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Preliminary Examination Reviewer > Financial Accounting and Reporting 1 > Flashcards

Financial Accounting and Reporting 1 Flashcards

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1
Q

is a process of identifying, recording, and communicating economic information that is useful in making economic decisions.

A

Accounting

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2
Q

those who are directly involved in managing the business.

A

Internal Users

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3
Q

Those who are not directly involved in managing the business.

A

External Users

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4
Q
  • Focuses on general purpose financial statements.
  • General purpose caters the common needs of external users.
  • It is governed by the Philippine Financial Reporting Standards (PFRSs)
A

Financial Accounting

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5
Q
  • Accumulation and communication of information for use by internal users.
  • Management advisory services like services to client on matters of accounting, finance, business policies, etc.
A

Management Accounting

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6
Q
  • Accounting for the government.
  • Focusing on public funds.
A

Government Accounting

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7
Q
  • Inspection of an entity’s financial statements.
A

Auditing

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8
Q
  • Preparation of tac returns and rendering of tax advice.
A

Tax Accounting

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9
Q
  • Systematic recording and analysis of the cost of materials, labor, overhead incident in the production.
A

Cost Accounting

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10
Q
  • Refers to teaching accounting and accounting related subjects.
  • Process of facilitating the acquisition of knowledge and skills regarding one or more of the other branches of accounting.
A

Accounting Education

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11
Q
  • Careful analysis of economic events and other variables to understand their impact on decisions.
  • It includes a broad range of topics, which may be related to one or more of the branches of accounting.
A

Accounting Research

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12
Q
  • Owned by one person
  • Simplest form of business organization.
  • this is registered with the Department of Trade and Industry (DTI)
A

Sole or Single Proprietorship

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13
Q
  • Owned by 2 or more individuals to carry on the business and divide among the earnings.
  • It is registered with the Securities and Exchange Commission (SEC)
A

Partnership

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14
Q
  • owned by more than one individual.
  • Unlike partnership, this is created by operation of law rather than contract.
  • this is registered with the Securities and Exchange Commission (SEC).
A

Corporation

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15
Q
  • also owned by more than one individual.
  • from the root word “cooperate” a cooperative who joined together to contribute capital.
  • it is formed with the provisions of The Philippine Cooperative Code of 2008.
  • They are called members.
  • The are registered with the Cooperative Development Authority (CDA)
A

Cooperative

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16
Q

Offers service as its main product

A

Service Business

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17
Q

Is one that buys and sell goods

A

Merchandising Business

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18
Q

Is one that buys raw materials and processes them into final products.

A

Manufacturing

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19
Q
  • Are a set of logical ideas and procedures that guide the accountant in recording and communicating economic information.
  • It provides reasonable assurance that information communicated to users is prepared in a proper way.
A

Accounting concepts and principles

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20
Q

Under this concept, the business is viewed as a separate person, distinct from its owner(s). Only the transactions of the business are recorded in the books of accounts.

A

Separate entity concept

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21
Q

Under this concept, assets are initially recorded at their acquisition cost.

A

Historical cost concept

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22
Q

Under this concept, the business is assumed to continue to exist for an indefinite period.

A

Going concern assumption

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23
Q

Under this concept, some costs are initially recognized as assets and charged as expenses only when the related revenue is recognized.

A

Matching

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24
Q

Under this concept, the income is recognized when earned, while expenses are recorded when it is incurred.

A

Accrual Basis of accounting

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25
Q

Under this concept, the accountant observes some degree of caution when exercising judgements needed in making accounting estimates under conditions of uncertainty. Such that, accountant needs to choose favorable outcome over unfavorable one.

A

Prudence (or Conservatism)

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26
Q

Under this concept, life is divided into series of reporting periods.

A

Time Period

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27
Q

starts on January 1 and ends on December 31 of the same year.

A

Calendar year period

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28
Q

covers 12 months but starts on a date other than January 1.

A

Fiscal year period

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29
Q

Under this concept, assets, liabilities, equity, income, and expenses are stated in forms of a common unit of measure which is the Philippine Peso.

A

Stable monetary unit

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30
Q

This concept guides the accountant when applying accounting principles. This is because accounting principles are applicable only to material items. An item is considered material if its omission or misstatement could influence economic decision.

A

Materiality concept

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31
Q

Under this concept, the costs of processing and communicating information should not exceed the benefits to be derived from the information’s use.

A

Cost-benefit

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32
Q

This concept is related to both concepts of materiality and cost-benefit. Under this concept, information communicated to users reflects a series of judgmental trade-offs.

A

Full disclosure principle

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33
Q

This concept requires a business to apply accounting policies consistently, and present information consistently, from one period to another.

A

Consistency concept

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34
Q

are Standards and Interpretations adopted by the Financial Reporting Standards Council (FRSC)

A

Philippine Financial Reporting Standards (PFRSs)

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35
Q

The PFRSs are patterned from the?

A

International Financial Reporting Standards (IFRSs

36
Q

What is the Basic Accounting Equation?

A

a = l+c

37
Q

are the economic resources you control that have resulted from past events and can provide you with economic benefits.

A

Assets

38
Q

are your present obligation that have resulted from past events and can require you to give up economic resources when settling them.

A

Liabilities

39
Q

How do we get the Liabilities if it’s missing?

A

L = A-C

40
Q

How do we get the Capital if it’s missing?

A

C = L-A

41
Q

What is the Expanded Accounting Equation?

A

Assets = liabilities + capital + income – expenses

42
Q

basic storage of information in accounting.

A

Account

43
Q

specific item of asset, liability, equity, income or expenses.

A

Account title

44
Q

left side of the account, value received, come from the latin word “debere”

A

Debit side

45
Q

right side of the account, value parted with, come from the latin word “credere”

A

Credit side

46
Q

assets minus liabilities.

A

Equity

47
Q

increases in economic benefits during the period in the form of increases in assets, or decreases in liabilities, that results in increases in equity, excluding those relating to investments by the business owner

A

Income

48
Q

decreases in economic benefits during the period in the form of decreases in assets, or increases in liabilities, that result in decreases in equity, excluding those relating to distributions to the business owner.

A

Expenses

49
Q

includes money or its equivalent that is readily available for unrestricted use, e.g., cash on hand and cash in bank

A

Cash

50
Q

receivables supported by oral or informal promises to pay

A

Accounts receivable

51
Q

the aggregate amount of estimated losses from uncollectible accounts receivable. Another term is “allowance for doubtful accounts”

A

Allowance for bad debts

52
Q

receivables supported by written or formal promises to pay in the form of promissory notes.

A

Notes receivable

53
Q

represents the goods that are held for sale by a business. For a manufacturing business, inventory also includes goods undergoing the process of production and raw materials that will be consumed in the production process.

A

Inventory

54
Q

represents the cost of unused office and other supplies.

A

Prepaid supplies

55
Q

rent paid in advance.

A

Prepaid rent

56
Q

lot on which the building of the business has been constructed or a vacant lot which is to be used as future plant site. Land is not depreciable.

A

Land

57
Q

the structure owned by a business for use in its operations.

A

Building

58
Q

the total amount of depreciation expenses recognized since the building was acquired and made available for use

A

Accumulated depreciation – building

59
Q

machinery, transportation equipment, office equipment, computer equipment, furniture and fixtures.

A

Equipment

60
Q

the total amount of depreciation expenses recognized since the equipment was acquired and made available for use.

A

Accumulated depreciation – equipment

61
Q

obligations supported by oral or informal promises to be paid by the debtor.

A

Accounts payable

62
Q

obligations supported by written or formal promises to be paid by the debtor in the form of promissory notes.

A

Notes payable

63
Q

interest incurred but not yet paid. Interest payable arises from interest-bearing liabilities. For example, you will incur interest on your bank loan

A

Interest payable

64
Q

salaries already earned by employees but not yet paid by the business.

A

Salaries payable

65
Q

utilities like electricity, water, telephone, internet, cable, etc. already used but not yet paid.

A

Utilities payable

66
Q

items related to income that were collected in advance before they are earned. After the earning process is completed, these items are transferred to income.

A

Unearned income

67
Q

residual amount after deducting liabilities from assets

A

Owner’s capital (owner’s equity)

68
Q

this account is used to record the temporary withdrawals of the owner during the period.

A

Owner’s drawings

69
Q

revenues earned from rendering services.

A

Service fees

70
Q

revenues earned from the sale of goods

A

Sales

71
Q

revenues earned from the issuance of interest-bearing receivables.

A

Interest income

72
Q

earned from the sale of assets (except inventory) or from enhancement of assets or decrease in liabilities that are not classified as revenue.

A

Gains

73
Q

the value of inventories that have been sold during the accounting period.

A

Cost of sales (cost of goods sold)

74
Q

seller’s cost of delivering goods to customers.

A

Freight out

75
Q

salaries earned by employees for the services they have rendered.

A

Salaries expense

76
Q

the rentals that have been used up

A

Rent expense

77
Q

cost of utilities that have been used

A

Utilities expense

78
Q
A
79
Q

the cost of supplies that have been used.

A

Supplies expense

80
Q

amount of estimated losses from uncollectible accounts receivable.

A

Bad debt expense

81
Q

portion of the cost of depreciable asset that has been allocated to the current accounting period.

A

Depreciation expense

82
Q

cost of promotional or marketing activities.

A

Advertising expense

83
Q

cost of insurance pertaining to the current accounting period.

A

Insurance expense

84
Q

cost of business and local taxes required by the government for conduct of the business.

A

Taxes and licenses

85
Q

transportation expenses represent the necessary and ordinary cost of employees getting from one workplace to another, while travel expenses represent the cost incurred when travelling on business trips.

A

Transportation and travel expense

86
Q

cost of borrowing money

A

Interest expenses

87
Q

various small expenditures which do not warrant separate presentation.

A

Miscellaneous expense

Preliminary Examination Reviewer (6 decks)

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