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Introduction to Accounting

Introduction to Accounting. Definitions of Accounting.

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Introduction to Accounting

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  1. Introduction to Accounting

  2. Definitions of Accounting • 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. (Financial Reporting Standards Council)

  3. 2. 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. ( Committee on Accounting Terminology of the American Institute of Certified Public Accountants)

  4. Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information. (American Accounting Association in its Statement of Basic Accounting Theory)

  5. Purpose of accounting– to provide quantitative information for making economic decisions.

  6. Development of Accounting Crusades • Literacy • Arabic Numerals • Credit Genoa Systemic bookkeeping (double-entry) Nicolas Petri • group similar transactions in separate records • journals Mesopotamia • (use of tokens) • bullae Florence, Venice, Genoa • Account-keeping (primitive, no balancing of accounts) Babylonia • Code of Hammurabi • Scribe • Tablets Venice • 1st treatise on systemic bookkeeping • Fra Luca Pacioli (father of double-entry bookkeeping) Industrial Revolution • Acctg profession • Textbooks • Cost acctg

  7. Accounting in Modern Times

  8. Pacioli – The double entry bookkeeping • Modern bookkeeping system • Modern business practice

  9. Use of Accounting Information Owners Managers Financial Accounting Management Accounting

  10. The Accountancy Profession

  11. Attributes • Scope of Practice • Code of Ethics for Philippine CPAs • Fundamental Principles

  12. Attributes of Accountancy Profession • All members are CPA • CPAs have their own body of language • CPAs adhere to a Code of Ethics • CPAs are members of national organization, the PICPA • BS Acctg and passed the board • Terminologies perculiar to the profession • Competence, integrity • Ensure continued improvement of the profession

  13. RA 9298 Practice of accounting • Philippine Accountancy Act of 2004 • Signed into law on May 13, 2004 • Repealed PD 692 of May 5, 1975 • Practice of Accounting • Practice of Public Accountancy • Practice in Commerce and Industry • Practice in Education/Academe • Practice in Government Scope of practice

  14. Professional Accountant – an individual who holds a valid certificate issued by the Board of Accountancy, whether he/she be in public practice, industry, commerce, the public sector or education. Code of ethics

  15. Fundamental Principles Integrity Objectivity Professional Competence and Due Care Confidentiality Professional Behavior

  16. Accountancy in the Philippines

  17. Act#3105 • BOA • Examination • Certificates • Registration of CPAs • Don Vicente Fabella • 1923 – 43 Registered Accountants March 17, 1923 Accountancy as a recognized profession • The Big Five • Arthur Anderson (then) • PriceWaterhouseCoopers • Ernst & Young • KPMG • Deloitte Tohmatsu International Local & Foreign Tie-ups

  18. 1923- RA3105 -3 members • 1967 – RA5166– 6members • 1975 – PD692 – 7members • 2004 – RA9298 7members Changes in the BOA • Accountancy Act of 1967 • Code of Professional Ethics 1967 • CPE guidelines 1987 • Biennial oath-taking for new CPAs • Accounting Standards Council (FRSC) • Auditing Standards Practices Council (AASC) • Accountancy Week • New Code of Ethics –Jun 30, 2008 • Accountancy Act of 2004 PRC-BOA-PICPA (1975)

  19. Accounting Standards In the Philippines

  20. Accounting Standards Council • Financial Reporting Standards Council • International Accounting Standards Committee • International Accounting Standards Board • Philippine Association of Collegiate Schools of Business • Philippine Council of Deans and Educators in Business

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