Accounting Standards Council(ASC) in the Philippines

ASC -was created on November 18, 1981, the standard setting body which is tasked to established and improve
the GAAP in the Philippines.
GAAP- Generally Accepted Accounting Principles, are uniform sets of accounting rules, procedures, practices
and standards that are followed in preparing the financial statements.
SEC- Securities on Exchange Commission
BSP- Bangko Sentral ng Pilipinas
PRC-Philippine Regulatory Commission
BOA-Board of Accountancy
FINEX- Financial Executive Institute of the Philippines

Importance of keeping the business record

-To ensure all transaction and events that occurred in the business will be recorded because it is difficult to
memorize or recall it.
a) Book of Accounts- records that are used and keep for the purpose.
b) Accounting data- data that are stored in the book of accounts.
c) Financial Statements – data that later processed and transformed into report.

GAAP Principles:
1. Cost Principles- requires that assets should be recorded at their cost.
2. Objectivity Principles-requires that accounting records should be based on reliable and verifiable data as
evidence of transactions.
3. Materiality Principle-dictates practicability to rule over theory in determining the valuation of an item.
4. Matching Principle-requires revenue should be recognized when earned and corresponding expense
should be recognized when incurred during the same period as revenue is earned.
5. Consistency Principle- requires that accounting methods and procedures should be applied on a uniform
basis from period to period to achieve comparability in FS.
6. Adequate Disclosure Principles-requires that FS should be free from any material misstatements, that if
there is any, proper disclosure should be made.
Basic Accounting Assumptions
1. Accounting Entity-a business is a separate entity from the owner.
2. Going Concern Assumption-a continuous life of existence to operate for an indefinite period of time.
3. Time period assumption-accounting period
a) Calendar year-most common accounting period starts from Jan. 1 and end on Dec. 31.
b) Fiscal year-begin from first day of any month of the year except Jan. and end on the last day of the
twelfth month completing the one year period.
c) Natural business year- this twelfth month period that ends on any month when the business is
experiencing slack season
1. Hotel industry- start at slack in visitors then ends up at its peak season
2. Durian season- from the month of Aug. to the month of Oct.
3. Flower season of every February and November 1 and 2.
4. Unit measure- purchasing power of PESO is constant regardless on inflation.
5. Accrual basis-income is recognized when earned regardless of when received and expense is
recognized when incurred regardless of when paid.
Elements of FS
1. Assets-resources of the business.
2. Liabilities- obligations of the business
3. Owners Equity- investment of the owner
4. Revenue-gross inflow of economic benefits during the period of enterprise activities.
5. Expenses-gross outflow of economic benefits during the period of enterprise activities.
FINANCIAL STATEMENTS
1)Balance Sheet- shows financial position of the enterprise
Liquidity-the ability of the enterprise to meet currently maturing obligations.
Solvency- is the availability of cash over the longer term to meet maturing obligations.
Adaptations-is the financial flexibility of the enterprise to use the available cash for unexpected requirements
and investments opportunities.
Equation: A=L+OE
2)Income Statement-shows the performance of the enterprise.
Equation: R-E=Net Income /Net Loss
3) Statement of Change in Equity- summarizes the changes in equity for a given period of time.
Equation: OE at the end – OE at the beginning = increase in OE
4) Statement of Cash Flows – a statement that provides information about cash inflow and cash outflow of an
entity for a given period of time. This includes the ff. activities
a. Operating Activities- inflow/outflow of cash from the normal operating business.
b. Investing Activities- inflow/outflow of cash from the sale or purchases of assets other than inventory.
c. Financing Activities- inflow/outflow of cash from the owners and creditors of the enterprise.

4 Phases of Accounting
1. Recording- this is the phase of accounting which involves ten routines and mechanical process of
writing down the business transactions and events in the books of accounts in chronological manner
called “Journalizing”.
2. Classifying- this is the phase of accounting which involves sorting or grouping of similar transactions
and events into their respective kind and classes, or this is the process of transferring from journal to
ledger called “Posting”.
3. Summarizing- this is the phase of accounting which involves the completion of the FS and the
accounting requirements. This is done from trial balance, plotting down of adjusting entries in the
worksheet and the preparations of closing entries, post closing trial balance and reversing entries.
4. Interpreting- this phase of accounting which involves the analytical and interpretative works.
Arts 8
Group yourself according to the date of the month where you born.
GROUP1 – 1 to 7
GROUP2 – 8 to 14
GROUP3 – 15 to 21
GROUP4 – 22 to 30
Then bring the following:(every group must have 4 or 5 pieces per materials)
1. Coloring Materials
2. Colored paper
3. Scissor
4. Stick (ice cream stick) or Straw (soft drink straw)-individual
5. Glue
6. Pencil & Eraser - individual

Arts 8
Group yourself according to the date of the month where you born.
GROUP1 – 1 to 7
GROUP2 – 8 to 14
GROUP3 – 15 to 21
GROUP4 – 22 to 30
Then bring the following:(every group must have 4 or 5 pieces per materials)
1. Coloring Materials
2. Colored paper
3. Scissor
4. Stick (ice cream stick) or Straw (soft drink straw)-individual
5. Glue
6. Pencil & Eraser-individual

Arts 8
Group yourself according to the date of the month where you born.
GROUP1 – 1 to 7
GROUP2 – 8 to 14
GROUP3 – 15 to 21
GROUP4 – 22 to 30
Then bring the following:(every group must have 4 or 5 pieces per materials)
1. Coloring Materials
2. Colored paper
3. Scissor
4. Stick (ice cream stick) or Straw (soft drink straw)-individual
5. Glue
6. Pencil & Eraser-individual
 HUMMS 12- Trustworthy
Classroom Officers S.Y. 2019-2020

President: Echavez, Lojen Rey

Vice President Religious: Banguis Jaime
Vice President Social: Salapan, Janica
Secretary: Rebuyas, Smellogen
Treasurer: Alave, Larmi Joy
Auditor: Arsenal Emmie Rose
P.I.O. Baran, XY Jay
Artist: Harayo, Michelle
Cadisim, Justine
HUMMS 12- Trustworthy
Class Schedule S.Y. 2019- 2020

Time Day Subject Teacher

7:20-8:20 Monday Intro. to Philo. JQ Torres
8:20-9:20 Monday Homeroom JQ Torres
Definition and Elements in the Statement of Financial Position or Balance Sheet

1. Cash- this refers to currencies, checks, money orders, bank deposits and other money equivalents.
2. Trading Account Securities-this include stocks of companies listed in the stock exchange and are readily convertible into
cash.
3. Notes Receivable- this includes claims of the business from customers and third parties that are evidenced by formal
instruments of credit such as promissory notes.
4. Accounts Receivable-this pertains to claims of the business from customers for sales of products or rendering of services.
5. Allowance for bad debts- this is contra account against accounts receivable. The net amount is called net realizable value.
6. Supplies- these include various office or shop supplies that are necessary in the operation of the business.
7. Equipment- this refers to office equipment such as computer set, printer, air conditioner and delivery equipment(vehicles)
8. Furniture and Fixtures- this pertains to tables, chairs, cabinets, counters and other types of furniture used in the business.
9. Accumulated Depreciation – this is a deduction (except for land) from property, plant, and equipment.
10. Accounts Payable- this refers to the debt of the business due to purchases of products or services that are to be paid on a
future date.
11. Notes Payable- this covers loans obtained by the business from financial institutions or private individuals and payables good
for one year and above supported by a promissory note.
12. Utilities Payable- these refers to amounts due to providers of water, electricity, telephone and other basic services.
13. Mortgage Payable-this pertains to debt secured from a financial institution by mortgage or lien on real estate of the business
or its proprietor.
14. Owner’s Drawing-this covers the withdrawal of cash or any form of asset from the business.

Definition and Elements in the Statement of Comprehensive Income or Income Statement

A. Revenue –refers to the economic benefits that flow to the business in the form of increase in assets.
1. Sales- pertain to the sale of goods, on cash or credit terms, of a merchandising business.
2. Service income-refers to earnings of a service business from services rendered to its clients on cash or credit basis.
3. Professional fees- are earnings derived by a professional or a professional servicing entity, which may be on cash or
credit terms.
4. Interest income- includes the yield on promissory notes, which can be received in cash or may be collectible on the
future date.
5. Rent income-represents the earnings of the owner or lessor from his/her property or facility received o collectible from
the occupant, called the tenant or lessee.
6. Gain on sale of asset-refers to income obtained from sale of old, retired, or replaced asset, such as equipment,
investments in shares of stocks and land.
B. Expenses-pertains to a decrease in economic benefits of the business due to reduction in assets or addition to the liabilities
resulting from the business operations.
 1. Cost of sales- pertains to the value given on the products sold. In service business its term is direct cost of service.
2. Supplies expense-refers to cost of consumed or used office supplies, store supplies and shop supplies, among others.
3. Salaries and wages expense- refers to the total payroll for the employees and workers of the business.
4. Insurance expense-means the amount of premiums paid for insurance policy coverage such as life insurance of the
company offices and employees, fire insurance and robbery insurance, among others.
5. Taxes and licenses- refers to cost of permits to operate the business, and income and business taxes paid to the local
government unit, the Registrar of Deeds and the Bureau of Internal Revenue, among others.
6. Doubtful accounts expense- represents the estimated amount of customers’ debts to the company, which are deemed to
be uncollectible.
7. Depreciation expense- is the allocated cost of the plant property or equivalent to the accounting period.

Statement in Changes in Equity

Owner’s Equity- pertains to the residual amount after subtracting liabilities from asset.
Sole proprietorship- refers to owner’s capital
Partnership-refers to partner’s capital
Corporation- refers to shareholder’s capital
Drawings/withdrawals- whatever asset was withdrawn from the business.

Equation in SCE: BC + NI – W = EC

Cash Flow Statement and its components

It is the summary of the cash inflows and outflows that brought cash to its ending balance.
3 components that affect cash balance:
1. Operating activities- activities intended to generate income for the business.
2. Financing Activities-pertain to transactions between the business and the owner and the creditors.
3. Investing activities- are transactions that will affect non operating current assets and non current assets.