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AP Notes

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18 views5 pages

AP Notes

Uploaded by

verronabellagarcipleimiti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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O2C - revenue receipt cycle

- generation of revenue + collection of receivables


- lifecycle

Order Entry - check if the customer is order-worthy and credit standing of customer

Shipping - bill of lading

Segregation of duties - dahil baka kapag hindi segregated, there's a chance na


approve lang ng approve para maboost ang sales and maging problem ang collection ng
accounts receivable

P2P - expenditure disb cycle

(end of P2P)
AR = IRv x CRv x DR^ --> STv
N - less strict
T - interim/prior year-end
E - Small SS

AR = IRv x CR^ x DRv --> ST^


N - more strict
T - year-end
E - Large SS

Hire-to Retire

(end of H2R)
Segragation of Duties according to
(CARE)
Custody
Authorization
Recording
Execution

----
Components of SHE

Note: Dapat mag-appropriate ng RE for TS kahit silent ang problem about retained
earnings.

Cash Consideration (given that there is only one type of shares)

Non-Cash consideration:
1. (RII)
- fv of the noncash consideration Received
- fv of the shares Issued
- par value/stated value of shares Issued

2. (ELC)
- fv of the Equity
- fv of Liability, if e is not determinably reliable
- Carrying amount of the liability, if wala pa rin

-----
Issuance
@ a LumpSum Price

FV of OS in Intrinsic Value Method can be per unit or per total

______
Kapag naman inissue with bonds payable, compound financial instruments which can be
with or without method

Issued price including warrants (Total proceeds = FV with warrants)


Issue price of bond ex-warrants (FV without the warrants)
*Residual approach

_______
Treasury shares

*Reissuance
Note: If stock dividend yung transaction prior to reissuance, no effect to the cost
of the TS. However, if stock split ang nangyari prior to reissuance, magbabago ang
cost which is according to the split na nangyari.

_______
*Split up
- no. of shares will increase but par value will decrease;
- outstanding, subsribed, and TS will increase. including the unissued donated
shares.

*Split down
- no. of shares will decrease but par value will increase
- outstanding, subscribed, and TS will decrease. including unissued donated shares.

_________
Counter-balancing Errors
(errors in PSE)
- Purchases
- Sales
- Ending Inventories

(ommissions) - (these are the errors na nagkakaroon ng mga reversing entries)


1. Deferred Expense (Pre-payments under expense method)
2. Deferred Income(Pre-collection under income method)
3. Accrued Expense
4. Accrued Income

Reversing entries are not required in the accounting cycle.

__________
Counterbalancing
**if current period is understated, next year is overstated.
**kung ano ang effect sa NI during the current year, yun din ang effect sa RE &
Working Capital during the current year.
**kung understated ang NI in the current year, the NI next year will be overstated.
But the RE and Working capital in the next year will be automatically correct na.

_________
*Investing
(PIEDL
-PPE
-Intangible Assets
-Investment Properties
-Equity Investments other than held for trading
-Debt Investments other than held for trading
-Loan Receivable
-Lease Receivable
-Contracts

Cashflow from Investing Activities


= Cash Inflow - Cash Outflow

____________
PROOF OF CASH

--- CIB per BANK balance---


DIT
- receipts in the prior month but in still transit @ month-end. hence, not included
in the prior month bank statement. will be deposited palang in the current month.
- add DIT in prior month balance, deduct from current month receipts

*current month DIT


- add in the current month receipts, add in the current month balance

OC
- payables in the prior month but still outstanding @ month-end. hence, not
deducted from the prior month bank statement. will be deducted palang in the
current moth.
- deduct OC in prior month, deduct from current month disbursements.

*current month OC
- add in the current month disbursements, deduct from current month balance

ERRONEOUS BANK CREDIT


- maling credit ni bank in your account, so need to be adjusted by deducting the
amount from your account

*prior month EBC


- deduct from prior month balance
- deduct from current month disbursements, because it is not a legitimate deduction
from your balance in the current month

*current month EBC


- deduct from current month balance
- deduct from current month receipts, becasue the credit in your account was not
from a legitimate receipt

ERRONEOUS BANK CHARGE


- maling debit ni bank from your account, so need to be adjusted and eventually
will be added back in your account

*prior month EBCh


- add in prior month balance
- deduct from current month receipt, because it is not really a credit to your
account. binalik lang kung ano yung binawas sayo

*current month EBCh


- add in current month balance
- deduct from current month disbursements, because it is not really a disbursment
in the firstplace
---CIB per BOOK balance---
CM - added in your bank account na hindi mo pa alam. so hindi mo pa narerecord yun
until matanggap mo yung bank statement

*prior month CM
- add in prior month balance
- deduct from current month receipts, because receipt yun nung prior month hindi ng
current month

*current month CM
- add in current month balance
- add in current month receipts

DM - deducted na from your bank account pero hindi mo pa nababawas sa book mo dahil
late mo na nalaman dahil late na rin dumating yung bank statement.

*prior month DM
- deduct from prior month balance
- deduct from current month disbursement, because the deduction is for the prior
month not for the current month

*current month DM
- deduct from current month balance
- add in current month disbursements

Overstatement of Cash Receipts


*prior moth OCR
- deduct from prior month balance
- deduct from current month disbursements, because hindi siya legitimate
disbursements. hindi ka naman kasi dapat magbabawas kung sakaling no overstatement

*current month OCR


- deduct from current month balance
- deduct from current month receipts, because it should not have been a receipt in
the first place

Overstatement of Cash Disbursements


*prior month OCD
- add in prior month balance
- deduct from current month receipts, because hindi ka naman kasi dapat nag add
back kung walang OCD in the prior year

*current month OCD


- add in current month balance
- deduct from current month disbursements, because it should have not been a
disbursement in the first place.

________________
INVENTORIES

*NRV = Selling Price - Cost to Sell - Cost to Complete (if not yet finished
@inventory count)

Yes-Yes-Yes
-Valid?
-Recorded?
-Counted (Included/Excluded)?
-------
GP =

______________________
INVESTMENT

FA @ FVTPL

Note: when you ACQUIRE & SELL FA@FVTPL in between the date of declaration and date
of record, deduct dividends from the FV at @INITIAL RECOGNITION & from
consideration recevied @DERECOGNITION, respectively.

- Direct Method:
*acquisition of FA@FVTPL - amount of acquired is deducted from operating
cashflows
*receipt of dividendes income from FA@FVTPL - added in operating cashflows if
silent; or added in investing cashflows
*receipt of interest income - added in operating cashflows if silent; or added
in investing cashflows
*payment of dividends - deducted from financing cashflows if silent; or
operating cashflows
*payment of interest - deducted from operating cashflows if silent; or deducted
from financing cashflows

-----
IE @ FVTOCI

Note: the "Unrealized gain (or loss) -OCI" in subsequent measurement will
eventually be closed to the RE along with the "Gain (or Loss) at the derecognition

-----
INVESTMENT IN ASSOCIATE

Initial Measurement @ Cost


(with the following considerations)
- should the share (using actual voting %) in the FV of assoc's net assets is not
equal to the cost of acquisition: IMPLIED GOODWILL, included in CA (if cost > sh.
in FV); INVESTMENT INCOME in P/L (if cost < sh. in FV).

Subsequent Measurement - Equity Method

______________

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