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Questions and Answers
What is the primary purpose of accounting?
What is the primary purpose of accounting?
Which of the following is NOT considered an essential characteristic of accounting?
Which of the following is NOT considered an essential characteristic of accounting?
Which component of accounting is primarily analytical?
Which component of accounting is primarily analytical?
What is one of the objectives of this financial reporting unit?
What is one of the objectives of this financial reporting unit?
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How long is the expected study time for this unit?
How long is the expected study time for this unit?
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Which definition of accounting emphasizes its role in decision-making?
Which definition of accounting emphasizes its role in decision-making?
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What type of information is accounting primarily concerned with?
What type of information is accounting primarily concerned with?
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How many total members are there in the FRSC?
How many total members are there in the FRSC?
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Which organization does NOT have a representative on the FRSC?
Which organization does NOT have a representative on the FRSC?
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What is the role of the Philippine Interpretations Committee (PIC)?
What is the role of the Philippine Interpretations Committee (PIC)?
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What happens to proposed IFRSs after the FRSC evaluates and deliberates on them?
What happens to proposed IFRSs after the FRSC evaluates and deliberates on them?
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Which of the following is part of the Generally Accepted Accounting Standards in the Philippines?
Which of the following is part of the Generally Accepted Accounting Standards in the Philippines?
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What defines a transaction as accountable within a business?
What defines a transaction as accountable within a business?
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What is the primary purpose of measuring economic transactions in accounting?
What is the primary purpose of measuring economic transactions in accounting?
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Which of the following best describes historical cost?
Which of the following best describes historical cost?
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If Rickrolled Inc. purchased equipment for ₱20,000,000 in 2021, what does this amount represent?
If Rickrolled Inc. purchased equipment for ₱20,000,000 in 2021, what does this amount represent?
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What does the current cost of an asset refer to?
What does the current cost of an asset refer to?
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How would you define realizable value?
How would you define realizable value?
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Which of the following statements is false regarding measurable transactions?
Which of the following statements is false regarding measurable transactions?
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If the price of the same equipment decreases over time, which cost reflects this change?
If the price of the same equipment decreases over time, which cost reflects this change?
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Which of the following is NOT a financial attribute used for measurement?
Which of the following is NOT a financial attribute used for measurement?
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What does GAAP stand for in the context of accounting?
What does GAAP stand for in the context of accounting?
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Which body was established before the Financial Reporting Standards Council (FRSC) in the Philippines?
Which body was established before the Financial Reporting Standards Council (FRSC) in the Philippines?
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What primary role does the Financial Reporting Standards Council (FRSC) serve?
What primary role does the Financial Reporting Standards Council (FRSC) serve?
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How does GAAP respond to societal changes?
How does GAAP respond to societal changes?
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What does the present value of an asset represent?
What does the present value of an asset represent?
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What legislative act is associated with the establishment of the Board of Accountancy (BOA) in the Philippines?
What legislative act is associated with the establishment of the Board of Accountancy (BOA) in the Philippines?
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Which of the following is not a factor to consider when selecting a measurement basis?
Which of the following is not a factor to consider when selecting a measurement basis?
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What is one purpose of Generally Accepted Accounting Principles (GAAP)?
What is one purpose of Generally Accepted Accounting Principles (GAAP)?
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What is the first step in the accounting communication process?
What is the first step in the accounting communication process?
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What is the role of the Professional Regulation Commission in the context of accounting standards?
What is the role of the Professional Regulation Commission in the context of accounting standards?
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Which of the following statements about GAAP is true?
Which of the following statements about GAAP is true?
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Which of the following describes the classifying process in accounting?
Which of the following describes the classifying process in accounting?
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What is contained in a complete set of financial statements?
What is contained in a complete set of financial statements?
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What significant change occurred to the Accounting Standards Council (ASC)?
What significant change occurred to the Accounting Standards Council (ASC)?
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A receivable of ₱20,000,000 forty years from today is valued how?
A receivable of ₱20,000,000 forty years from today is valued how?
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What is implied about the complexity of financial transactions in society?
What is implied about the complexity of financial transactions in society?
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Which component of accounting focuses on distributing reports to users?
Which component of accounting focuses on distributing reports to users?
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What does the revised conceptual framework introduce in terms of measurements?
What does the revised conceptual framework introduce in terms of measurements?
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Which of the following describes the process of summarizing in accounting?
Which of the following describes the process of summarizing in accounting?
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What is the purpose of classifying transactions in accounting?
What is the purpose of classifying transactions in accounting?
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Study Notes
Unit 1 Financial Reporting
- This unit reviews core accounting concepts.
- It details the standard-setting bodies in the Philippines.
- It outlines the process of developing accounting standards.
Introduction
- The unit provides a general review of accounting concepts.
- It includes information on financial reporting standard setters.
- It covers the general political procedures for setting standards.
Unit Learning Objectives
- Students should be able to review basic financial reporting concepts.
- Identify the standard-setting bodies in the Philippines.
- Understand the process of creating accounting standards.
Timing
- The unit requires approximately 4 study hours.
- 3 hours for reading and comprehension.
- 1 hour for assessments.
What is Accounting?
- Accounting is a service activity.
- It provides financial information for economic decision-making.
- It involves recording, classifying, and summarizing transactions.
- It interprets the results of these transactions.
Essential Characteristics of Accounting
- It uses quantitative information.
- It is financial in nature.
- It is useful for decision-making.
Components of Accounting - Identifying
- Determining if a transaction is recordable.
- Not all business activities are recordable.
- Accountable transactions affect assets, liabilities, or equity.
Components of Accounting - Measuring
- Assigning peso amounts to transactions and events.
- Accounting information needs a common financial denominator.
- Philippine Peso is used as the measurement unit.
- Transaction values can be determined using historical cost, current cost, realizable value, and present value.
Components of Accounting - Communicating
- Preparing and distributing accounting reports.
- Users of accounting information include potential investors, customers, etc.
- Procedures for recording and classifying (journalizing and posting to ledgers).
- Summarization into financial statements (statement of financial position, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows).
Generally Accepted Accounting Principles (GAAP) in the Philippines
- Represents the rules, procedures, practices, and standards.
- Standards evolve to meet societal needs.
- GAAP standards can be modified and evolve over time.
Standard-Setting Bodies
- Accountancy bodies determine the generally accepted accounting principles (GAAP).
- Financial Reporting Standards Council (FRSC) developed the Philippine Financial Reporting Standards (PFRS).
- Philippine Accounting Standards (PAS) were preceded by PFRS.
- The FRSC is made up of several representatives from various professional organizations and government bodies.
Philippine Interpretations Committee (PIC)
- Formed to interpret and provide guidance on PFRS.
- Addresses issues not specifically covered by existing PFRS.
International Arena
- The International Accounting Standards Board (IASB) aims for global uniformity in accounting principles.
- It issues pronouncements called International Financial Reporting Standards (IFRS).
- IFRS promotes transparency and comparability.
The Standard-Setting Process
- The development of accounting standards is a political process.
- Many groups exert influence on this process (e.g., investors, government bodies).
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Description
This quiz focuses on core accounting concepts covered in Unit 1 of Financial Reporting. It addresses standard-setting bodies in the Philippines and the processes involved in developing accounting standards. Prepare to review essential financial reporting principles and their significance in economic decision-making.
