65 67 73 78 83 86 87 87
Financial Statements and the Reporting Period Assets: Entity’s Rights to Economic Resources Liabilities: Entity’s Economic Obligations Assets and Liabilities: Unit of Account and Contracts
Lesson 3.2: Lesson 3.3: Lesson 3.4: Lesson 3.5:
Lesson 3.6: Equity, Income, and Expenses Conceptual Framework and Accounting Standards Visual Chapter Summary Discussion Questions
Evaluation
CHAPTER IV – CONCEPTUAL FRAMEWORK, PART 3: PRINCIPLES OF RECOGNITION AND DERECOGNITION OF THE ELEMENTS OF FINANCIAL STATEMENTS 93 Chapter Opener: Recognize: Giving Credit Where Credit Is Due 94 Chapter Learning Objectives 94 Introduction 95 Lesson 4.1: Recognition 103 Lesson 4.2: Derecognition
CONTENTS
CONTENTS
xi
Dedication
xii
Preface
iv 108 108 107
Visual Chapter Summary Discussion Questions
CHAPTER I – INTRODUCTION TO CONCEPTUAL FRAMEWORK AND FINANCIAL REPORTING STANDARDS 1 Chapter Opener A: Which Code of Right and Wrong? 2 Chapter Learning Objectives 3 Lesson 1.1: The Basics: Business and Its Language, Accounting 8 Lesson 1.2: The Business Entity and Its Environments 12 Chapter Opener B: The Philippines: A Good Citizen in the Community of Nations 13 Lesson 1.3: Financial Reporting in the Philippines 19 Lesson 1.4: Conceptual Framework, Accounting Standards, and the Accounting Cycle 26 Visual Chapter Summary 27 Discussion Questions 28 Evaluation CHAPTER II – CONCEPTUAL FRAMEWORK, PART 1: OBJECTIVES OF ACCOUNTING AND FINANCIAL REPORTING OF BUSINESS ENTITIES 33 Chapter Opener: Real News Versus Fake News 34 Chapter Learning Objectives 35 Introduction 36 Lesson 2.1: General Purpose Financial Reporting: Objectives, Usefulness, and Limitations 40 Lesson 2.2: Information Provided by General Purpose Financial Reports
Evaluation
CHAPTER V – MEASUREMENT PRINCIPLES AND STANDARDS 115 Chapter Opener: Who’s Afraid of the “Big Bad Math”? 116 Chapter Learning Objectives 116 Introduction 118 Lesson 5.1: Measurement Bases – Historical Cost 122 Lesson 5.2: Measurement Bases – Current Value 127 Lesson 5.3: Factors to Consider When Selecting a Measurement Basis 136 Lesson 5.4: Measurement of Equity 137 Lesson 5.5: Cash-flow-based Measurement Techniques 139 Lesson 5.6: Business Entity with Elements Measured at Fair Value 153 Lesson 5.7: A Framework for Fair Value Measurement Approach 165 Visual Chapter Summary 166 Discussion Questions 166 Evaluation CHAPTER VI – PRESENTATION AND DISCLOSURES: GENERAL AND SPECIFIC STANDARDS; ACCOUNTING POLICIES AND CHANGES 179 Chapter Opener: Not Just What You Say but How You Say It 180 Chapter Learning Objectives 180 Introduction: Business Entity as Main Subject of Financial Information 181 Lesson 6.1: General Presentation and Disclosure Standards 187 Lesson 6.2: Specific Presentation and Disclosure Standards: PAS 1 Presentation of Financial Statements 204 Lesson 6.3: Specific Presentation and Disclosure Standards: PAS 7 Statement of Cash Flows
iii
43
Fundamental Qualitative Characteristics of Useful Financial Information Enhancing Qualitative Characteristics and the Cost Constraints
Lesson 2.3:
49
Lesson 2.4:
53 54 54
Visual Chapter Summary Discussion Questions
208 210 215 216 216
PAS 10 Events After the Reporting Period
Lesson 6.4: Lesson 6.5:
v PAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors
Evaluation
Visual Chapter Summary Discussion Questions
CHAPTER III – CONCEPTUAL FRAMEWORK, PART 2: REPORTING ENTITIES, FINANCIAL STATEMENTS, AND THEIR ELEMENTS 59 Chapter Opener: Everybody Loves a Good Story 60 Chapter Learning Objectives 61 Introduction 62 Lesson 3.1: The Reporting Entity 65 Lesson 3.2: Financial Statements and the Reporting Period 67 Lesson 3.3: Assets: Entity’s Rights to Economic Resources 73 Lesson 3.4: Liabilities: Entity’s Economic Obligations 78 Lesson 3.5: Assets and Liabilities: Unit of Account and Contracts 83 Lesson 3.6: Equity, Income, and Expenses 86 Visual Chapter Summary 87 Discussion Questions 87 Evaluation CHAPTER IV – CONCEPTUAL FRAMEWORK, PART 3: PRINCIPLES OF RECOGNITION AND DERECOGNITION OF THE ELEMENTS OF FINANCIAL STATEMENTS 93 Chapter Opener: Recognize: Giving Credit Where Credit Is Due 94 Chapter Learning Objectives 94 Introduction 95 Lesson 4.1: Recognition 103 Lesson 4.2: Derecognition
Evaluation
CHAPTER VII – FINANCIAL INSTRUMENTS 223 Chapter Opener: Liquidity in Nature 223 Chapter Learning Objectives 224 Introduction 226 Lesson 7.1:
Business Entity as Holder or Issuer of Financial Instruments (PAS 32) Business Entity as Holder or Issuer of Financial Assets and Liabilities (PFRS 9) Disclosure Requirements for the Business Entity’s Financial Instruments (PFRS 7)
234
Lesson 7.2:
243
Lesson 7.3:
248 249 249
Visual Chapter Summary Discussion Questions
Evaluation
CHAPTER VIII – INVENTORIES, AGRICULTURE, AND MINERAL RESOURCES 255 Chapter Opener: Goods and Services, Business’ Main Contact Point to the World 255 Chapter Learning Objectives 256 Introduction 257 Lesson 8.1: Business Entity as Manufacturer or Merchandiser (PAS 2)
2025 Higher Education Learning Solutions for the Business and Accountancy Program 86
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