Accounting Prelim - Terms

Periodicity

A concept which the Financial Accounting process provides information about economic activities of an enterprise for a specified accounting period that is shorter than the life of the enterprise.

Partnership

A form of a business organization that has limited ability to raise capital and unlimited personal liability of owners.

Integrity

A professional accountant should be straightforward and honest in all professional and business relationships. This is in consonance with this fundamental principle.

Buyer

A purchase should be recognized in the accounting records when title transfers to these people.

Going Concern

According to the IASB conceptual framework , this is not an objective of financial statements.

Commerce and Industry

Accountants employed by a particular business firm or not-for-profit organization, perhaps as chief accountant, controller, or financial vice president, are said to be engaged in this area of competence.

Consistency

Accounting changes are often made and the monetary impact is reflected in the financial statements of an entity even though, in theory, this maybe a violation of this accounting principle.

Historical Cost

Assets are usually valued under this basis.

Professional Competence and Due Care

Carrying out professional responsibilities diligently and in accordance with applicable technical and professional standards is descriptive of this principle.

Stable Monetary Unit

Concept that means that the financial statements should be stated in terms of a common financial denominator.

Ledger

If a person wants to to determine the balance of a particular account, he/she should refer to this.

Customers

These users are interested in the information about the continuance of an entity, especially when they have a long-term involvement with or dependent on the entity.

Periodicity

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with this basic accounting principle.

Trial Balance

Equality of debits and credits in the ledger should be verified at the end of the accounting period by preparing this.

PRC

It is a government agency that regulates professionals in the Philippines and it also conducts CPA governments examination.

Cost

It is a pervasive constraint on the information that can be provided by the financial reporting.

Account

It is the basic summary device of accounting.

Ledger

It is used to classify and summarize transactions, and to prepare data for basic financial statements.

Financial Reporting Standards Council

Its main function is to establish and improve accounting standards that will be generally accepted in the Philippines.

Current Liabilities

Obligations which are expected to be liquidated through the use of existing current assets or the creation of other current liabilities are these.

Generally Accepted Accounting Principles

They encompass the conventions, rules, and procedures necessary to define what accepted accounting practice.

Objectivity

Proponents of historical cost maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more concerned with this concept.

Unit of Measure

Stating assets and liabilities and changes in them in terms of a common financial denominator is a prerequisite in measuring financial position and periodic net income.

International Accounting Standards Board

They issue the International Financial Reporting Standards.

Repayment Ability of Entity

The IASB Conceptual framework identifies user groups. This is not an information need for the investor group.

Business Entity Concept

The accounting concept if the owner of a business takes goods from inventory for his personal use.

Consistency

The accounting concept that means that similar items should receive a similar accounting treatment.

Financial Reporting Standards Council

The body authorized by law to promulgate the rules and regulations affecting the practice of the accounting profession in the Philippines.

Materiality

The concept that states that omitting or misstating this information could influence users of the financial statements.

Stable Monetary Unit

The concept where Accountants do not recognize that the value of the peso changes over time.

Compound Journal Entry

The journal entry that contains more than two accounts.

Recording Data

The measurement phase of accounting is accomplished by this.

Provide Quantitative Information

The overall objective of accounting.

Cost Principle

The records of properties acquired and service availed of by a business are maintained in accordance with this principle.

Objectivity

This accounting concept states that an accounting transaction should be supported by sufficient evidence to allow two or more qualified individuals to arrive at essentially the same conclusion.

Historical Cost

This accounting concept which, in times of rising prices, tends to underestimate asset values and overstate profits.

Identifying

This accounting process is the recognition or nonrecognition of business activities as accountable events.

Going Concern

This assumption underlies the depreciation of assets over their useful lives.

Accrual

This basis of accounting recognizes expenses when resources are consumed as part of operating activities.

Matching

This concept means associating effort with accomplishment.

School Identification Card

This document is not a requirement and shall not be submitted.

Analyze transactions from Source Documents

This is the first step in the Accounting Cycle.

RA. No. 9298

This is the law regulating the practice of Accountancy in the Philippines.

Financial Statements

This is the output document or record in the accounting cycle.

Adequate Disclosure

This principle requires relevant information to form part of the financial statements by decision-making purposes.

Accounting Period

This serves as the basis for preparing financial statements at regular artificial points in time.

Going Concern

This type of basic assumption may not be followed in bankruptcy reports and financial reports.

Corporation

This type of business organization is owned by its stockholders.

Business's bank manager and the tax authorities

Two groups of people that are most likely to be interested in the financial statements of a sole trader.

External Auditing

What area of Public Accounting means the examination of financial statements by a CPA for the purpose of expressing an opinion as to the fairness of the statements.