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ACCA102 - Midterm Reviewer Part 1

The document discusses the key components and objectives of accounting. It defines accounting as the process of identifying, measuring, and communicating quantitative financial information about an entity that is useful for economic decision making. The three main components are identifying transactions, measuring them in monetary terms, and communicating the information to users through financial reporting. The overall objective of accounting is to provide useful financial data to support decision making.

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Fuhoe Neko
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50 views1 page

ACCA102 - Midterm Reviewer Part 1

The document discusses the key components and objectives of accounting. It defines accounting as the process of identifying, measuring, and communicating quantitative financial information about an entity that is useful for economic decision making. The three main components are identifying transactions, measuring them in monetary terms, and communicating the information to users through financial reporting. The overall objective of accounting is to provide useful financial data to support decision making.

Uploaded by

Fuhoe Neko
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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◆ Identifying and measuring are pointless if

the information contained in the accounting


Chapter 1: The Accountancy Profession record cannot be communicated in some
Definition of Accounting form to potential users.
A. Accounting Standards Council ◆ Recording or journalizing - process of
a. Service Activity. systematically maintaining a record of all
b. Provide quantitative information. economic business transactions after they
B. Committee on Accounting Terminology have been identified and measured.
a. Accounting is the art of recording, ◆ Classifying - sorting or grouping of similar
classifying and summarizing… and interrelated economic transactions into
C. American Accounting Association their respective classes. Accomplished ny
a. The process of identifying, measuring and posting to the ledger
communicating ◆ Summarizing - preparation of financial
statements.
Important Points:
1. Quantitative Information. Overall Objective of Accounting
2. Financial in nature. ➔ To provide quantitative financial information about
3. Useful in decision making. an entity useful in making economic decisions.

Accounting Components The Accountancy Profession


➔ Identifying as the analytical component. ➔ Republic Act No. 9298
◆ Process is the recognition or nonrecognition ◆ Law regulating the practice of accountancy
of businesses activities as “accountable” in the Philippines.
events. ◆ Aka Philippine AccountancyAct of 2004.
◆ An event is accountable or quantifiable ➔ Board of Accountancy
when it has an effect on assets, liabilities and ◆ The body authorized by law to promulgate
equity. rules and regulations affecting the practice
◆ External Transactions of the accountancy profession in the
● Or exchange transactions are those Philippines.
economic events involving one ◆ Responsible for preparing and grading the
entity and another entity. Philippine CPA examination.
◆ Internal Transactions ◆ CPALE - Certified Public Accountant
● Economic activities that take place Licensure Examinations.
entirely within the entity only.
● Production - process by which
resources are transformed into
products.
● Casualty - any sudden
unanticipated loss from events
ordinarily termed as an act of God
(fire, flood etc.)
➔ Measuring as the technical component.
◆ Process of assigning of peso amounts to the
accountable economic transactions and
events.
◆ Historical Cost - the original acquisition cost
and the most common measure of financial
transactions.
◆ Current Value - includes fair value, value in
use, fulfillment value and current cost.
➔ Communicating as the formal component.
◆ Process of preparing and distributing
accounting reports to potential users of
accounting information.

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