FUNDAMENTAL CONCEPTS

Economic Entity This is the most basic concept in accounting. Organizations and individuals
are separated.
Periodicity Concept meaningfully subdivided into equal time periods for reporting purposes.
Stable Monetary Concept PHP is the reasonable unit of measure.
Going Concern continuously operating.
Accrual Basis recording regardless of payment.
Cash Basis recording when the transaction is paid.

CRITERIA OF GAAP
Relevance results in information is meaningful and useful.
Objectivity the resulting information is not influenced by the personal bias of judgment.
Feasibility it can be implemented without complexity of cost.

BASIC PRINCIPLES
Objectivity Principle the data available is accurate and as useful as possible.
Historical Cost assets should be recorded at their actual cost.
Revenue Recognition Principle when goods are delivered and service are rendered.
Expense Recognition Principle goods and services are used up to produce revenue.
Adequate Disclosure relevant information that would affect users understanding.
Materiality only concerned with information that is significant enough to affect evaluations
and decisions.
Consistency Principle should use same accounting from period to period.

KNOWLEDGE
General Knowledge understanding different cultures in the world.
Organizational and Business Knowledge
Information Technology (I.T.) Knowledge control in computer-based systems.
Accounting Knowledge

SKILLS
Intellectual abstract logical thinking and understand critical thinking.
Interpersonal to work in groups and being a team player.
Communication active listening skills and communicate effectively ones point of view.

VALUES
Professional Ethics accordance with the highest standards of professionalism.
Moral Values ethical rules.
FUNDAMENTAL PRINCIPLES
Integrity straightforward and honest.
Objectivity should not allow bias.
Professional Competence and Due Care maintain professional knowledge and skill.
Confidentiality not disclose to any such information to third parties.
Professional Behavior avoid any actions that discredit the profession.

CONCEPTUAL FRAMEWORK

Objective of the Financial Statement is to provide financial information about the reporting
entity that is useful.
Primary users Users/Investors and Lenders/Creditors
Other users employees (remuneration), customers (long term involvement), supplier/vendor
(pay) and government (tax basis).
Qualitative Characteristics information are likely to be most useful to users in making
decisions.
Relevance is capable of making a difference in the decisions by users.
Predictive Value forecast
Confirmatory Value correction of earlier expectations
Faithful Representation in words and numbers
Completeness includes all information
Neutrality free from bias
Freedom from Error freedom from error din meaning nito
Enhancing Qualitative Characteristics
Comparability can compare with similar information
Verifiability information represents faithfully
Timeliness information is available to decision-makers in time
Understandability classifying, characterizing and presenting information clearly and concisely
Underlying Assumptions
Going Concern financial statements are normally prepared on the assumption that an
enterprise is a going concern and will continue in operation for the foreseeable future
Elements of Financial Statement
Assets resources controlled by the entity
Liabilities present obligations
Owners Equity residual interest
Income increase in economic benefit
Expense decrease in economic benefit

Measurement
Historical Cost actual cost
Current Cost should have been paid and the original market price
Realizable Value settlement value, value upon selling it and depreciated price
Settlement Value liabilities are carried at the undiscounted amounts of cash
Present Value discounted value of future cash flow
Concept of Capital Maintenance
Income Expenses = Net Income
Financial Concept absolute monetary value
Physical Concept quantitative measurement of physical productive company
Reporting Entity new item added but still a work-in-progress