Accounting Basics Flashcards
not only a modest and less expensive profession, but also a prestigious one
Accountancy
is a holder of baccalaureate degree in Bachelor of Science in Accountancy (BSA), who has taken and passed the difficult and competitive licensure examination for CPAs, vested by laws to practice the accounting profession under the supervision of the Professional Regulation
Certified Public Accountant (CPA)
helps the owner to know how much profit his business makes.
Accounting
Prepares financial report for the business.
Accountant
income is recorded when earned, regardless of cash collection
and expenses are recorded when incurred, regardless of cash payments
Accrual Basis
business is assumed separate from the owners
Accounting Entity
business is assumed to operate indefinitely
Going-Concern
the business life is divided into equal periods
Time Period
Peso is assumed to have a stable value regardless of inflation
Unit of Measure
the accountant’s reports to business owners or management and considered the end products of the accounting process.
Financial Statement
Shows the financial position of the business as of a particular date, also called balance sheet.
Statement of Financial Position
Also called Income Statement. Shows the performance of the business for a given period of time.
STATEMENT OF COMPREHENSIVE INCOME (SCI)
Summarizes the changes that occurred in the owner’s equity.
STATEMENT OF CHANGES IN EQUITY (SCE)
Shows cash receipts (inflows) and cash disbursements (outflows) of the business classified into operating activities, investing activities and financing activities.
STATEMENT OF CASH FLOWS (SCF)
Presents the summary of accounting policies and other explanatory information or
NOTES TO FINANCIAL STATEMENTS (NTFS)
begins on January 1 and ends on December 31
Calendar Year
begins on the first day of any month except January and ends on the last day of the twelfth month
Fiscal Year
twelve-month period that ends on any month when the business is at the lowest or in a slack season
Natural Business Year
involves journalizing
Recording
involves posting
Classifying
involves financial statements completion
Summarizing
involves analytical and interpretative works
Interpreting
An accounting device used to summarize the effect of changes in assets, liabilities and owner’s equity.
T- ACCOUNT
refers to the difference between the debit total and the credit total.
Account balance
means total of debit side exceeds total of credit side.
Debit balance
means total of credit side exceeds total of debit.
Credit balance
means total of debit side equals total of credit side.
Closed account
