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conceptual framework > prelim > Flashcards

prelim Flashcards

1
Q
  • June 1973 -
    OBJECTIVE:
    1. Uniformity of accounting principles all around the world.
      “International Accounting Standards (IAS)“
A

International Accounting Standards Committee (IASC)

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2
Q

New name of IASC and IAS

A

International Accounting Standards Board (IASB)

“International Financial Reporting Standards (IFRS)”

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3
Q

Sila kung gumagawa or nagha-handle ng board

A
  • Professional Regulation Commission (PRC)
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4
Q

BOA recommended to make FRSC

A
  • BOA or Board of Accountancy
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5
Q

To assist BOA in carrying out its power and functions

MAIN FUNCTION: Establish and improve accounting standards that will be generally accepted in the Philippines

A

FRSC or Financial Reporting Standard Council

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6
Q

FRSC Promulgates accounting standards aka

A

Philippine Accounting Standards (PAS)(old) (pagnarinig mo big sabihin Hindi pa nauupdate / applicable pa run ngayon)
Philippines Financial Reporting Standards (PFRS)

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7
Q
  • Summary of the terms and concepts that underlie the preparation and presentation of financial statements
  • Used as basis for the development and revision of accounting standards
  • BASIC PURPOSE:
    • To assist IASB to develop IFRS
    • To assist the preparers of FS to develop consistent accounting policy when no standard applies to a particular transaction
    • To assist preparers of FS to develop accounting policy when a standard allows a choice of an accounting policy
    • To assist all parties to understand and interpret IFRS
A
  • CONCEPTUAL FRAMEWORK
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8
Q
  • Primary users

* Owner/investors …

A
  • Primary users

* Owner/investors - the one who puts in capital in a business

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9
Q
  • Primary users

* Manager …

A
  • Primary users

* Manager - the one who is responsible for running the business

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10
Q
  • Primary users

* Lenders and other creditors…

A
  • Primary users

* Lenders and other creditors - Assesses the paying ability of the business(borrower) .

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11
Q
  • Primary users

* Supplier …

A
  • Primary users

* Supplier - Offers goods for the sale of the business

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12
Q
  • Other users

* Employees …

A
  • Other users

* Employees - Assesses the ability of the company to grant their demands

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13
Q
  • Other users

* Customers ….

A
  • Other users

* Customers - Assesses the ability of the company to continuously supply the goods they buy

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14
Q
  • Other users

* Government…

A
  • Other users

* Government - Assesses the correct payment of taxes and filing of all required documents

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15
Q
  • Why / Purpose / Goal of accounting :
    • Provide financial information for decision making
      • Financial Statement
  • Specific Objectives:
    • Provide information useful in making decisions about providing resources to the entity (Statement of Changes in Equity)
    • Provide information useful in assessing the cash flow prospects of the entity (Statement of Changes in Cash flow)
    • Provide information about entity resources, claims and changes in resources and claims (Statement of Changes in Financial Position Income statement)
A
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16
Q

LIMITATIONS OF FINANCIAL REPORTING (Hindi lahat ng kailangan ng investors at creditors ay napapakita mo - may monetary value lang or amount. Pinapakita mo lang yung estimate)

  • Do not and cannot provide all information that existing and potential investors lenders and other creditors need
  • Not designed to show the value of an entity but these reports provide information to help the primary users estimate the value of the entity
  • Intended to provide common information to users and cannot accommodate every request for information
  • Based on estimate and judgment rather than exact depiction
A
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17
Q

WHAT IS QUALITATIVE CHARACTERISTICS?

A

Qualities and attributes that makes financial information useful to the users.

Answers the question, “Paano ba masasabi na yung information ay useful?”

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18
Q

2 classification of Qualitative characteristics:

  • di pwede mawala. The content or the substance (pag nawala to ay wala ng sense or usefulness and information)
A
  • Fundamental Qualitative Characteristic -
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19
Q

Intented to increase the usefulness of the information.

regards to presentation / forum (the way mo siya prinesent (was Baganda prinesent was useful)

A
  • Enhancing QC -
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20
Q

eto yang kakayahan or capacity of the information to influence a decision

A

relevance

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21
Q

helps users correct / forecast outcome of event naimagine yung mangyari sa company?

A

predictive value

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22
Q

enables users to confirm earlier expectations (Tama ba yung na predict ko?)

A

Confirmatory value

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23
Q

if commission, misstatement (Mali) and obscuring(tinago) of the information could reasonably affect the decision of users (dapat isama kung makakaapekto, pero kung Hindi wag na isama)

A

Materiality information / doctrine of Convenience =

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24
Q

kailagan daw yung actual effect of transaction are properly accounted for and represented. (Kung and Malaga yung information or nangayri sa transaction pinapakita mo)

A

faithful representation

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25
Q

you presented everything to facilitate understanding and avoids erroneous implications (lahat ng kailangan ng users satin pinapakita natin)

A

completeness

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26
Q

All significant and relevant information shall be reported.

A

STANDARD OF ADEQUATE DISCLOSSURE -

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27
Q

dapat yung gagawin mong financial statement shall not favor any party (dapat walling bias or fair)

A

neutrality

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28
Q

no error or omission (kulang)

A

free from error

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29
Q

present the transaction based on the economic substance rather than the legal form (dapat kung and talaga yung nangyari yun yung ipakita mo, example accrual, kappa nagbenta ka na even though di ka pa binabayaran irecord mo na)

A

substance over form

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30
Q

you exercise care and caution (magiingat ka kung you are dealing with uncertainties )

you must make sure na yung asset or income mo ay Hindi sobra / overstated

liability / expense ay Hindi kelang or understated

A

prudence

31
Q

incase of doubt (may choices ka), chose the alternative that has the least effect on equity

A

principle of conservatism

32
Q

different observers could reach a consensus (Kisangani decision)

same evidences, same conclusion

results can be duplicated

A

verifiability

33
Q

users are able to identify and understand the similarities and differences

A

comparability

34
Q

2 TYPES OF COMPARABILITY

1. Naiidentify / kinokompare yang infos WITHIN AN ENTITY it is

A

HORIZONTAL COMPARABILITY / INTRACOMPARABILITY

35
Q

2 TYPES OF COMPARABILITY

    Kung si user kinompare Nila yung company natin sa ibang company / ACROSS ENTITIES and Tawag ay
A

DIMENSIONAL COMPARABILITY / INTERCOMPARABILITY

36
Q

same method from period to period (kung ang ginamit last year ganon pa rin this year)

A

consistency

37
Q
  • yung mag users can readily understand yung pinapagawa mo

- users are expected to have a reasonable understanding of economic activities

A

understandability

38
Q

kung kelan kailangan tung information available dapat in time. Having infos available in time to influence decision

A

timeliness

39
Q
  • the benefit derived from the infos should exceed the cost incurred (pagkuha) in obtaining the information. (10 years or 5 years or kung sa tingen mo yang benefit na makukuha mo kayos sa paghahanap mo ay was mallet, wag na isama)
A

cost constraint

40
Q

provide information about economic resources of an entity, claims against the entity, and changes in the economic resources and claims

A

Financial statements

41
Q

Entity that prepares financial statement

A

reporting entity

42
Q

period of financial statement

annual basis

A

reporting period

43
Q

process of capturing for inclusion in the FS

A

recognition

44
Q

recognized income when earned regardless of collection of money

recognized expense incurred regardless of payment

A

accrual basis

45
Q

different type of expense

 cost incurred to generate income / revenue recoignized in the same period (yung ginastos mo ng 2022, irerecognized mo rin ng 2022)
A

MATCHING PRINCIPLE

46
Q

Expense is recognized when the revenue is also recognized.

strict matching principle

ex. Inventory 
                    cash or a/r 
                              sales 
                    Cost of good sold 
                              Inventory
A

Cause and effect association

47
Q

cost or expense by allocating over the periods infold

there’s no direct association with income

         ex. depreciation
A

SYSTEMATIC AND RATIONAL ALLOCATION

48
Q

EXPENSE OUT RIGHT BECAUSE OF DIFFICULTY OF ASSOCIATING WITH REVENUE
(no connection)

           EXAMPLE SALARY EXPENSE
A

IMMEDIATE RECOGNITION

49
Q

RECORD OF ALL OR PART FROM FINANCIAL STATEMENT

A

DERECOGNITION

50
Q

is the quantifying in monetary terms in the elements of financial statements.

A

Measurement

51
Q

cost in cured in acquiring or creating the asset

entry price or entry value

asset = consideration paid + transaction cost

Liability = consideration receipt + transaction cost

A

Historical Cost

52
Q

CURRENT VALUE

  • fair value
    price that would be received or paid between market participants (seller and buyer)
            kung magkano mo mabebenta or mabibili 

        exit price / exit value 

        Term for LIABILITY IS PRESENT VALUE
A
53
Q

present value of cash flows that is expected to drive from continuing to use of asset.

it includes transaction cause or disposal of asset

also called exit price or exit value

A

VALUE IN LIFE (ASSET)

54
Q

present value of cash that is expected in paying or selling

Include transaction costs on collection of debt

exit price / exit value

A

Fulfillment life (LIABILITY)

55
Q

current cost also known as ….

kung 3 years dapat 3 years din ipapalit

A

replacement cost

56
Q

sorting of asset liability equity income and expense

A

CLASSIFICATION

57
Q

adding together as assets liabilities and equity income and expense

A

AGGREGATION

58
Q

JOURNAL

A

TRANSACTION APPROACH

59
Q

Net income mangyayari lang pag may sumobra sa beg. capital

yung capital dapat mamemaintain mo, pag may sumobra income yun

A

Capital Maintainance Approach

60
Q

2 methods of C.M.A

         Net asset is based on monetary amount investment
A

FINANCIAL CAPITAL (HISTORICAL COST)

61
Q

2 methods of C.M.A

            Net assets is based on physical productive capacity to release goods and / or service
A

Physical capital (CURRENT COST)

62
Q

Accounting entity is viewed as continuing in operation indefinitely n the absense of evidence in contrary

explicit assumption

A

GOING CONCERN / CONTINUITY CONSUMPTION

63
Q

entity is separate from the owners, managers and employees who constitutes the entity \

implicit assumption

A

accounting entity assumption

64
Q

the indefinite life of the entity is subdivided into accounting period which are usually have a equal length for the purpose of preparing reports on financial position, financial performance, and cash flows

calendar year - ending on dec 31

fiscal year - ending any on any month except dec. 31

implicit assumption

A

time period assumption or periodicity

65
Q

elements of FS should be stated in terms of a measure (PHP)

implicit assumption

A

Monetary unit assumption

66
Q

ELEMENTS OF FINANCIAL STATEMENTS

  • Financial position
    ASSET
    LIABILITY
    OWNERS EQUITY
  • Financial performance
    INCOME
    EXPENSE
A
67
Q

PRESENT ECONOMIC RESOURCE CONTROLLED BY THE ENTITY AS A RESULT OF PAST EVENT (RIGHT)

A

ASSET

68
Q

PRESENT OBLIGATION OF AN ENTITY TO TRANSFER AN ECONOMIC RESOURCE AS A RESULT OF PAST EVENT (DUTY / RESPONSIBILITY)

A

LIABILITY

69
Q

RESIDUAL INTEREST IN THE ASSETS AFTER DEDUCTING LIABILITIES

A

EQUITY

70
Q

increase in assets or decrease in liabilities that result in increase of equity, other than those relating to contributions from equity holder

A

Income

71
Q

decrease in assets or increase in liabilities that result in decrease of equity, other than those relating to distributions from equity holder

A

expense

72
Q

Arises in the course of ordinary activity (araw araw na ginagawa ng business mo)

A

revenue

73
Q

other items that meets the definition of income but do not arise in the course of ordinary activities

A

gains

74
Q

expense = arise in the course of ordinary business

losses = do not arise in the course of ordinary business

A

conceptual framework (1 decks)

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