Basic Financial Accounting & Reporting: Bachelor of Science in Accountancy

ISO
9001: 2015 CERTIFIED
EMILIO AGUINALDO COLLEGE QUALITY MANAGEMENT
CITY OF DASMARIÑAS, CAVITE SYSTEM
Basic Financial
Accounting & Reporting
Bachelor of Science in Accountancy
DR. REBECCA DELA CRUZ‐MIRANDA, CPA
VIRTUE EXCELLENCE SERVICE

ISO 9001: 2015 CERTIFIED
ISO 9001: 2015
Classroom Management
• Greetings
• Prayer
• One Minute Clean‐up
• Attendance Checking
• Review of the Previous Lesson
• Motivation Techniques
• Lesson Proper including Synthesis
• One minute “CLAYGO” : Clean as you go.
DEFINITION 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 (Statement of Financial
Accounting Standards No. 1, "Basic Concepts and
Accounting Principles Underlying Financial
Statements of Business Enterprises" (Manila:
Accounting Standards Council, 1983), par. 1).

• Accounting is an information system that
measures, processes and communicates financial
information about an economic entity (Statement
of Financial Accounting Concepts No. 1,
"Objectives of Financial Reporting by Business
Enterprises" (Norwalk, Conn.: Financial Accounting
Standards Board, 1978), par. 9).

• Accounting is the process of identifying, measuring
and communicating economic information to
permit informed judgments and decisions by users
of the information (American Accounting
Association, "A Statement of Basic Accounting
Theory" (Evanston, Ill.: American Accounting
Association, 1966), par. 1; Accounting Principles
Board, Statement No. 4, "Basic Concepts and
Accounting Principles Underlying Financial
Statements of Business Enterprises" (New York:
AICPA, 1970), par. 40).
• 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 (American Institute
of Certified Public Accountants, "Review and
Resume", Accounting Terminology Bulletin No. 1
(New York: AICPA,1953), par. 9).

EMILIO AGUINALDO COLLEGE

QUALITY MANAGEMENT
ASEAN 2015
Establishment and Member States
• The Association of Southeast Asian Nations, or
ASEAN, was established on Aug. 8, 1967 in
Bangkok, Thailand, with the signing of the ASEAN
Declaration (Bangkok Declaration) by the Founding
Fathers of ASEAN, namely:
• Indonesia, Malaysia, Philippines, Singapore and
Thailand.
• Brunei Darussalam then joined on Jan. 7, 1984,
• Viet Nam on July 28, 1995,
• Lao PDR and Myanmar on July 23, 1997 and
• Cambodia on April 30, 1999, making up what is today
the ten Member States of ASEAN.
Vision
• What is ASEAN 2015?
In a nutshell, the Vision:
“a stable, prosperous and highly competitive ASEAN
Economic Region in which there is a free flow of
goods, services, investment and a freer flow of
capital, equitable economic development and
reduced poverty and socio‐economic disparities."

Opportunities
• What are the opportunities?
• Ten member states with a 2013 population of 625
million.
• ASEAN is characterized by rising incomes, young
population, with combined gross domestic product
(GDP) at current prices of US$2,399 billion or a GDP per
capita at current prices of US$3,839 and GDP growth
rate of 5.1.

Four Pillars of ASEAN Economic Community
• The ASEAN Community is comprised of three
pillars, namely:
• the ASEAN Political‐Security Community:
• ASEAN Economic Community; and
• ASEAN Socio‐Cultural Community.

• In turn, the ASEAN Economic Community (AEC is
the blueprint) has four pillars.

In turn, the ASEAN Economic Community (AEC is the
blueprint) has four pillars:
1. Single market and production base (measures to
ensure the free flow of goods, services, investment,
capital, skilled labor, priority integration sectors);
2. competitive economic region (actions on competition
policy, consumer protection, intellectual property
rights, infrastructure development, taxation, e‐
commerce);

3. equitable economic development (SME
development, initiative for ASEAN integration); and
4. integration into the global economy (coherent
approach towards external economic relations,
enhanced participation in global supply networks).

ASEAN Framework Agreement on Services
• ASEAN is a government‐to‐government
cooperation.
• To realize its dreams, ASEAN has progressively
entered into more legally binding and
institutionalized agreements through the adoption
of the ASEAN Trade in Goods Agreement (ATIGA),
the ASEAN Comprehensive Investment Agreement
(ACIA) and the ASEAN Framework Agreement on
Services (AFAS).
• AFAS aims to provide greater mobility of ASEAN
professionals to provide their services in the
region. This will require rounds of negotiations to
liberalize trade in services.
Mutual Recognition Arrangements and
ASEAN Chartered Professional Accountant
• MRAs (mutual recognition arrangements) are
contracts between a National Accountancy
Body (NAB) and/or Professional Regulatory
Authority (PRA) from countries that have
signed the General Agreement on Trade in
Services in 1995 allowing professional service
providers registered in signatory countries to
be equally recognized in another signatory
country.

• The existing MRAs: for engineering (MRA
2005), nursing (MRA 2006), architectural
(MRA 2007), medical (MRA 2009), dental
(MRA 2009), accountancy (MRA 2014) and
surveying (MRA Framework 2009) services.

• A Professional Accountant is eligible to apply
through the Monitoring Committee of his
• Country of Origin, to be registered as an ASEAN
Chartered Professional Accountant
• (ACPA) on the ASEAN Chartered Professional
Accountant Register (ACPAR) subject to
• certain qualifications enumerated in Article 4 of
the ASEAN MRA on Accountancy Services signed
last Nov. 13, 2014.
•
• The Monitoring Committee shall assess the

Professional Accountant according to the Guidelines
on Criteria and Procedures in Appendix II of the MRA;
and guided by Appendix III in preparing an
Assessment Statement for the purpose of the
application.
• It will then submit the application to the ASEAN
Chartered Professional Accountant Coordinating
Committee (ACPACC).
• ACPACC shall have the authority to confer and
withdraw the title of ACPA or ASEAN Chartered
Professional Accountant.
• To practice in a host country, an ACPA need to
apply to become a Registered Foreign Accountant
(RFPA).
• Upon approval, the successful ACPA applicant shall
be subject to the domestic regulations, be
permitted to work as a RFPA, not in independent
practice, but in collaboration with designated
Professional Accountants in the host country,
within such area of his own competency as may be
approved by the NAB (in our case, the Philippine
Institute of CPAs) and/or PRA (the Professional
Regulation Commission and the Board of
Accountancy) of the host country.
ASEAN Qualifications Reference
Framework (AQRF)
• AQRF, a common reference framework,
functions as a device to enable comparisons
of qualifications of skilled labor across ASEAN
Member States.
• The framework, among others, supports
recognition of qualification, promote quality of
education and learning, and facilitate labor
mobility.

ASEAN Qualifications Reference
Framework (AQRF)
• It addresses all education and training,
including formal, nonformal and informal
learning.
• Noting that ASEAN Member States are at
different stages of development, each country
is expected to voluntarily comply with the
AQRF at their own capacity and start the
referencing process by 2016 and at the latest
by 2018.
Types of Business

Types of Business

FORMS OF BUSINESS
ORGANIZATIONS
Sole Proprietorship.
• This business organization has a single owner called the
proprietor who generally is also the manager.
• Sole proprietorships tend to be small service‐type (e.g.
physicians, lawyers and accountants) businesses and retail
establishments.
• The owner receives all profits, absorbs all losses and is solely
responsible for all debts of the business.
• From the accounting viewpoint, the sole proprietorship is
distinct from its proprietor.
• Thus, the accounting records of the sole proprietorship do
not include the proprietor's personal financial records.
FORMS OF BUSINESS
ORGANIZATIONS
Partnership.
• A partnership is a business owned and operated by
two or more persons who bind themselves to
contribute money, property, or industry to a
common fund, with the intention of dividing the
profits among themselves.
• Each partner is personally 1 liable for any debt
incurred by the partnership.
• Accounting considers the partnership as a separate
organization, distinct from the personal affairs of
each partner.
FORMS OF BUSINESS
ORGANIZATIONS
Corporation.
• A corporation is a business owned by its
stockholders.
• It is an artificial being created by operation of law,
having the rights of succession and the powers,
attributes and properties expressly authorized by
law or incident to its existence.
• The stockholders are not personally liable for the
corporation's debts.
• The corporation is a separate legal entity.

ACTIVITIES IN BUSINESS
ORGANIZATIONS
Financing Activities
• Organizations require financial resources to obtain other
resources used to produce goods and services.
• They compete for these resources in financial markets.
• Financing activities are the methods an organization uses to
obtain financial resources from financial markets and how it
manages these resources.
• Primary sources of financing for most businesses are owners
and creditors, such as banks and suppliers.
• Repaying the creditors and paying a return to the owners are
also financing activities

ORGANIZATIONS
Investing Activities
• Managers use capital from financing activities to
acquire other resources used in the transformation
process—that is, to transform resources from one
form to a different form, which is more valuable, to
meet the needs of the people. Having the right mix
of resources is essential to efficient and effective
operations.
•
ORGANIZATIONS
Investing Activities
• An efficient business is one that provides goods and
services at low costs relative to their selling prices.
• An effective business is one that is successful in
providing goods and services demanded by the
customers.

ORGANIZATIONS
• Investing activities involve the selection and
management including disposal and replacement
of long‐term resources that will be used to
develop, produce, and sell goods and services.
• Investing activities include buying land, equipment,
buildings and other resources that are needed in
the operation of the business, and selling these
resources when they are no longer needed.

ORGANIZATIONS
Operating Activities
• Operating activities involve the use of resources to design,
produce, distribute, and market goods and services.
• Operating activities include research and development,
design and engineering, purchasing, human resources,
production, distribution, marketing and selling, and servicing.
• Organizations compete in supplier and labor markets for
resources used in these activities.
• Also, they compete in product markets to sell the goods and
services created by operating activities .

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