FAR1C1 E Flashcards

1
Q

Differentiate financial accounting and managerial accounting.

Financial accounting is — concerned with the — of business — and the eventual — of — —.

Financial accounting focuses on — — — known as — — intended for — and — users.

Financial accounting is the area of accounting that emphasizes — to — and —-.

Managerial accounting is the — and — of — — for — users only.

In other words, managerial accounting is the area of accounting that emphasizes — — — for use — an entity.

A

Financial accounting is primarily concerned with the recording of business transactions and the eventual preparation of financial statements.

Financial accounting focuses on general purpose reports known as financial statements intended for internal and external users.

Financial accounting is the area of accounting that emphasizes reporting to creditors and investors.

Managerial accounting is the accumulation and preparation of financial reports for internal users only.

In other words, managerial accounting is the area of accounting that emphasizes developing accounting information for use within an entity.

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2
Q

These represent the rules, procedures, practice and standards followed in the preparation and presentation of financial statements.

They are like laws that must be followed in financial reporting.

The process of establishing these principles is a social process which incorporates political actions of various interested user groups as well as professional judgment, logic and research.

A

Generally Accepted Accounting Principles or GAAP

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3
Q

These represent the rules, procedures, practice and standards followed in the preparation and presentation of financial statements.

A

Generally Accepted Accounting Principles or GAAP

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4
Q

They are like laws that must be followed in financial reporting.

A

Generally Accepted Accounting Principles or GAAP

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5
Q

The process of establishing these principles is a social process which incorporates political actions of various interested user groups as well as professional judgment, logic and research.

A

Generally Accepted Accounting Principles or GAAP

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6
Q

Explain Generally Accepted Accounting Principles or GAAP.

These represent the —, —, — and — followed in the — and — of financial —-.

They are like — that must be — in — —.

The process of establishing these principles is a — — which incorporates — — of various interested — — as well as — —, — and —.

A

These represent the rules, procedures, practice and standards followed in the preparation and presentation of financial statements.

They are like laws that must be followed in financial reporting.

The process of establishing these principles is a social process which incorporates political actions of various interested user groups as well as professional judgment, logic and research.

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7
Q

What is the purpose of accounting standards?

The overall purpose of accounting standards is to — — — — for the — and —- of — —-.

Accounting standards create a common — between — and — of financial statements particularly the — of — and —.

A set of high-quality accounting standards is a — to — —- and —- in financial statements based on the — — —-.

A

The overall purpose of accounting standards is to identify proper accounting practices for the preparation and presentation of financial statements.

Accounting standards create a common understanding between preparers and users of financial statements particularly the measurement of assets and liabilities.

A set of high-quality accounting standards is a necessity to ensure comparability and uniformity in financial statements based on the same financial information.

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8
Q

What organization replaces the ASC?

A

Financial Reporting Standards Council or FRSC

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9
Q

What organization is in-charge in the development of generally accepted accounting principles?

A

Accounting Standards Council or ASC

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10
Q

It is the accounting standard setting body created by the Professional Regulation Commission upon recommendation of the Board of Accountancy to assist the Board of Accountancy in carrying out its powers and functions provided under R.A. Act No. 9298.

Its main function is to establish and improve accounting standards that will be generally accepted in the Philippines.

The accounting standards promulgated by this organization constitute the “highest hierarchy” of generally accepted accounting principles in the Philippines.

The approved statements of this organization are known as Philippine Accounting Standards or PAS and Philippine Financial Reporting Standards or PFRS.

A

Financial Reporting Standards Council or FRSC

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11
Q

It is the accounting standard setting body created by the Professional Regulation Commission upon recommendation of the Board of Accountancy to assist the Board of Accountancy in carrying out its powers and functions provided under R.A. Act No. 9298.

A

Financial Reporting Standards Council or FRSC

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12
Q

Its main function is to establish and improve accounting standards that will be generally accepted in the Philippines.

A

Financial Reporting Standards Council or FRSC

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13
Q

The accounting standards promulgated by this organization constitute the “highest hierarchy” of generally accepted accounting principles in the Philippines.

A

Financial Reporting Standards Council or FRSC

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14
Q

The approved statements of this organization are known as Philippine Accounting Standards or PAS and Philippine Financial Reporting Standards or PFRS.

A

Financial Reporting Standards Council or FRSC

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15
Q

What is Financial Reporting Standards Council or FRSC?

It is the — — — — created by the — — — upon recommendation of the — of —- to — the — of — in — out its — and — provided under R.A. Act No. —.

Its main function is to — and — — — that will be generally — in the Philippines.

The — — promulgated by this organization — the “— —” of — — accounting —- in the Philippines.

The approved statements of this organization are known as — — — or — and — — — —- or —-.

A

It is the accounting standard setting body created by the Professional Regulation Commission upon recommendation of the Board of Accountancy to assist the Board of Accountancy in carrying out its powers and functions provided under R.A. Act No. 9298.

Its main function is to establish and improve accounting standards that will be generally accepted in the Philippines.

The accounting standards promulgated by this organization constitute the “highest hierarchy” of generally accepted accounting principles in the Philippines.

The approved statements of this organization are known as Philippine Accounting Standards or PAS and Philippine Financial Reporting Standards or PFRS.

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16
Q

Explain the composition of FRSC.

The FRSC is composed of — — with a — who had been or is presently a — — — and — representatives from the following:

— of — 1
— and — — 1
— — ng — 1
— of — —- 1
— on —- 1
Major — of — and — of
— — - — — —
of the — or — 1
— — —- —- of —:
— — 2
—- and —- 2
— or — 2
—- 2
Total 14

The Chairman and members of the FRSC shall have a term of —- years renewable for —- term. Any member of the ASC shall not be — from being appointed to the —.

A
  • The FRSC is composed of 15 members with a Chairman who had been or is presently a senior accounting practitioner and 14 representatives from the following:

Board of Accountancy 1
Securities and Exchange Commission 1
Bangko Sentral ng Pilipinas 1
Bureau of Internal Revenue 1
Commission on Audit 1
Major organization of preparers and users of
Financial statements- Financial Executives Institute
of the Philippines of FINEX 1
Accredited national professional organization of CPAs:
Public Practice 2
Commerce and Industry 2
Academe or Education 2
Government 2
Total 14

The Chairman and members of the FRSC shall have a term of 3 years renewable for another term. Any member of the ASC shall not be disqualified from being appointed to the FRSC.

17
Q

What PIC stands for?

A

Philippine Interpretations Committee

18
Q

What organization formed the PIC?

It was formed by — in — — and has replaced the — — or — formed by the Accounting Standards Council in —- —.

A

It was formed by FRSC in August 2006 and has replaced the Interpretations Committee or IC formed by the Accounting Standards Council in May 2000.

19
Q

What is the role of PIC?

Its role is to — — of — for — by the — and to — — —- on — —- — not — — in — —.

In other words, interpretations are intended to — — — on — that are likely to receive — or — —- because the standards do not provide — and — — and —.

A

Its role is to prepare interpretations of PFRS for approval by the FRSC and to provide timely guidance on financial reporting issues not specifically addressed in current PFRS.

In other words, interpretations are intended to give authoritative guidance on issues that are likely to receive divergent or unacceptable treatment because the standards do not provide specific and clearcut rules and guidelines.