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FAR/AP > 01 Introduction to Accountancy Profession & Preface to PFRS > Flashcards

01 Introduction to Accountancy Profession & Preface to PFRS Flashcards

1
Q

What is wrong with ASC’s definition of accounting?

A

Accounting is a service activity - Definition is too clerical

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2
Q

What is wrong with AICPA’s definition of accounting?

A

Accounting is the art of recording, classifying and summarizing… - Definition implies accounting is subject to interpretation (any process to meet the objective)

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3
Q

Which accounting definition stood the test of time and who provided that definition?

A

Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information -American Accounting Association

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4
Q

What are the characteristics of accounting?

A

User-based
Quantitative or financial in nature
Subject to interpretation

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5
Q

What are accountable and non-accountable events?

A

Accountable events - affect the accounting equation
Non-Accountable events - do not affect the accounting equation

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6
Q

What is the analytical component of the accounting process?

A

Identifying - analyze whether transaction should be recognized

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7
Q

Do you recognize non-accountable events?

A

No, but disclosed only if relevant

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8
Q

What are the types of accountable events?

A

External - external part/entity/transaction involved
Internal - no external factor/entity involved

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9
Q

What are the types of external events? Give examples.

A

Exchange - reciprocal transfer (e.g. sale and purchase of inventories, payment of liabilities)
Non-reciprocal Transfer - unilateral transfer (e.g. donation/gifts, theft, fines/penalties)
Other events that do not involve Transfer (e.g. changes in FV, obsolescence, vandalism)

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10
Q

What are examples of internal events?

A

Production - conversion of RM to FG
Casualty - decrease in resources resulting from sudden, unexpected or unusual event

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11
Q

What is the technical component of the accounting process?

A

Measuring - need technicalities/measurement basis to assign amounts to items

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12
Q

What is the formal component of the accounting process?

A

Communicating - preparing and distributing reports to potential users formally following a specific format

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13
Q

Under what process is classifying and summarizing?

A

Communicating - classifying (posting) and summarizing (trial balance and FS)

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14
Q

What is the end product of accounting?

A

Financial Statements

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15
Q

What is the law that regulates the practice of accounting in the Philippines?

A

RA 9298: The Philippine Accountancy Act of 2004

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16
Q

Which body is authorized by law to promulgate the rules and regulations of the law regulating accountancy?

A

Professional Regulatory Board of Accountancy (PR BOA)

17
Q

What are the five rules of the law regulating accountancy?

A
  1. Title, Declaration of Policy, Objective, Scope of Practice
  2. PR BOA
  3. Examination, Registration, Licensure
  4. Practice of Accountancy
  5. Penal and Final Provisions
18
Q

What is the composition of PRBOA?

A

1 Chairman
6 members

19
Q

Who appoints PRBOA?

A

President

20
Q

What is the process of the appointment of PRBOA?

A

APO (PICPA) submits 5 nominees per position to PRC
PRC submits 3 out of 5 nominees per position to the President
The President appoints

21
Q

What is the term of PR BOA? What are rules on renewability?

A

3 years, renewable
2 successive complete terms require a lapse of 1 year
Maximum of 12 years

22
Q

Who appoints PR BOA Vice Chairman? What is their term?

A

PR BOA among themselves, 1 term

23
Q

What are the qualifications of PR BOA?

A
  1. natural-born and resident of the Philippines
  2. duly registered CPA with at least 10 years of work experience
  3. good moral character, never convicted for crimes involving moral turpitude
  4. no pecuniary interest in any academic institution or review centers at the time of appointment
  5. not director or officer of PICPA at time of appointment
24
Q

What should PR BOA members do if their active professional job is involved in a case?

A

Leave the company

25
Q

What are the powers and functions of PR BOA?

A
  1. prescribe and adopt rules and regulations of RA 9298
  2. supervise registration, licensure, practice of accountancy in the Philippines
  3. administer oath
  4. issue, suspend, revoke, reinstate COR for practice of accountancy
  5. adopt official seal
  6. prescribe and adopt a Code of Ethics
  7. monitor conditions affecting accountancy and adopt measures
  8. conduct oversight into quality of audits of financial statements
  9. investigate violations of RA 9298
  10. issue cease or desist to entities violating RA 9298
  11. punish for contempt of the board
  12. prepare, adopt, issue or amend syllabi of subjects for examination
  13. comply with CHED
  14. other powers to achieve objectives of RA 9298
26
Q

Who has the power to suspend PR BOA members and what at are grounds for suspension or removal?

A

The President can suspend.
> neglect of duty or incompetence
> violation or tolerance of RA 9298 violations
> final conviction of crimes involving moral turpitude
> manipulation or rigging of CPALE and results

27
Q

What are the 4 sectors of the accountancy profession? Give descriptions.

A

Public Accountancy - accounting and auditing services to one or more clients on a fee basis
Commerce and Industry - private accounting
Academe - teaching CPALE subjects in educational institutions
Government - employed in a government agency or GOCC where civil service as a CPA is a pre-requisite

28
Q

What are the usual services offered by a CPA?

A
  • auditing - attest function
  • taxation - tax planning and tax compliance (does not include representation in tax investigations)
  • management advisory services - consulting
29
Q

What are the limitations of public accountancy?

A

No corporations allowed - accountants cannot have limited liability

Certificate of accreditation is required for accountants who want to put up their own firm
> need 3 years of meaningful experience
> requires 120 CPD units

30
Q

Highest accounting officer in any business entity

A

Controller

31
Q

What are the requirements for the dean or department head of educational institutions offering accounting degrees?

A

duly registered CPA

32
Q

What does APO stand for?

A

Accredited Professional Organization

33
Q

Which organization is the APO for CPAs?

A

PICPA (Philippine Institute of CPAs)

34
Q

What are the requirements to be an APO?

A
  1. established for the benefit/welfare of CPAs and the accountancy profession
  2. membership is open to all CPAs without discrimination
  3. include CPAs in all sectors
  4. creditable plan to enlist in active membership within 3 years at least majority of CPAs
  5. adequate chapters/regions in major areas of the Philippines
  6. judicious and prudent in management of its financial resources
  7. full-time career Executive Director
  8. duly registered as a non-stock corporation/association by the SEC
  9. paid prescribed accreditation fee
35
Q

What are the sectoral organizations of CPA?

A

ACPAPP - public practice
ACPACI - commerce and industry
NACPAE - national … education
GACPA - government

36
Q

How many national directors should there be?

A

15 (unless there is a valid reason to have additional representation) distributed based on ratio of latest available number of members in good standing per area

37
Q

How can you be a director of a region?

A

Member in good standing
Member of that region for at least 2 years

38
Q

How often is the Certificate of Accreditation for APO renewed?

A

every 3 years

FAR/AP (7 decks)

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