IAF Flashcards
A jeepney driver has to spend money on gas and jeep repairs. That is called his?
Expenses
All the money collected by jeepney drivers are?
Revenue
The money a jeepney driver returns home with is his?
Profit or Net Income
the first 3 steps in the accounting process
Bookeeping
The ________ record which makes them different from accountants
Bookeepers
Earliest bookeeping records were found in?
Babylonia (Iraq) and Egypt
What became basis for the collection of taxes?
Registry
The first accounting book was written by _____ in ______
Cortugli, Naples
The double entry bookeeping system was introduced in ________ by _________ entitled, ___________
1494, Luca Pacioli, Summa de Arithmetica
Bookeeping in the Philippines was first introduced by the?
Spaniards
Bookkeepers in the Spanish era were called?
Tenedor de Libro
The old form of trade was?
Bartering
A business needs _________ before making decisions
Financial Information
shows a list of assets and liabilities
Statement of Financial Position
Statement of Financial Position is also called as?
Balance Sheet
performance report against costs and expenses
Income Statement
a cash report showing where the money came from and where the money was used.
Statement of Cash Flows
a progress report showing changes in your wealth.
Statement of Owner’s Net Worth
an economic unit that engages in buying and selling of goods or services
Business
Most often success is measured in terms of _____ and increase in _______.
profit, funds
This is a business set up and managed by one person. Most small businesses such as beauty parlors, dress shops, barbershops, and bakeries
Sole Proprietorship
the element of uncertainty
Risk
This is business owned by two or more persons called partners who contribute money, property and talent into common fund for the purpose of sharing profit among themselves.
Partnership
A business organized as a separate legal entity from the owners.
Corporation
Corporations are managed by a ___________ elected by the shareholders from among themselves.
Board of Directors
Must register with SEC
Partnership, Corporation
Investor has unlimited liability
Sole Proprietorship, Partnership
Profit may be easily withdrawn
Sole Proprietorship
Must register with the BIR
Sole Proprietorship, Partnership, Corporation
Usually managed by its investor/s
Sole Proprietorship, Partnership
Business may be easily terminated
Sole Proprietorship, Partnership
May sell his/her interest over the firm
Partnership, Corporation
Large amount of contributed capital
Corporation
Has perpetual existence provided by the law
Corporation
Business must pay for its own income tax
Corporation
Three types of business activities
Operating, Investing, Financing
Three types of business operations
Service Business, Merchandising Business, Manufacturing Business
The only business operation with no inventory
Service Business
Business activity concerning revenue and expenses
Operating
Business activity concerning how you get funds
Financing
Business activity concerning the acquisition of non-current assets
Investing
Management process that determines the goal
Planning
Management process that creates division
Organizing
Management process that oversees operations
Directing
Management process that guards and guide people
Controlling
process of recording, classifying, and summarizing transactions
Accounting
money from other assets that you don’t mainly sell
Gains
Who would ask the following question:
Can we afford to ask for medical care?
Employees
Who would ask the following question:
Is the company earning a satisfactory rate of return?
Investors
Who would ask the following question:
Do we have funds to expand or should we borrow?
Investors
Who would ask the following question:
Is the cash sufficient to pay dividends to stockholders?
Financial Manager, Investors
Who would ask the following question:
Will the company be able pay for its short-term debts?
Creditor, Financial Manager
Who would ask the following question:
Is the price of their product appropriate compared to prices of competitors?
Investors
Who would ask the following question:
Are they overpricing products which are considered basic needs?
Government, Customers
Current assets and current liabilities are part of what business activity?
Operating
Non-current liabilities and owner’s equity are part of what business activity?
Financing
Non-current assets are part of what business activity?
Investing
PRC
Professional Regulation Comission
BOA
Board of Accountancy
PICPA
Philippine Institute of Certified Public Accountants
SEC
Securities and Exchange Comission
BSP
Bangko Sentral ng Pilipinas
BIR
Bureau of Internal Revenue
FRSC
Financial Reporting Standard Council
a pervasive structure that sets boundaries of accounting practice and the backbone of accounting
Framework
Standards are made by three organizations which are:
PICPA, FRSC, PIC
If a conflict should arise between Financial Reporting Standard and a concept within the accounting framework, the standard _____________.
Shall prevail
A standard is _______ while a concept is _______
specific, general
a business enterprise is separate and distinct from its owner or investor.
Business Entity Principle
business is expected to continue indefinitely.
Going Concern Principle
financial statements are to be divided into specific time intervals.
Time Period Principle
amounts are stated into a single monetary unit
Monetary Unit Principle
financial statements must be presented with supporting evidence.
Objectivity Principle
accounts should be recorded initially at cost.
Cost Principle
revenue should be recognized when earned regardless of collection and expenses should be recognized when incurred regardless of payment.
Accrual Accounting Principle
cost should be matched with the revenue generated.
Matching Principle
all relevant and material information should be reported.
Disclosure Principle
also known as prudence. In case of doubt, assets and income should not be overstated while liabilities and expenses should not be understated.
Conservatism Principle
in case of assets that are immaterial to make a difference in the financial statements, the company should instead record it as an expense.
Materiality Principle
