is Casualty
intended to be useful in making economic - any sudden and unanticipated loss from
decisions. fire, flood, earthquake and other events
ordinarily termed as an act of God.
2.The Committee on Accounting
Terminology of the American Institute of MEASURING
Certified Public Accountants - assigning peso amounts to accountable
-Accounting is the art of recording, economic transactions and events.
classifying and summarizing in a significant - information must be expressed in the
manner and in terms of money, transactions common financial denominator.
and events which are in part at least of a
financial character and interpreting the MEASUREMENT BASES
results thereof.
en 1. Historical cost
- original acquisition cost & the most
3. American Accounting Association in common measure of financial transaction.
its Statement of Basic Accounting 2. Current value
Theory - included fair value, value in use, fulfillment
- Accounting is the process of identifying, value and current cost.
measuring and communicating economic
information to permit informed judgement COMMUNICATING
and decisions by users of the information. - preparing and distributing accounting
m
reports to potential users of accounting
IMPORTANT POINTS: information.
1. Quantitative information - Reason for "universal langauge of
2. Financial in nature business".
3. Useful in decision making
PROCESS
Yu
Definition that stood the test of time: 1. Recording / Journalizing
American Accounting Association. - process of systematically maintaining a
States the very purpose of accounting is to record of all economic business
provide quantitative information to be useful transactions after they have been identified
in making an economic decision. and measured.
COMPONENTS OF THIS DEFINITION 2. Classifying / Posting to the ledger
1. identifying/ analytical component - sorting or grouping of similar and
2. Measuring / technical component interrelated economic transactions into their
3. Communicating / formal component respective classes.
IDENTIFYING Ledger
- recognition or non-recognition of business - group of accounts which are systematically
activities as "accountable events". categorized into assets, liability, equity,
- An event is accountable or quantifiable income and expense accounts.
when it has an effect on assets, liabilities
and equity and expressed in monetary 3. Summarizing
terms. - preparation of financial statements which
, CONCEPTUAL FRAMEWORK
OVERALL OBJECTIVE OF ACCOUNTING 3 KINDS OF PUBLIC PRACTICE
- provide quantitative financial information ● Auditing / external auditing
about a business useful to statement users - examination of financial statements
particularly owners and creditors in making by independent certified public
economic decisions. accountants for the purpose of
expressing an opinion as to the
THE ACCOUNTANCY PROFESSION fairness with which the financial
Republic Act No. 9298 / Philippine statements are prepared.
Accountancy Act of 2004 ● Taxation
- law regulating the practice of accountancy -preparation of annual income tax
in the Philippines . returns and determination of tax
consequences of certain proposed
QUALIFICATIONS TO PRACTICE business endeavors.
ACCOUNTANCY PROFESSION
1. Finish Bachelor of Science in Notes: CPA does not represent the
Accountancy client in tax investigation.
2. Pass the CPALE/LECPA
● Management Advisory services -
Board of Accountancy more in business management.
en - body authorized by law to promulgate
rules and regulations affecting the practice
of the accountancy profession. 2. Private Accounting
- responsible for preparing and grading the - assist management in planning and
CPALE. controlling the entity’s operations.
- CPALE offered twice a year: May and - Highest accounting officer is the
October. controller.
LIMITATIONS OF THE PRACTICE OF 3. Government Accounting
m
PUBLIC ACCOUNTANCY - encompasses the process of
1. Practitioners and firms should be analyzing, classifying, summarizing
registered certified public accountants in the and communicating all transactions
Philippines. involving the receipts and disposition
2. Certificate of Accreditation issued to CPA of government funds and property
in public practice upon showing in and interpreting the results thereof.
Yu
accordance with rules and regulations - custody and administration of public
promulgated by BOA and approved by PRC funds.
that such registrant has acquired a
minimum of 3 years of meaningful CONTINUING PROFESSIONAL
experience in any of the areas of public DEVELOPMENT (CPD)
practice including taxation. Republic Act 10912
3. No corporation for the practice of public - law mandating and strengthening
accountancy. the CPD for all regulated professions
including accountancy profession.
ACCREDITATION TO PRACTICE PUBLIC
ACCOUNTANCY Under the new BOA Resolution:
1. They should be CPAs that registered with 1. Only 15 CPD credit units are
the BOA and PRC for the practice of public required for renewal of CPA license.
accountancy. 2. 120 CPD credit units for
2. PRC upon recommendation of BOA will accreditation of a CPA to practice
issue Certificate of Registration to practice public accountancy.
public accountancy which shall be valid for
3 years and renewable every 3 years upon Note:
CHAPTER 1 - ACCOUNTANCY
PROFESSION TYPES OF TRANSACTIONS
1. External
Definitions of Accounting - involving one entity and another entity.
1. Accounting Standards Council 2. Internal
- Accounting is a service activity. The - entirely within the entity only.
Accounting function is to provide - ex. production and casualty
quantitative information, primarily financial
in nature, about economic entities, that is Casualty
intended to be useful in making economic - any sudden and unanticipated loss from
decisions. fire, flood, earthquake and other events
ordinarily termed as an act of God.
2.The Committee on Accounting
Terminology of the American Institute of MEASURING
Certified Public Accountants - assigning peso amounts to accountable
-Accounting is the art of recording, economic transactions and events.
classifying and summarizing in a significant - information must be expressed in the
manner and in terms of money, transactions common financial denominator.
and events which are in part at least of a
financial character and interpreting the MEASUREMENT BASES
results thereof.
en 1. Historical cost
- original acquisition cost & the most
3. American Accounting Association in common measure of financial transaction.
its Statement of Basic Accounting 2. Current value
Theory - included fair value, value in use, fulfillment
- Accounting is the process of identifying, value and current cost.
measuring and communicating economic
information to permit informed judgement COMMUNICATING
and decisions by users of the information. - preparing and distributing accounting
m
reports to potential users of accounting
IMPORTANT POINTS: information.
1. Quantitative information - Reason for "universal langauge of
2. Financial in nature business".
3. Useful in decision making
PROCESS
Yu
Definition that stood the test of time: 1. Recording / Journalizing
American Accounting Association. - process of systematically maintaining a
States the very purpose of accounting is to record of all economic business
provide quantitative information to be useful transactions after they have been identified
in making an economic decision. and measured.
COMPONENTS OF THIS DEFINITION 2. Classifying / Posting to the ledger
1. identifying/ analytical component - sorting or grouping of similar and
2. Measuring / technical component interrelated economic transactions into their
3. Communicating / formal component respective classes.
IDENTIFYING Ledger
- recognition or non-recognition of business - group of accounts which are systematically
activities as "accountable events". categorized into assets, liability, equity,
- An event is accountable or quantifiable income and expense accounts.
when it has an effect on assets, liabilities
and equity and expressed in monetary 3. Summarizing
terms. - preparation of financial statements which
, CONCEPTUAL FRAMEWORK
OVERALL OBJECTIVE OF ACCOUNTING 3 KINDS OF PUBLIC PRACTICE
- provide quantitative financial information ● Auditing / external auditing
about a business useful to statement users - examination of financial statements
particularly owners and creditors in making by independent certified public
economic decisions. accountants for the purpose of
expressing an opinion as to the
THE ACCOUNTANCY PROFESSION fairness with which the financial
Republic Act No. 9298 / Philippine statements are prepared.
Accountancy Act of 2004 ● Taxation
- law regulating the practice of accountancy -preparation of annual income tax
in the Philippines . returns and determination of tax
consequences of certain proposed
QUALIFICATIONS TO PRACTICE business endeavors.
ACCOUNTANCY PROFESSION
1. Finish Bachelor of Science in Notes: CPA does not represent the
Accountancy client in tax investigation.
2. Pass the CPALE/LECPA
● Management Advisory services -
Board of Accountancy more in business management.
en - body authorized by law to promulgate
rules and regulations affecting the practice
of the accountancy profession. 2. Private Accounting
- responsible for preparing and grading the - assist management in planning and
CPALE. controlling the entity’s operations.
- CPALE offered twice a year: May and - Highest accounting officer is the
October. controller.
LIMITATIONS OF THE PRACTICE OF 3. Government Accounting
m
PUBLIC ACCOUNTANCY - encompasses the process of
1. Practitioners and firms should be analyzing, classifying, summarizing
registered certified public accountants in the and communicating all transactions
Philippines. involving the receipts and disposition
2. Certificate of Accreditation issued to CPA of government funds and property
in public practice upon showing in and interpreting the results thereof.
Yu
accordance with rules and regulations - custody and administration of public
promulgated by BOA and approved by PRC funds.
that such registrant has acquired a
minimum of 3 years of meaningful CONTINUING PROFESSIONAL
experience in any of the areas of public DEVELOPMENT (CPD)
practice including taxation. Republic Act 10912
3. No corporation for the practice of public - law mandating and strengthening
accountancy. the CPD for all regulated professions
including accountancy profession.
ACCREDITATION TO PRACTICE PUBLIC
ACCOUNTANCY Under the new BOA Resolution:
1. They should be CPAs that registered with 1. Only 15 CPD credit units are
the BOA and PRC for the practice of public required for renewal of CPA license.
accountancy. 2. 120 CPD credit units for
2. PRC upon recommendation of BOA will accreditation of a CPA to practice
issue Certificate of Registration to practice public accountancy.
public accountancy which shall be valid for
3 years and renewable every 3 years upon Note:
