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Intro To Accountancy Profession.f

Accounting involves identifying, measuring, and communicating financial information to allow for informed economic decisions. It includes recording transactions, classifying them, and summarizing the information into financial statements. The key aspects of accounting are the identifying process, measuring process, and communicating process. The Accountancy Law in the Philippines regulates the practice of accounting and classifies it into four sectors: public practice, commerce/industry, education, and government. Public practice involves rendering accounting/auditing services to clients, while the other sectors involve accounting work in private companies, academia, or the government.

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20 views

Intro To Accountancy Profession.f

Accounting involves identifying, measuring, and communicating financial information to allow for informed economic decisions. It includes recording transactions, classifying them, and summarizing the information into financial statements. The key aspects of accounting are the identifying process, measuring process, and communicating process. The Accountancy Law in the Philippines regulates the practice of accounting and classifies it into four sectors: public practice, commerce/industry, education, and government. Public practice involves rendering accounting/auditing services to clients, while the other sectors involve accounting work in private companies, academia, or the government.

Uploaded by

SURSECO UNO
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTRODUCTION

TO THE
ACCOUNTANCY
PROFESSION
Definition of Accounting

Accounting Standards Council

“Accounting is a service activity.

Its function is to provide quantitative information, primarily


financial in nature, about economic entities, that is intended to
be useful in making economic decisions.”
Definition
Definition of
of Accounting
Accounting

Committee on Accounting Terminology of the American


Institution of Certified Public Accountants (CAT of AICPA)

Accounting is 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.
Definition of Accounting

American Accounting Association (AAA)

Accounting is the process of identifying, measuring and


communicating economic information to permit informed
judgment and decision by users of the information.
Definition of Accounting

Based from these definitions we can say


that:
1. Accounting is a user-based discipline.
2. Accounting is quantitative in nature.
3. Accounting is subject to interpretation.
Three (3) important aspects or components of the
accounting process.

1. Identifying process (Analytical Component)


It is the process of analyzing events and
transactions to determine whether or not they will
be recognized. Always remember that only
accountable events are recognized (journalized).
On the other hand non-accountable events are not
recognized but disclosed in the notes to financial
statements if they have accounting relevance.
Identifying Process

Types of events and transactions


a)External Events - are transactions involving the entity and another
entity.
1) Exchange - an event wherein there is a reciprocal giving and
receiving of economic resources or extinguishment of obligations.
Examples: sale, purchase, payment of liabilities.
Identifying Process

Types of events and transactions


2) Non-reciprocal transfer - is a one way transaction
wherein the entity giving does not receive anything in
return.
Examples: donation or gifts, payments of taxes and fines,
theft, provision of capital
Identifying Process

Types of events and transactions


3) External event other than transfer – an event that changes
an entity’s economic resources or obligations caused by an
external party or event but does not involve transfer of resources
or obligations,
Examples: changes in fair value, vandalism, obsolescence
Identifying Process
Identifying Process
Internal events - are events that do
not involve outside party or event.
1) Production 2) Casualty
Three (3) important aspects or components of the
accounting process.

2. Measuring process (Technical Component)

It is the process of determining the


monetary amounts at which the
elements of the financial statements are
to be recognized and carried in the
balance sheet and income statement.
Three (3) important aspects or components of the
accounting process.

3. Communicating process (Formal Component)


It is the process of preparing and distributing
accounting reports to potential users of
accounting information.
Implicit in the communication process are the
recording, classifying and summarizing
aspects of accounting.
Communicating process (Formal Component)

• Recording or journalizing is the process of systematically maintaining a


record of all economic business transactions after they have been identified
and measured.

• Classifying is the sorting or grouping of similar and interrelated economic


transactions into their respective class. Actually, classifying is accomplished
by posting to the ledger.

• Summarizing is the preparation of financial statements which include the


statement of financial position, income statement, statement of comprehensive
income, statement of cash flows and statement of changes in equity.
The Accountancy Law

Republic Act No. 9298 is the law regulating the practice of


accountancy in the Philippines. This law is known as the
"Philippine Accountancy Act of 2004".

The Professional Regulatory Board of Accountancy (PR-


BOA) is the body authorized by law to promulgate the rules
and regulations.
The Accountancy Fields
Under RA 9298, the practice of accountancy is sub-classified into four (4) sectors:

(1) Practice in Public Accountancy - involves rendering of accounting and auditing services to one or more client on a fee
basis.

Services rendered:
(a) Auditing has traditionally been the primary service offered by most public accounting practitioners.
Auditing or specifically external auditing is the "examination of financialstatements by independent
certified public accountant for the purpose of expressing an opinion as to the fairness with which the financial
statements are prepared". This represents the "ATTEST FUNCTION" of CPAs.
(b) Taxation service includes the preparation of annual income tax returns and determination of tax
consequences of certain proposed business endeavors. The CPA not infrequently represents the client in tax
investigations.
(c) Management advisory service has no precise coverage. Generally, this refers to services to clients
on matters of accounting, finance, business policies, organization procedures, product costs, distribution and many
other phases of business conduct and operations.
Limitations:
(a) Certificate of Accreditation
• Requires three (3) year meaningful experience.
• CPD requirements
(b) No corporation form is allowed to be registered for the practice of public accountancy.
The Accountancy Fields
Under RA 9298, the practice of accountancy is sub-classified into four (4) sectors:

(2) Practice in Commerce and Industry – also known as private accounting. This refers to
employment in the private sector in a position which involves decision making requiring
professional knowledge in the science of accounting. The highest accounting officer in a
business entity is the controller.

(3) Practice in Education or Academe - employment in an education institution which


involves teaching of accounting, auditing, MAS, law, taxation, finance and other related
subjects.

(4) Practice in the Government - employment or appointment to a position in an


accounting professional group in the government or GOCC which involves decision
making requiring professional knowledge in the science of accounting or where civil
service eligibility as a CPA is a pre-requisite.

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