Exam (elaborations)
ACCOB2-CHAPTER 1; INTRODUCTION TO FINANCIAL ACCOUNTING
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ACCOB2-CHAPTER 1; INTRODUCTION TO FINANCIAL ACCOUNTING...
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ACCOB2-CHAPTER 1; INTRODUCTION TOFINANCIAL ACCOUNTING
Accounting - ANSWER The art of recording, classifying, and
summarizing in a significant manner and in terms of money, transactions
and events which are, in part at least, of a financial character, and
interpreting the results thereof.
Helps an entity, be if for prof or otherwise, to summarize its transactions
and communicate them in a way that will be understood by its intended
users.
Primary Users - ANSWER Needs accounting data for investment and
lending purposes.
Investors - ANSWER Needs accounting data to buy, hold, or sell their
stakes.
Lenders or Creditors - ANSWER To know if the company will be able to
pay off its debt.
Government - ANSWER To know whether the entity is paying the correct
amount of tax.
Other Users - ANSWER An entity's management needs accounting data
to decide on the particular transactions and directions it be undertaken.
An entity's management consists of - ANSWER Board of Directors,
Executive Officers, Supervisors, and Rank-and-file personnel.
Management Accounting - ANSWER A branch of accounting that
focuses on the needs of other users. It produces reports and provides
information to be circulated inside the company. Said reports cover a
period of less than one year and are sometimes produced as needed.
, Financial Accounting - ANSWER Answers the needs of primary users. It
produces general purpose financial statements.
Difference between Management and Financial Accounting - ANSWER
1. Different Intended Users
2. Management Accounting is more flexible as certain information may
be added or reduced, changed, or even disregarded by an entity to
support its needs in terms of information.
3. Financial Accounting requires the financial statement preparers to
follow the guidelines, conventions, and framework set by the
International Accounting Standards Board (IASB).
GAAP - ANSWER General Accepted Accounting Principles
Philippine Financial Reporting Standards (PFRS) - ANSWER
Promulgated by the Philippine Financial Reporting Standards Council
(PFRSC), the International Accounting Standards Board (IASB)
counterpart.
It includes different standards and interpretations that lay out the
guidelines and principles to be followed in the presentation of the items
shown in the general-purpose financial statements and their disclosures.
IFRS - ANSWER International Financial Reporting Standards. The
Philippine uses the IFRS as its financial reporting framework.
Conceptual Framework for Financial Reporting - ANSWER Developed
so the financial reporting standards are applicable to a wide range of
accounting models, including the concepts of capital and capital
maintenance.
The various purposes of the Conceptual Framework for Financial
Reporting are the following: - ANSWER 1. To assist the Board in the
development of future PFRS and in its review of existing PFRS.
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