Long Quiz 1 - The 2018 Revised Conceptual Framework for Financial Reporting
Accounting Standards
Standard
Standard Title
IFRS/PFRS 1
IAS/PAS 1
IAS/PAS 41
IFRS/PRFS 17
IAS/PAS 21
IFRS/PFRS 2
IAS/PAS 19
IAS/PAS 38
IFRS/PFRS 14
IAS/PAS 23
IAS/PAS 2
IAS/PAS 39
IAS/PAS 20
IFRS/PFRS 3
IAS/PAS 8
IFRS/PFRS 16
IAS/PAS 40
IAS/PAS 7
IAS/PAS 24
IFRS/PFRS 4
IFRS/PFRS 15
IAS/PAS 10
IFRS/PFRS 6
IFRS/PFRS 13
IFRS/PFRS 10
IFRS/PFRS 26
IAS/PAS 29
IFRS/PFRS 8
IFRS/PFRS 5
IAS/PAS 33
IFRS/PFRS 12
IFRS/PFRS 9
IAS/PAS 12
IFRS/PFRS 11
IAS/PAS 37
IAS/PAS 36
IAS/PAS 17
IAS/PAS 27
First-time Adoption of International Financial Reporting Standards
Presentation of Financial Statements
Agriculture
Insurance Contracts
The Effects of Changes in Foreign Exchange Rates
Share-based Payment
Employee benefits
Intangible Assets
Regulatory Deferral Accounts
Borrowing Costs
Inventories
Financial Instruments: Recognition and Measurement
Accounting for Government Grants and Disclosure of Government
Business Combinations
Accounting Policies, Changes in Accounting Estimates and…
Leases
Investment Property
Statement of Cash Flows
Related Party Disclosures
Insurance Contracts
Revenue from Contracts with Customers
Events after the reporting period
Exploration and Evaluation of Mineral Resources
Fair value measurement
Consolidated Financial Statements
Accounting and Reporting by Retirement Benefits Plans
Financial Reporting in Hyperinflationary Economies
Operating Segments
Non-current Assets Held for Sale and Discontinued Operation
Earnings per Share
Disclosure of Interest in Other Entities
Financial instruments
Income Taxes
Joint arrangements
Provisions, Contingent Liabilities, and Contingent Assets
Impairment of assets
Leases
Separate Financial Statements
IAS/PAS 16
IFRS/PFRS 7
IAS/PAS 34
IAS/PAS 28
IAS/PAS 32
Property, Plant and Equipment
Financial Instruments - Disclosures
Interim financial reporting
Investments in Associates and Joint Ventures
Financial Instrument -Presentation
BRANCHES OF ACCOUNTING
1. Public Practice
- the sector is a frequently traveled career as it
offers excellent opportunities to gain multi-faceted business experience.
Entry-level jobs include audit staff, tax staff, and consulting staff which leads to
advanced positions of being a Partner or Senior Consultant.
2. Government Accounting - The consistency of the sources and uses of
resources with the provisions of city, municipality, provincial or national laws is
the main concern
3. Auditing
- is the independent examination of an entity's
financial statements to ensure fairness and reliability of such reports that
management submits to users outside the business entity.
4. Commerce and Industry - is employed by various for-profit and not-for-profit
entities, accountants in the sector are exposed to a wide scope of activities and
responsibilities. An accounting staff or analyst may become the Chief Financial
Officer or Chief Executive Officer given an ample period of experience and
skills-building exposure.
5. Bookkeeping
- is the mechanical task of accounting. This starts
with the entering of data in the accounting records and then the extraction,
classification, and summary in the forms of financial statements.
6. Financial Accounting
- is focused on the recording of business transactions
and the periodic preparation of reports on the financial position and results of
operation of the entity/organization for which accountants work.
7. Academe
- this sector guarantees the continued development of
the profession by endeavoring to make others understand the body of accounting
knowledge, and, to clarify and address emerging issues through research and
sharing the results obtained with their colleagues. This sector is considered the
least paid yet most noble sector of the accountancy profession.
8. Taxation
- includes the responsibility for computing the amount
of contribution or due by both business entities and individuals as a consequence
of proposed business transactions or alternative courses of action. Accountants
within this branch specialize in complying with existing laws but are also in
constant legal search for ways to minimize these dues or liabilities to the
government.
9. Government Sector
- An accountant may also serve in the government
sector as hired by different Presidential cabinets and departments or of the local
government units. They may serve the public as state accountants and auditors,
financial or budget analysts, or Commissioners, Cabinet Secretaries and
Presidents of GOCCs, or Mayors, Governors, Representatives, among others.
10. Forensic Accounting
- blends auditing, accounting, and, investigatory skills
to assess financial documents. These often review accounting systems and
practices related to criminal and legal investigations.
11. Cost Accounting
- The process that involves the recording of cost data
in books of accounts to provide information for managerial planning and control is
covered.
12. Finance
- Accountants can also work in the management of
large amounts of money and can associate with the activities with banking,
leverage, credit, capital market, and asset, liabilities, revenues, debt, and funds
management, which are covered.
13. Management Accounting - incorporates cost accounting data and adapts them
for specific decisions that management may be called upon to make. This branch
incorporates all types of financial and non-financial information from a wide range
of sources in coming up with the best decisions for the situation.
14. Internal Auditing
- The risk management and evaluation of the
effectiveness of a company's own controls, corporate governance, and
accounting processes are the areas of concern.
15. Financial Planners
- Also, accountants may assist individuals with their
finances, from budgeting to taxes to investing in a financial planner that works for
firms, or as independent financial consultants.
Accounting Standard-Setting
1. Association of CPAs in Commerce and Industry - A group of CPAs
employed by private entities and organizations and has sworn to provide
quality financial and allied services directed to attaining effective business
decisions, which includes, promoting the advancement of the accounting
profession in the sector, assisting members in addressing common
problems, promote high professionalism and adherence to established
ethical standards, maintain effective liaison with the members of other
sectoral organizations, and, assist and cooperate with the Board of
Accountancy in the attainment of its objectives.
2. Government Association of CPAs
- Its objective is to
continuously uphold and promote the highest professional and ethical
standards among CPAs in the national and civil service through a healthy
exchange of ideas and experience among themselves and their
counterparts in the private sector.
3. Philippine Institute o,f CPAs
- Founded in 1929 and is
the accredited professional accountancy organization by the Philippines
Professional Regulation Commission (PRC).
4. Bangko Sentral ng Pilipinas
- Its primary objective is
to maintain price stability conducive to a balanced and sustainable growth
of the economy and employment and shall also promote and maintain
monetary stability and the convertibility of the peso.
5. Bureau of Internal Revenue
- It shall comprehend the
assessment and collection of all national internal revenue taxes, fees, and
charges, and the enforcement of all forfeitures, penalties and fines
connected therewith, including the execution of judgments in all cases
decided in its favor by the Court of Tax Appeals and the ordinary courts.
6. Association of CPAs in Public Practice
It
was
created primarily to strengthen the position of the CPAs in offering their
service to the public and to preserve the unity of the combined strength of
all CPA professionals.
7. Commission on Audit
- It shall have the power,
authority, and duty to examine, audit, and settle all accounts about the
revenue and receipts of, and expenditures or uses of funds and property,
owned or held in trust by, or about, the Government, or any of its
subdivisions, agencies, or instrumentalities, including government-owned
or controlled corporations with original charters.
8. National Association of CPAs in Education - Its objective is to attend to
the needs of accounting teachers, promote their cause, advance their
purpose, and advocate a better quality of life for them and a better quality
of accounting education for the aspiring CPAs.
9. Securities and Exchange Commission
- National government
regulatory agency charged with supervision over the corporate sector, the
capital market participants, the securities and investment instruments
market, and the protection of the investing public.
10. Philippine Financial Reporting Standards Council The
accounting
standard-setting body created by PRC upon recommendation of the BOA to
assist the Board in carrying out its powers and functions provided under
the Philippine Accountancy Act of 2004.
11. Professional Regulation Commission
-Performs
important
functions on conducting and administering licensure examinations to
aspiring professionals, and on regulating and supervising the practices of
the professions executed in partnership with the 43-regulatory boards in
the financial reporting.
12. International Accounting Standards Council
- An independent private
sector body to achieve uniformity in the accounting principles which are
used by businesses and other organizations for financial reporting around
the world.
13. Board of Accountancy
- The body authorized by
law to promulgate rules and regulations affecting the practice of the
accountancy profession in the Philippines.
14. Philippine Interpretations Committee
- Formed by the FRSC to
prepare authoritative guidance on issues that are likely to receive
unacceptable treatment because of the absence of specific and clear-cut
rules and guidelines from the standards.
15. Financial Executives Institute of Philippines
- A non-stock and
non-profit organization, working at the forefront of finance in the country,
setting the pace in professional development, corporate governance,
capital markets development, national policy reforms, entrepreneurship,
social involvement, and financial education.
Concept of Accounting
1. Going Concern
- The owners of a five-star hotel base their
accounting records on the assumption that the hotel might close any time.
2. Accounting Entity Concept
- An accounting practitioner mixes his
accounting records with his accounting practice.
3. Physical Capital Concept
- Net income occurs when the physical
productive capital of the entity at the end of the year exceeds the physical
productive capital at the beginning of the period.
4. Current value measurement
- The inventory account is adjusted at the
end of the year to reflect the price that would be received to sell it in an
orderly transaction between market participants at the measurement date.
5. Neutrality
- Preparers of statements should not try to
increase the usefulness of the information to a few users to the detriment
of others who may have opposing interests.
6. Accrual basis
- Revenue is recognized when it is earned
regardless of when received and expense is recognized when incurred
regardless of when paid.
7. Understability
- The entity having 150 accounts
payable lists each account among the liabilities in the statement of
financial position.
8. Timeliness
- The older the information, the less useful.
9. Immediate Recognition Principle
- A large entity decides that whenever
an asset has a cost of less than P10,000, the cost will be charged to
expense even though the asset may benefit several accounting periods.
10. Completeness/Standard adequate disclosure- The entity should always
report the important details about share capital, for instance, the number of
shares authorized, shares issued, treasury shares, subscribed shares,s,
and par value.
11. Historical cost Concept
- The delivery equipment recorded at cost
by a manufacturing entity is written up to its fair value at the end of the
reporting period.
12. Financial Capital Concept
- Net income occurs when the nominal
amount of the net assets of the entity at the end of the year exceeds the
nominal amount of the net assets at the beginning of the period.
13. Expenses Recognition Principle
- Expenses are reported whenever
the accountant records them rather than when related revenues are earned.
14. Materiality
- The accountant of the entity keeps a
detailed depreciation record on every asset no matter how small its value.
15. Comparability
- It is the goal achieved by consistency.
16. Revenue Recognition Principle - A construction firm signed a three-year
contract to build a skyway connecting Davao and Tagum City. The firm
immediately records the full contract price as revenue.
17. Periodicity Concept
- After starting a business, a mining entity keeps
no accounting records. The entity is waiting until the mine is exhausted to
determine the success or failure of the business.
18. Faithful representation
- The damaged inventory of a department
store is being written down. The manager bases the writedown on his own
subjective opinion to minimize income tax.
19. Free from errors
- There are no errors or omissions in the
description of the phenomenon.
20. Consistensy
- A department store changes its
accounting method every year to report a higher net income possible under
accounting standards.
21. Systematic and Rational Allocation- The entity allocates the cost of a
patent to the accounting periods in which it helps to produce the revenue.
22. Cause and Effect Association - When the merchandise is sold, the cost
thereof is expensed because, at such time, revenue may be recognized.
23. Substance over form
- In case of conflict between economic
substance and legal form of transaction, the economic substance shall
prevail.
24. Stable Monetary Unit Concept - An entity that reports in the currency of a
hyperinflationary economy prepared financial statements in pesos that
have the same amount of purchasing power.
25. Classification Concept
- Liabilities due within 12 months from the
end of the reporting period are classified as current liabilities. Other
liabilities that do not qualify as such will be reported as noncurrent
liabilities.
26. Verifiability
- This enhancing qualitative characteristic
implies consensus.
27. Conservatism
- When in doubt, recognize all losses and
don't recognize gains.
28. Understandability
- It requires that users have some
knowledge of the complex economic activities of entities, the accounting
process, and the technical terminology in the statements.
29. Relevance
- Information that has no bearing on an economic
decision to be made is useless.
30. Aggregation Concept
- The P1,000,000 balance of the
accounts receivable is arrived at by accumulating all open 1,200 receivable
accounts of the customers by the entity.
What is the law regulating the practice of the accountancy profession in the
Philippines?
➔ Republic Act 9298
➔ The law is known as the Philippine Act of 2004