IAF

control accounts

accounts receivable and accounts payable in the general ledger

Check

A negotiable instrument used as a substitute for cash, of which is drawn against the entities or individual's current or savings account.

official receipt

Issued when cash is received by the entity.

invoice

Issued when service is rendered to a customer or client.

chart of account

consists of accounts titles which serves as a guide in recording business transactions.

Trial Balance

list of accounts with ledger balances.

Statement of Account

A bill presented to a customer for service rendered for which payment is demandable.

Accounting

Accounting is the art of recording, classifying, and summarizing in a significant manner and terms of money, transactions, and events, which are, in part at least, of a finance character and interpreting the result thereof

Periodicity Principle

Divide the life of the operating of the business

Business Entity Principle

Owner is separated and distinct to the business

book of original entry

Transactions are initially recorded chronologically by day in the journal

Stable Monetary Unit

Uniform currency

account

a device used to record the increase and decrease affecting each of the different assets, liabilities, and owner's equity.

general ledger

a formal book of accounts used in actual practice wherein a separate page is maintained for each account.

Generally accepted accounting principles

a set of accounting standards that is used in the preparation of financial statements

business

an economic unit that engages in buying and selling of goods or services

operating cycle

average period required for a business to make an initial outlay of cash to produce goods, sell the goods, and receive cash from customers in exchange of the goods.

Going Concern Principle

business continuously operating without the intention to liquidate

Manufacturing

buys raw materials, convert it to finished goods and then sells to customers.

Equity

claims of the owners and assets invested by the owners

Partnership

contract between two or more persons who bind themselves to contribute money, property, or industry to a common fund with the intention of dividing the profit among themselves.

Government Accounting

deals with proper custody and disposition of public funds.

cost accounting

deals with recording, classifying, and summarizing the details of materials, labor and overhead necessary to produce and sell a product or service. It also deals with controlling the expenses

accounting cycle

defined as a series of steps taken in gathering, processing and summarizing data to produce meaningful information, communicated to users using financial reports.

Cash or Check Voucher

document used, signed by the payee or the person who received the cash payment and the payee or the person who received the cash payment, when cash is paid, or a check is issued.

business papers

documents evidencing transactions of a business.

Merchandising

engages in buying and selling of goods or merchandise.

difference of ten

error in addition

difference is divisible by two

error is in posting to the wrong side

difference is divisible by 9 or a multiple of 9

error is in transposition

Recognition of Expense

expense is recognized when it is incurred regardless of cash is paid or not.

Auditing

independent examination and verification of the financial statement if it is prepared and presented fairly

Comparability

information must be comparable to the financial information presented for other accounting periods, so that the users can identify trends in the performance and financial position of the reporting entity.

Reliability

information must be free of material error and bias, and not misleading. Thus, the information should faithfully represent the transactions and other events, reflect the underlying substance of events, and prudently represent estimates and uncertainties through proper disclosure.

Understandability

information must be readily understandable to users of the financial statements. This means that information must be clearly presented, with additional information supplied in the supporting footnotes as needed to assist in clarification

Relevance

information must be relevant to the needs of the users, which is the case when the information influences their economic decisions. This may involve reporting particularly relevant information, or information whose omission or misstatement could influence the economic decision of the users.

Statement of Financial Position/ Balance sheet

list of assets, liabilities, and owner's equity of a business. It shows the present condition of a business at current or certain point in time.

Sole Proprietorship

most basic legal form of business, managed by one person

PHILIPPINE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANT (PICPA)

national professional organization of certified public accountants in the Philippines having the basic

Service

one which provides services, for a fee, to clients or customers.

Corporation

organized as a separate legal entity from the owners.

accounting period

period that covers certain accounting function, which can be either a calendar or a fiscal but also a week, month, or quarter

Financial Accounting

preparation and interpretation of financial statements primarily intended for external users

Liabilities

present obligations of the business and claims of the creditors

Accounting

process of identifying, recording, summarizing, and interpreting of the financial information

posting

process of transferring the debits and credits from the journal to the ledger

Matching Principle

recognize expenses in the same period as the revenues they help to generate

Assets

resources owned and controlled by the business, and it arise from past transactions

Realization of Revenue

revenue is recognized when it is earned regardless of collection.

Accrual Basis

revenues are recognized when earned and expenses are recognized when incurred

Statement of Changes in Equity

shows the activities for a period that caused the owner's equity to change. Activities affecting owner's equity are investment, withdrawal, net income/loss

Statement of Cash Flow

shows what caused the change in cash. It shows three kinds of activities which is the operating, financing, and investing activities

T account

simplest form used to analyze the effects of the transaction on each account.

Management Accounting

special-purpose financial statement primarily for the use of internal users

Statement of Comprehensive Income/ Income Statement

statement which requires an entity to present income and expenses. It shows the profitability of the business at a period of time.

BOARD OF ACCOUNTANCY

under the jurisdiction of the Professional Regulatory Commission (PRC) and is tasked to set-up and promulgate a set of professional standards and ethics in the practice of accounting profession.

Promissory Note

written promise by the debtor/payor to the creditor/payee to pay a certain amount of money at a future date.