Chapter 1 - Framework of Accounting

• Definition
• Accounting Standards Council-Accounting is a service activity. Its primary function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision.
• American Institute of Certified Public Accountants-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 of at least of a financial character and interpreting the results thereof.
• American Accounting Association-Accounting is the process of IDENTIFYING, MEASURING and COMMUNICATING economic information to permit informed judgment and decision by users of information.

Components

1. Identifying-analytical component
• Recognition or Nonrecognition
• Transactions
• Internal
• External
2. Measuring-technical component
• Common denominator-PESO AMOUNT
• Historical cost
• Current replacement cost
• Current selling price or realizable value
• Present or discounted value
3. Communicating-formal component
• Recording-journalizing
• Classifying-posting to ledger/grouping of account
• ledger-group of accounts
• Summarizing-financial statements

Accountancy Profession

• Republic Act No. 9298-"Philippine Accountancy Act of 2004" 
• Law regulating the practice of accountancy in the Philippines.
• Board of Accountancy-authorized by law to promulgate laws in RA 9298.

Generally Accepted Accounting Principles (GAAP)

• Accounting rules, procedures and practices.
• "Norms" in accounting
• Conventional-"traditions in accounting accepted as correct"

 Accounting Standards Council (ASC)

• Created in 1981
• Created by Philippine Institute of Certified Public Accountants (PICPA)
• ESTABLISH and IMPROVE ACCOUNTING STANDARDS
• Two accounting standards:
• Philippine Accounting Standards
• Philippine Financial Reporting Standards

Financial Reporting Standards Council

• NEW standards setting body 
•  Created by PRC
• Assist BOA in implementing RA 9298.
• Composed of 15 members
• 1 chairman-senior accountant
• 1 BOA representative
• 1 SEC Representative
• 1 BSP representative
• 1 BIR Representative
• 1 COA Representative
• 1 major organization representative
• 2 ACPAP representative
• 2 ACPACI representative
• 2 ACPAE representative
• 2 ACPAG representative
• Each have three years term renewable