Ch1 Accounting and Its Environment
Ch1 Accounting and Its Environment
Ch1 Accounting and Its Environment
§ a recording system
§ it provides an accurate record of
what has happened to a business
over the specified period of time
§ extracted information can help the
manager operate the business
more effectively
ACCOUNTANCY IN THE
PHILIPPINES
March 17, 1928, RA 3105
“An Act Regulating the Practice of Public
Accounting; Creating the BOA; Providing for
Examination, for the Granting of Certificates,
and the Registration of CPAs; for the
Suspension or Revocation of Certificates;
and for Other Purposes”
BOARD OF ACCOUNTANCY
RA 9298, Phililppine Accountancy Act of 2004
1 chairman, 6 members
CPA Licensure Examination
• Financial Accounting and Reporting
• Advanced Financial Accounting and
Reporting
• Management Advisory Services
• Auditing
• Taxation
• Regulatory Framework for
Business Transaction
CPA Licensure Examination
• General average of 75%, with no grade
lower than 65% in any given subject
www.aasc.org.ph
ASEAN
Association of Southeast Asian Nations:
Indonesia Brunei Darussalam
Malaysia Viet Nam
Philippines Lao PDR (Laos)
Singapore Myanmar
Thailand Cambodia
ASEAN
Vision
Education/Academe
Government
CORE COMPETENCIES
FRAMEWORK
• KNOWLEDGE • SKILLS
– General knowledge – Intellectual
– Organizational and – Interpersonal
business knowledge – Communication
– Information
technology (IT)
• VALUES
knowledge
– Professional ethics
– Accounting
knowledge – Moral values
FUNDAMENTAL BUSINESS MODEL
TYPES OF BUSINESS
• Service
• Trade/Merchandising
• Manufacturing
• Raw Materials
• Infrastructure
• Financial
• Insurance
FORMS OF BUSINESS
ORGANIZATIONS
SOLE PROPRIETORSHIP
- Owner: Proprietor
- small service-type businesses and retail
establishments
- owner receives ALL profits, absorbs ALL losses and
is SOLELY responsible for ALL debts of the business
- distinct from its proprietor
PARTNERSHIP
Investing
Operating
PHASES OF ACCOUNTING
FUNDAMENTAL CONCEPTS
ENTITY CONCEPT
- An accounting entity is an organization or
a section of an organization that stands
apart from other organizations and
individuals as a separate economic unit.
FUNDAMENTAL CONCEPTS
PERIODICITY •Allows the users to obtain timely
information to serve as a basis on
CONCEPT making decisions about future
- An entity’s life can activities
be meaningfully •Usual accounting period: 1 year
subdivided into
equal time periods
for reporting
purposes.
FUNDAMENTAL CONCEPTS
STABLE MONETARY UNIT CONCEPT
CONSISTENCY PRINCIPLE
- “The firms should use the same accounting method
from period to period to achieve comparability over
time within a single enterprise.”
FINANCIAL STATEMENTS
Elements of financial
statements
OBJECTIVE OF FINANCIAL STATEMENTS
- to provide information about the financial
position, performance, and changes in
financial position of an enterprise that is
useful to a wide range of users in making
economic decisions
Balance Sheet
Financial position
(Statement of Financial Position)
Measurement
- the process of determining the monetary amounts at
which the elements of the financial statements are to
be recognized and carried in the FS
- involves the selection of the particular basis of
measurement (historical cost, current cost, realizable
or settlement value and present value)
Auditing
Bookkeeping
Cost Accounting
Financial Management
Management Accounting
Taxation
Others
Code of Ethics for CPAs
FUNDAMENTAL PRINCIPLES
• Integrity without proper and specific
authority unless there is a legal
- straightforward and honest or professional right or duty to
- fair dealing and truthfulness disclose
• Objectivity • Professional Behavior
- does not allow bias, conflict of - comply with relevant laws and
interest or undue influence regulations
• Professional Competence - avoid any action that discredits
and Due Care the profession
- continuing duty to maintain
professional knowledge and skill
• Confidentiality
- should not disclose information
PA1
Look for a business entity and note the ff.:
Name
Address
Type of business
Form of business organization
Size (assets value, no. of employees)
PA1
Interview a CPA and note the ff.:
Name (Initials will do)
Sector
No. of years in practice
Rank “Knowledge” and “Skills”
according to importance
Piece of advice for passing the board
exam. J
PA1
Actual financial statements of an existing
business entity.