Chapter 1: The Accountancy Profession

7. What is the overall objective of accounting?

1. Define accounting. - To provide useful financial information for making

good decisions.
- Accounting is the process of recording, organizing,
and reporting a business's money activities.

8. Describe the accountancy profession.

2. Explain identifying as a component of accounting. - The accountancy profession includes people who
prepare, examine, and analyze financial information.
- Identifying means recognizing which business
transactions should be recorded. Examples: CPAs, Auditors, and Tax accountants

Example: Buying school supplies for your store? 9. What is R.A. No. 9298?
Record it. Buying pizza for yourself? Don't record it
because it's personal. - Republic Act No. 9298 is the Philippine
Accountancy Act of 2004, the law that regulates the
accountancy profession in the Philippines.

3. When is a transaction accountable or quantifiable?

- A transaction is accountable or quantifiable when it 10. What is the Board of Accountancy (BOA)?
can be measured in money.
- The BOA is the government body that regulates
Example: Selling a notebook for ₱50 can be CPAs and the accountancy profession.
recorded because it has a value.

11. Explain the limitation of the practice of public

4. Explain measuring as a component of accounting. accountancy.

- Measuring means assigning a money value to each - Only licensed and accredited Certified Public
business transaction. Accountants (CPAs) are allowed to practice public
accountancy.
Example: If you bought a chair for ₱2,000,
accounting records it as ₱2,000.

12. Explain accreditation to practice accountancy.

5. Explain communicating as a component of - Accreditation is the official approval that allows a

accounting. CPA to legally practice public accountancy.

- Communicating means sharing financial information

with people who need it.
13. What are the three main areas of the
Example: A business owner receives a financial accountancy profession?
report to know if the business made a profit.
1. Public accounting

2. Private accounting
6. Explain recording, classifying, and summarizing.
3. Government accounting
Recording – writing down transactions.

Classifying – putting similar transactions together.

Summarizing – making reports from the recorded

information.
14. Explain public accounting. - To keep professionals updated with new
knowledge, skills, laws, and technology.
- Public accounting means providing accounting
services to different clients.

Services include: Auditing, Tax, and Consulting 22. What is the exemption from the CPD
requirements?

- Some professionals may receive exemptions or

15. Explain auditing, taxation, and management reduced requirements based on current PRC rules,
advisory services. such as certain senior professionals or special cases
approved by the PRC.
Auditing – checking if financial records are correct.

Taxation – preparing and paying taxes correctly.

23. Distinguish accounting and auditing.
Management advisory – helping businesses improve
their operations. Accounting - Records financial transactions.

Auditing - Checks if the records are correct.

16. Explain private accounting.

- Private accounting means working as an 24. Distinguish accounting and bookkeeping.

accountant for only one company.
Accounting

- Analyzes and reports financial information.

17. Explain government accounting.
- Broader process
- Government accounting records and reports how
government money is collected and spent. Bookkeeping

- Records daily transactions

18. What is Continuing Professional Development - First tep of accounting

(CPD)?

- CPD is continuous learning that helps CPAs

improve their knowledge and skills after becoming 25. Distinguish accounting and accountancy.
licensed.
Accounting - The process of recording and reporting
finances

19. What is the meaning of CPD credit units? Accountancy - The profession or field of accounting

- CPD credit units are points earned by attending

seminars, training, and other learning activities.
26. Distinguish financial accounting and managerial
accounting.

20. How many CPD credit units are required? Financial Accounting

- Generally, 120 CPD credit units are required every - For outsiders (investors, banks)
3 years for CPAs renewing their professional license
(subject to current PRC rules). - Uses financial statements

Managerial Accounting

21. What is the purpose of the required CPD credit - For managers inside the company
units? - Helps managers make decisions
27. Explain Generally Accepted Accounting - The IASC was the international organization that
Principles (GAAP). developed accounting standards before the IASB
was created.
- GAAP is a set of accounting rules and guidelines
that businesses follow when preparing financial
reports.
33. What is the International Accounting Standards
Simple example: Like school rules help everyone Board (IASB)?
behave fairly, GAAP helps accountants prepare
reports the same way. - The IASB is the international organization that
creates International Financial Reporting Standards
(IFRS).

28. What constitutes GAAP in the Philippines?

- GAAP in the Philippines consists mainly of the 34. What are the International Financial Reporting
Philippine Financial Reporting Standards (PFRS) Standards (IFRS)?
issued by the Financial and Sustainability Reporting
Standards Council (FSRSC). - IFRS are global accounting standards used by
many countries to prepare financial statements in the
same way.

29. Explain accounting standards.

- Accounting standards are official rules that tell 35. What are collectively included in Philippine
accountants how to prepare financial statements Financial Reporting Standards (PFRS)?
correctly and consistently.
PFRS includes:

Philippine Financial Reporting Standards (PFRS)

30. What is the Financial and Sustainability
Reporting Standards Council (FSRSC)? Philippine Accounting Standards (PAS)

- The FSRSC is the organization that develops and Philippine Interpretations (guidance on applying the
approves accounting and sustainability reporting standards)
standards in the Philippines.

31. What is the composition of the FSRSC?

- The FSRSC is composed of representatives from

the:

Board of Accountancy (BOA)

Securities and Exchange Commission (SEC)

Bangko Sentral ng Pilipinas (BSP)

Bureau of Internal Revenue (BIR)

Commission on Audit (COA)

Major accounting organizations and business groups

32. What is the International Accounting Standards

Committee (IASC)?