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.