Prelim Exam - Fundamentals of Accounting 2

The Philippine Institute of Certified Public Accountants (PICPA) __Its function is to provide quantitative information, primarily in nature, about economic entities, that is intended to be useful in making economic decisions.

• Financial Accounting

• Management Accounting

• Accounting

• Cost Accounting

• Tax Accounting

Preparing the financial statements from the transactions recorded in the books of accounts designed to meet the information.

• Classifying

• Interpreting

• Recording

• Summarizing

The data in the financial statements, users are able to determine the financial standing of the company as well as its growth potential.

• Classifying

• Interpreting

• Summarizing

• Recording

The investors are called stockholders and the unit of ownership is called share of stock.

• Sole/Single Proprietorship

• Partnership

• Corporation

• Cooperative Buss.

This type of business operation is involved in the purchasing and converting of raw materials to finished goods.

• Trading/Merchandising

• Service

• Infrastructure

• Manufacturing

• Raw Materials

This type of business operation engaged in the rendering of services.

• Manufacturing

• Services

• Trading/Merchandising

• Raw Materials

• Infrastructure

Separate financial reports are prepared yearly for the are repair shop and the barber shop of Mr. Santos. Hence, Mr. Santos can measure the income of the two business annually.

• Entity Concept

• Going Concern

• Transaction

• Periodicity Concept

• Accounting System

In preparing the financial statements for the car repair shop and the barber shop, the accountant assumes that the business will not close or shut operations within the next year.

• Periodicity

• Entity Concept

• Going Concern

• Accounting System

• Transaction

States that all material facts that will significant affect the financial statements must be indicated

• Objectivity Principle

• Adequate Disclosure

• Accrual Principle

• Historical Cost

• Consistency

Any changes must be clearly explained Ex. If the straight line method of depreciation is being used by the company, then the method should be uniformly used by the company in computing its annual depreciations.

• Consistency

• Materiality

• Adequate Disclosure

• Objectivity Principle

• Accrual Principle