Definition of Accounting
o 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 decision. (SFAS #1)
o Accounting is the art or 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. (AICPA)
o Accounting is the process of identifying, measuring and
communicating economic information to permit informed
judgment and decision by users of the information. (AAA)
Accounting (AAA)
o Identifying
Recognition of accountable or non accountable event.
1) Internal
2) External
o Measuring – Assigning of peso amounts to accountable
events
o Communicating
Recording
Classifying
Summarizing
Prohibition in the Practice of Accountancy
o No person shall practice accountancy in this country, or
use the title "Certified Public Accountant", or use the
abbreviated title "CPA" or display or use any title, sign,
card, advertisement or other device to indicate such
person practices or offers to practice accountancy, or is a
certified public accountant, unless such person shall have
received from the Board a certificate of
registration/Professional license and be issued a
professional identification card or a valid
temporary/special permit duly issued to him/her by the
Board and the Commission. (Section 26, R.A. 9298)
Qualifications of Applicant for Examinations
o Any person applying for examination shall establish the
following requisites to the satisfaction of the Board that
he/she:
1) Filipino citizen;
2) Good moral character;
3) Holder of the degree of Bachelor of Science in
Accountancy conferred by the school, college,
academy or institute duly recognized and/or
accredited by the CHED or other authorized
government offices; and
4) Not been convicted of any criminal offence involving
moral turpitude.
Scope of Examination
o The licensure examination for certified public accountants
shall cover, but are not limited to, the following subjects:
1) Theory of Accounts
2) Business Law and Taxation
3) Management Services
4) Auditing Theory
5) Auditing Problems
6) Practical Accounting Problem I
7) Practical Accounting Problem II. (Section 15, R.A.
9298)
Rating in the Licensure Examination
o To be qualified as having passed the licensure examination
for accountants, a candidate must obtain a general
average of seventy five percent (75%), with no grade lower
than sixty-five percent (65%) in any given subject. In the
event a candidate obtains the rating of seventy-five
percent (75%) and above in at least a majority of subjects
as provided for in this Act, he/she shall receive a
conditional credit for the subjects passed: Provided, That a
candidate shall take an examination in the remaining
subjects within two (2) years from preceding examination:
Provided, further, That if the candidate fails to obtain at
least a general average of seventy-five percent (75%) and a
rating of at least sixty-five percent (65%) in each of the
subjects reexamined, he/she shall be considered as failed
in the entire examination. (Section 16, R.A. 9298)
Rating in the Licensure Examination
o To passed:
1) General average of 75% and above
2) No grade lower than 65%
o Conditional:
Does not meet both requirements to passed but
majority of the subjects has a rating of 75% and
above.
o Failed:
Does not meet both requirements to passed and
majority of the subjects has a rating of less than 75%.
Scope of Practice
o The practice of accountancy shall include, but not limited
to, the following:
a) Practice of Public Accountancy
b) Practice in Commerce and Industry
c) Practice in Education/Academe
d) Practice in Government. (Section 4. R.A. 9298)
Accounting vs. Auditing
Accounting vs. Bookeeping
Accounting vs. Accountancy
Financial Accounting vs. Managerial Accounting
Generally Accepted Accounting Principle (GAAP)
o Generally accepted accounting principles encompass the
conventions, rules and procedures necessary to define
what accepted accounting practice is.
o It represents the rules, procedures, practice and standards
followed in the preparation and presentation of financial
statements.
o Basis
Experience
Reason
Usage
Customs
Practical necessity