Introduction to Accounting

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.
Republic Act No. 9298
Republic Act No. 9298 also known as known as the “Philippine Accountancy Act of 2004”.

This Act shall provide for and govern:

a) The standardization and regulation of accounting education;
b) The examination for registration of certified public accountants; and
c) The supervision, control, and regulation of the practice of accountancy in the
Philippines.
Professional Regulatory Board of
Accountancy
The Professional Regulatory Board of Accountancy (or BOA) is the regulatory body for the
accountancy practice in the Philippines.

The following are some of the important functions of the Board:

• To supervise the registration, licensure and practice of accountancy in the Philippines
• To issue, suspend, revoke, or reinstate the Certificate of Registration for the practice of
the accountancy profession
• To prescribe and/or adopt a Code of Ethics for the practice of accountancy
Philippine Institute of Certified Public
Accountant (PICPA)
The integrated national professional organization of Certified Public Accountants
accredited by the Board and the Commission per PRC Accreditation No. 15 dated October
2, 1975.

The group set forth the following objectives:

1. To promote and maintain high professional and ethical standards among accountants;
2. To advance the science of accounting;
3. To develop and improve accountancy education;
4. To encourage cordial relations among accountants, and
5. To protect the Certificate of Certified Public Accountant granted by the Republic of the
Philippines.
Scope of practice
1. Practice of Public Accountancy
2. Practice in Commerce and Industry
3. Practice in Education/Academe
4. Practice in the Government
Code of ethics
The International Code of Ethics for Professional Accountants “the Code” sets out
fundamental principles of ethics for professional accountants, reflecting the profession’s
recognition of its public interest responsibility.
Code of ethics
The fundamental principles are:

1. Integrity – to be straightforward and honest in all professional and business relationships.

2. Objectivity – not to compromise professional or business judgments because of bias, conflict
of interest or undue influence of others.
3. Professional competence and due care
a. Attain and maintain professional knowledge and skill at the level required to ensure that a
client or employing organization receives competent professional service, based on current
technical and professional standards and relevant legislation; and
b. Act diligently and in accordance with applicable technical and professional standards
4. Confidentiality – to respect the confidentiality of information acquired as a result of
professional and business relationships.
5. Professional behavior – to comply with relevant laws and regulations and avoid any conduct
that the professional accountant knows or should know might discredit the profession.
Accounting Standards in the Philippines
Accounting standards are authoritative statements of how particular types of transaction
and other events should be reflected in financial statements. Accordingly, compliance with
accounting standards will normally be necessary for the fair presentation of financial
statements.
Financial Reporting Standards Council (FRSC)

The FRSC (formerly known as Accounting Standards Council “ASC”) was established by the
Professional Regulatory Commission under the Implementing Rules and Regulations of the
Philippine Accountancy of Act of 2004 to assist the Board of Accountancy in carrying out its
power and function to promulgate accounting standards in the Philippines. The FRSC’s
main function is to establish generally accepted accounting principles in the Philippines.
International Accounting Standard Boards
(IASB)
The International Accounting Standards Board (formerly known as International Accounting
Standards Committee “IASC”) is an independent private sector. Its objective is to achieve
convergence in the accounting principles that are used by businesses and other
organizations for financial reporting around the world.
Philippine Accounting Standards (PAS)
Philippine Financial Reporting Standards (PFRS)
The Philippine Financial Reporting Standards (PFRS)/Philippine Accounting Standards (PAS)
are the new set of Generally Accepted Accounting Principles (GAAP) issued by the
Accounting Standards Council (ASC) to govern the preparation of financial statements.

These standards are patterned after the revised International Financial Reporting
Standards (IFRS) and International Accounting Standards (IAS) issued by the International
Accounting Standards Board (IASB).
Philippine Accounting Standards (PAS)
Philippine Financial Reporting Standards (PFRS)
The Philippine Financial Reporting Standards (PFRS)/Philippine Accounting Standards (PAS)
are the new set of Generally Accepted Accounting Principles (GAAP) issued by the
Accounting Standards Council (ASC) to govern the preparation of financial statements.

These standards are patterned after the revised International Financial Reporting
Standards (IFRS) and International Accounting Standards (IAS) issued by the International
Accounting Standards Board (IASB).
Philippine Accounting Standards (PAS)
Philippine Financial Reporting Standards (PFRS)
International
International Accounting Standards (IAS)
International Financial Reporting Standards (IFRS)
Philippines
Philippine Accounting Standards (PAS)
Philippine Financial Reporting Standards (IFRS)
Branches of Accounting
The following are the main branches of accounting:

1. Auditing
2. Bookkeeping
3. Cost bookkeeping, Costing, and Cost accounting
4. Financial accounting
5. Financial management
6. Management accounting
7. Taxation
Auditing

Auditing forms a most important branch of accountancy. Once financial statements have
been prepared, they may need to be validated to ensure that the financial statements are
presented fairly for the users of the reports.

The checking of accounts and the reporting on them is known as auditing.

Bookkeeping

Bookkeeping is a mechanical task involving the collection of basic financial data. The
bookkeeping procedures usually end when the basic data have been entered in the books
of account and the accuracy of each entry has been entered.

Bookkeeping is the process of maintaining and recording all financial transactions in the
original books of entry of a business while accounting is the process of interpreting,
analyzing, summarizing and reporting the financial transactions of a business.
Cost bookkeeping, costing and cost accounting

Cost bookkeeping is the process that involves the recording of cost data in the books of
account. It is similar to bookkeeping except that data are recorded in very much greater
detail.

Cost accounting makes use of those data once they have been extracted from the cost
books in providing information for managerial planning and control.
Financial accounting

Financial accounting is the more specific term applied to the preparation and subsequent
publication of highly summarized financial information.

The information supplied is usually for the benefit of the owners of an entity, but it can
also be used by management for planning and control purposes.
Financial management

Financial management is a relatively new branch of accounting. Financial managers are

responsible for setting financial objectives, making plans based on those objectives,
obtaining the finance needed to achieve plans, and generally safeguarding all the financial
resources of the entity.
Management accounting

Management accounting incorporates cost accounting data and adapts them for specific
decisions which management may be called upon to make. A management accounting
system incorporates all types of financial and non-financial information from a wide range
of resources.
Taxation

Taxation is a highly complex technical branch of accounting. Accountants involved in tax

work are responsible for computing the amount of tax payable of an entity.