Accounting Standards and Practices in the Philippines: A Comprehensive Guide, Slides of Accounting

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C O N C E P T U A L

F R A M E W O R K A N D

A C C O U N T I N G

S T A N D A R D S

Justiniano L. Santos, CPA, MBA

THE ACCOUNTANCY PROFESSION

C h a p t e r 1

DEFINITION OF ACCOUNTING

Accounting Standards Council American Institute of Certified Public Accountant American Accounting Association

Important

Points

Accounting is about quantitative information. The information is likely to be financial in nature. The information should be useful in decision making. Conceptual Framework and Accounting Standards

IDENTIFYING

- r e c o g n i t i o n a n d

n o n - r e c o g n i t i o n o f b u s i n e s s a c t i v i t i e s a s “ a c c o u n t a b l e ” e v e n t s Not all business activities are accountable. An event is accountable when it has effect on assets, liabilities and equity. Only economic activities are emphasized and recognized in accounting. Sociological and psychological matters are beyond the province of accounting. Conceptual Framework and Accounting Standards

Economic Activities

External Internal

C O M M U N I C AT I N G

- t h e p r o c e s s o f

p r e p a r i n g a n d d i s t r i b u t i n g a c c o u n t i n g r e p o r t s t o p o t e n t i a l u s e r s o f a c c o u n t i n g i n f o r m a t i o n. Identifying and measuring are pointless if not communicated to potential users. Recording or journalizing is the process of systematically maintaining a record Classifying is accomplished by posting to the ledger Summarizing is the preparation of financial statements Conceptual Framework and Accounting Standards

Accounting as an Information System

FINANCIAL DATA CONVERTED INTO RECORDING I N T E R P R E T I N G CLASSIFYING SUMMARIZING INPUT (^) PROCESS OUTPUT Conceptual Framework and Accounting Standards

R.A. 9298

Conceptual Framework and Accounting Standards

The Accountancy Profession

CPALE – BOARD OF ACCOUNTANCY

Accreditation to practice public accountancy

a. Public accounting b. Private accounting c. Government accounting

Public Accounting

Auditing Taxation Management Advisory Services

Taxation

Includes preparation of annual income tax returns The CPA frequently represents the client in tax investigations. The public accountant must be thoroughly familiar with the tax laws and regulations Conceptual Framework and Accounting Standards

Management Advisory Services

Advice on installation of computer system Quality Control and Budgeting Installation and modification of accounting system Forward planning Design and modification of retirement plan Advice on mergers and consolidation