Kent Tongloy BSIE 1-5N - The Bachelor of Science in Industrial Engineering (BSIE) is a five-year baccalaureate PDF

Preview

Summary

ACCO 20233 Bachelor of Science in Industrial Engineering Kent John Arnold M. Tongloy Ruth CarlosACCOUNTING ASSESSMENT A. Identifying the applicable Accounting Principle1 personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline? Eco...

Description

Polytechnic University of the Philippines ACCO 20233 Kent John Arnold M. Tongloy

Bachelor of Science in Industrial Engineering Ruth Carlos

ACCOUNTING ASSESSMENT A. Identifying the applicable Accounting Principle 1.The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline? Economic Entity Assumption 2.Which principle/guideline requires a company's balance sheet to report its land at the amount the company paid to acquire the land, even if the land could be sold today at a significantly higher amount? Monetary Unit Assumption 3.Which principle/guideline allows a company to ignore the change in the purchasing power of the peso over time? Cost Principle 4.Which principle/guideline requires the company's financial statements to have foot notes containing information that is important to users of the financial statements? Full Disclosure Principle 5.Which principle/guideline justifies a company violating an accounting principle because the amounts are immaterial? Materiality 6.Which principle/guideline is associated with the assumption that the company will continue on long enough to carry out its objectives and commitments? Going Concern Principle 7.A very large corporation's financial statements have the peso amounts rounded to the nearest P1,000. Which accounting principle/guideline justifies not reporting the amounts to the penny? Materiality 8.Accountants might recognize losses but not gains in certain situations. For example, the company might write-down the cost of inventory, but will not write-up the cost of inventory. Which principle/guideline is associated with this action? Conservatism 9.Which principle/guideline directs a company to show all the expenses related to its revenues of a specified period even if the expenses were not paid in that period? Matching Principle 10.When the accountant has to choose between two acceptable alternatives, the accountant should select the alternative that will report less profit, less asset amount, or a greater liability amount. This is based upon which principle/guideline? Conservatism

Polytechnic University of the Philippines ACCO 20233 Kent John Arnold M. Tongloy

Bachelor of Science in Industrial Engineering Ruth Carlos

ACCOUNTING ASSESSMENT B. Define or discuss the following: 1. Accounting  Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting, and communication financial information. It reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and owner's equity. In simple words, accounting is the production of financial records about an organization. 2. Generally Accepted Accounting Principles (GAAP)  GAAP is a combination of authoritative standards established by policy boards and widely accepted methods for recording and reporting accounting information. It aims to enhance the transparency, consistency, and comparability of financial information communication. 3. International Accounting Standards (IAS)  The International Accounting Standards (IAS) are older accounting standards issued by the International Accounting Standards Board stating how particular types of transactions and other events should be reflected in financial statements. 4. International Financial Reporting Standards (IFRS)  The International Financial Reporting Standards (IFRS) is a set of accounting standards that are established by the IFRS Foundation’s standard setting body, the IASB. It is recognized by at least 120 nations including the Philippines, and serves as a guide on how to report particular types of transactions and other events in financial statements. The aim of using the International Financial Reporting Standards (IFRS) is to ensure consistency in the recording, identifying, and measuring of financial transactions, which, if implemented correctly, would ensure the stability and transparency in the company's financial reporting process. These guidelines are not enforceable, and compliance is entirely voluntary. 5. Evolution of accounting standards in the Philippines  The Generally Accepted Accounting Principles (GAAP) of the United States were the first accounting standards used in the Philippines. However, with the convergence of reporting standards, the Accounting Standards Council (ASC) has released a new set of accounting standards, the Philippine Financial Reporting Standards (PFRS)/ Philippine Accounting Standards (PAS), to regulate the preparation of financial statements. These standards are based on the International Accounting Standards Board's (IASB) revised International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS). Under the supervision of the Board of Accountancy (BOA), the PFRS Council, which was formerly the Accounting Standards Council (ASC), issued the Philippine Financial Reporting Standards (PFRS) and the Philippine Accounting Standards (PAS), which is the Philippine version of the International Financial Reporting Standards (IFRS) with some minor changes. In its Memorandum to All Banks and Other BSP Supervised Financial Institutions (BSFIs) dated 11 January 2005, the Bangko Sentral ng Pilipinas (BSP) declared its implementation of the PFRS/PAS effective for annual financial statements beginning 1 January 2005

Polytechnic University of the Philippines ACCO 20233 Kent John Arnold M. Tongloy

Bachelor of Science in Industrial Engineering Ruth Carlos

C. Enumerate and Discuss the following: 1. Forms of Business Organization a) Sole Proprietorship A sole proprietorship is a business owned by one person who has complete control and jurisdiction over the business, owns all of the properties, is personally liable for all liabilities or losses, and reaps all of the income to the exclusion of others. A sole proprietorship must register with the Department of Trade and Industry (DTI) - National Capital Region and apply for a business name. Application may be filed with the DTI regional/provincial offices in the provinces. b) Partnership A partnership is regarded as a juridical person under the Philippine Civil Code, with a legal personality separate from that of its members. Partnerships may either be general partnerships, in which one or more general partners have unlimited liability for the partnership's debts and obligations, and limited partners have liability limited to the amount of their capital investments. It is made up of two or more people. The Securities and Exchange Commission (SEC) requires any partnership with a capital of more than Peso 3,000 to register. c) Corporation Corporation is composed of juridical persons governed under the Corporation Code and established by the Securities and Exchange Commission (SEC) that has a separate and distinct identity from their stockholders. A corporation's shareholders' liability is limited to the value of their share capital. It must have at least five to fifteen incorporators, each of whom must own at least one share and be registered with the Securities and Exchange Commission. A minimum paid-up capital of Peso 5,000 is required. Regardless of nationality, a corporation may be either a stock or a non-stock corporation. A stock corporation is one that has capital stock that is divided into shares and is authorized to distribute dividends or allotments of surplus profits to the holders of those shares while, a OnePerson Corporation (OPC) is a corporation with only one stockholder, who must be a natural person of legal age, trust, or estate. The term "trust," as used by an incorporator, does not refer to a trust body, but rather to the subject being handled by a trustee. Lastly, a non-stock corporation is one that is formed primarily for public reasons, such as charitable, educational, cultural, or similar ones, and does not issue stock to its members. 2. Types of Business Activity a) Service Business  A service type of business provides intangible products. Professional skills, experience, advice, and other related items are offered by service firms. Salons, repair shops, libraries, banks, accounting firms, and law firms are examples of service businesses. b) Merchandising Business  This type of business buys goods in bulk and resells them at a retail price. They are known as "buy and sell" businesses. They benefit from selling the goods at a higher price than they paid for them. A merchandising business sells a product in its original form. Grocery shops, convenience stores, dealers, and other resellers are examples. c) Manufacturing Business  A manufacturing company purchases goods with the goal of repurposing them as raw materials for a new product. As a result, the purchased goods undergo transformation. In the manufacturing process, raw materials, labor, and operating costs are all combined. Customers would then purchase the finished products

Polytechnic University of the Philippines ACCO 20233 Kent John Arnold M. Tongloy

Bachelor of Science in Industrial Engineering Ruth Carlos

3. 10 Generally Accepted Accounting Principles 1) Economic Entity Assumption  The accountant keeps all of a sole proprietorship's company transactions separate from the owner's personal transactions. A sole proprietorship and its owner are considered one entity for legal purposes, but they are two distinct entities for accounting purposes. 2) Monetary Unit Assumption  Economic activity in the Philippines is measured in pesos, and only transactions that can be represented in pesos are recorded. Because of this basic accounting principle, the purchasing power of the peso is assumed to have remained constant over time. As a result, accountants fail to account for the impact of inflation on published figures. 3) Time Period Assumption  This accounting principle assumes that complex and ongoing business operations should be recorded in relatively short, distinct time intervals. The shorter the time span, the more likely it is that the accountant will be required to estimate amounts for that period. Every income statement, statement of owner's/stockholders' equity, and statement of cash flows must include the time interval (or duration of time) in the heading. 4) Cost Principle  From the perspective of an accountant, "cost" refers to the amount paid (in cash or the cash equivalent) when an item was first purchased, whether it was last year or thirty years ago. As a result, the figures on financial statements are referred to as historical cost amounts. Asset values are not adjusted for inflation because of this accounting concept. In reality, asset amounts are not adjusted to represent any kind of increase in value as a general rule. Thus, the value of an asset does not represent the amount of money a company would gain if it sold the asset at its current market value. 5) Full Disclosure Principle  If a financial statement's information are relevant to an investor or lender, the information should be revealed within the statement or in the notes to the statement. Numerous pages of "footnotes" are often added to financial statements as a result of this basic accounting principle. In compliance with this full disclosure principle, a business usually lists its significant accounting policies as the first note to its financial statements. 6) Going Concern Principle  This accounting principle implies that a company will remain in business long enough to attain its objectives and commitments and will not go out of business in the near future. If the accountant believes the business' financial situation is such that it will be unable to survive, the accountant must disclose this assessment. This principle also allows to postpone some of its pre-paid expenses to future accounting periods. 7) Matching Principle  The accrual basis of accounting is required by this accounting principle. The matching principle requires that expenses and revenues be matched. Sales commissions, for example, should be reported in the timeframe in which the sales were made (and not reported in the period when the commissions were paid). 8) Revenue Recognition Principle  Revenues are recognized under the accrual basis of accounting as soon as a product is sold or a service is rendered, regardless of when the money is paid. A business could earn and record P1,000,000 in revenue in its first month of service, but receive P0 in actual cash in that month, according to this basic accounting principle.

Polytechnic University of the Philippines ACCO 20233 Kent John Arnold M. Tongloy

Bachelor of Science in Industrial Engineering Ruth Carlos

9) Materiality If an amount is insignificant, an accountant might be allowed to violate another accounting principle because of this basic accounting principle. To determine whether an amount is insignificant or immaterial, professional judgment is needed. Financial statements are usually rounded to the nearest hundred, thousand, or million pesos, depending on the size of the company because of materiality. 10) Conservatism  Conservatism guides the accountant to select the alternative when two acceptable options for reporting an item arise on which results in lower net income and/or lower asset amount. It helps the accountant to "break a tie". Accountants are expected to be objective and unbiased. This principle leads accountants to anticipate or disclose losses, but it forbids them from doing so with gains. Potential losses from lawsuit, for example, will be reported in the financial statements or notes, but potential gains will not An accountant can often write inventory down to a lower cost than the original cost, but will not write inventory up to a higher cost than the original cost.

Polytechnic University of the Philippines ACCO 20233 Kent John Arnold M. Tongloy

Bachelor of Science in Industrial Engineering Ruth Carlos

EXERCISE 1-1 ― Instructions: For each of the business listed below, indicate the type of firm for which each belongs. Write “X” on the line provided. SERVICE

MERCHANDISING

MANUFACTURING

1. car assembler

________________

________________

_______X________

2. newsstand

________________

______X_______

__________________

3. paper mills

________________

________________

_________X________

4. laundry shop

_______X________

________________

_________

5. pharmaceutical

________________

________________

________X________

6. dental clinic

______X________

________________

__________________

7. barber shop

_____X________

________________

__________________

8. gift shop

________________

_______X________

__________________

9. real estate broker

______X_________

________________

__________________

10. bookstore

________________

_______X______

__________________

11. battery maker

________________

________________

________X_______

12. movie houses

______X_______

________________

__________________

13. driving school

______X________

________________

__________________

14. hardware

________________

_______X_______

__________________

15. furniture maker

________________

________________

________X_________

16. law offices

______X________

________________

__________________

17. department store

________________

_______X_______

__________________

18. accounting firm

______X________

________________

__________________

19. boutique

________________

_______X_______

__________________

20. groceries

________________

_______X_______

__________________

21. supermarkets

________________

_______X________

__________________

22. textiles

________________

_______X________

__________________

23. shoe maker

________________

________________

________X________

24. sari-sari store

________________

_______X________

__________________

25. laundry shop

______X________

________________

__________________

Polytechnic University of the Philippines ACCO 20233 Kent John Arnold M. Tongloy

Bachelor of Science in Industrial Engineering Ruth Carlos

EXERCISE1- 2- INSTRUCTION - After the statement given below, make a “check” on the line Provided. Indicate the type of organization being referred to: SOLE

PARTNERSHIP

CORPORATION

1. Easy to form

____X______

___________

___________

2. Life is continuous

__________

___________

______X_____

3. More expensive to organize.

__________

___________

_____X______

4. Better credit standing.

__________

___________

______X_____

5. Unlimited liability.

__________

_____X______

___________

6. Few legal restrictions.

_____X_____

___________

___________

7. It is subject to more taxes.

__________

___________

______X_____

8. Owner has more freedom

_____X_____

___________

___________

9. Owned by the government.

__________

______X_____

___________

10.Centralized management.

__________

___________

______X_____

11.Unlimited life

__________

___________

______X_____

12.Easy to dissolve

____X______

___________

___________

13.Better credit standing than sole proprietorship __________ ______X_____ ___________ 14.Subject to governmental Controls.

__________

___________

______X_____

15.Large scale business Undertakings. __________

___________

______X_____

16.Limited liability

__________

___________

______X_____

17.Divided authority

__________

______X_____

___________

18.Difficult of raising capital

______X____

___________

___________

19.Restricted transfer of capital

__________

_____X______

___________

20.Greater source of capital than sole

__________

______X_____

___________

Polytechnic University of the Philippines ACCO 20233 Kent John Arnold M. Tongloy

Bachelor of Science in Industrial Engineering Ruth Carlos

PROBLEM 1-2 INSTRUCTION: Compute the new balances of the following items. Consider each item separately: ORIGINAL BALANCE

NEW BALANCE

SAMPLE: Cash was debited by P300

P 1, 500

P 1,800

1. Irene, Capital was debited by P10, 000

50,000