CHAPTER 2

THE DEMANDS OF GLOBAL E-COMMERCE

SUPPORT AND BUILDING BLOCK OF ACCOUNTING

Supporting the Practice of he Accounting Profession
- Values, skills, and knowledge
- Accounting areas and career fields
- Professional regulatorybodies and associations
- Ethical standards and good governanace
Building Block of Accounting
- Basic Accounting Principles

Skills of the accountants vary depending on their filed of specialization. CPA's

specialize in tax forms, financial reports and other forms of documentations their
clients need to disclose.

VALUES, SKILLS, KNOWLEDGE

- Effective Communication Skills - should be able to get your message clearly
accross to others such that others understand you.
- Integrity - possessing a sterling character of being trustworthy of being
always on the right side and standing for truth.
- Positive Attitude - must believe in yourself that you can do it, try and never
say you can't.
- Competency - must have the ability to perform well each task or function
assigned to you.
- Flexible and Addaptable - must be aware of the changes taking place in the
environment.
- Creative and Innovative - must be open to new ideas.
- Critical Mind - identif and define clearly the problem, set up various options,
evaluate these options for possible consequences before deciding which one is the
best.
- Interpersonal Skills - shuld lern to get along well with people, motivating,
leading, and influencing them.

INTELLECTUAL SKILLS
- Intellectual Skills - must be an analytical thinker, a problem solver and a
decision maker.
- General Knowledge - includes history and culture so you can interact with
different people, appreciate their political views and social traits.
- Business Knowledge - includes economic, business statistics, quantitative
techniques, operaions management, organizational behavior, law and tax.
- Information Technology Knowledge - includes skills in IT concepts
- Accounting Knowledge - makes one understand the accountant's reports, form
rational judgment so as to come up with sound business decisions.

CAREER FIELDS IN ACCOUNTING

- Public Accounting - open to firms and individual CPAs who offers to the public,
for a fee, expert services like bookkeeping, auditing, accounting, tax and
financial planning.
- Industry Accounting (Private Accounting) - more accountants are employed than
public accounting because of the huge number of merchandising, manufaturing, or
service firms.
- Government and Not for Profit Accounting - one works as an accountant, auditor,
budget officer or analyst in any of the government agencies, religious
organizations, labor unions, colleges and universities, trade associations, and
many others.
- Research and Education - accountant assumes the role of researcher, teacher,
and reviewer.
ACCOUNTING COURSES
- Basic Accounting or Bookkeeping - routine act of recording, classifying and
summarizing business transactions in a systematic manner.
- Financial Accounting - involves preparation and interpretation of financial
statements primarily intended for external users such as the investors, lenders,
suppliers, governement, and customers.
- Cost Accounting - deals with reocrding, classifying, and summarizing details of
materials, labor, and overhead necessary to produce and sell a product or service.
- Managerial Accounting - deals with financial and non-financial information
primarily for managers and other internal users to assist them in planning,
directing, and controlling the affairs of business.
- Auditing - deals with the independent verification and examination of the
accounting records for the purpse of giving credibility to the financial
statements.
- Government and Non-profit Accounting - uses "fund accounting" which delas with
the administration or use of public or community funds to bring about service to
the people.
- Tax Accounting - deals with tax matters affecting firms (partnership and
corporation), individuals, trusts and estatess and the preparation of tax reports
and documents.
- Forensic Accounting - discipline which integrates accounting, auditing, and
investigative skills. Works as a fraud examiner in cases involving illegal
transactions such as cash embezzlement, bankcruptcy, or money laundering.

PROFESSIONAL REGULATORY BODIES AND PROFESSIONAL ASSOCIATIONS

- Professional Regulation Commission (PRC) - government body in charge of
regulating and licensing the practice of any profession in the Phil.
- Securities and Exchange Commission (SEC) - regulates business operations
specifically that of partnership, cooperation, and other entities seeking a license
or franchise to operate in the Phil. Foreign compnies doing business in the country
are included.
- Bangko Sentral ng Pilipinas (BSP) - regulates the operations of all banks and
financing institutions in the Phil. and is tasked to control price of goods and
products, promote and maintain peso stability, and monitor importations of
products.
- Bureau of Internal Revenue (BIR) - exacts tax and license compliance from
peopleand business entities earning income.
- Local Government Unit (LGU) - grants permit and license to operate business

PROFESSIONAL ASSOCIATIONS
- All professionals are registered members of their respective professional
associations, a few of which are the ff: Phil. Institute of Certified Public
Accountants; People Management Association of the Phil,; Hotel and Restaurant
Associations of the Phil.

ETHICAL STANDARDS
- Integrity - frees you from intentional distortions or manipulations. Requires
that you be honest in practicing your profession.
- Competency - means you have adequate knowledge, skill, and experience in the
practice of your profession.
- Objectivity - requires you to be fair in all your dealings with others, avoid
bias and always maiantain an impartial attitude in all matters.
- Independence - mental attitude requires you to avoid compromising relationships
that will hinder you to think, act, and decide wisely.
- Confidentiality - of records requires you to maintain secrecy, meaning you
should not divulge confidential information obtained in the course of your
professional engagement unless you have the consent of your client employer.

CORPORATE GOVERNANCE
 - Board of Directors - policy making body of corportion, overseer, chooses the
top management
- Top Management - manage the business and maximize profits
- Stockholders - interested in financial conditions and operations of the
business
An effective corporate governance system should also protect the interests of the
company's other stakeholders:
- Employees - human capital of the business
- Customers -
- Creditors -
- Suppliers -

GOOD GOVERNANCE
- process of directing the affairs of the firm with a view of upholding standards
and protecting the interest of all stakeholders specially against mismanagement
standards and protecting the interest of all stakeholders specially against
mismanagement ( fraud, theft, embezzlement).

ACCOUNTANCY ACT OF 2004

BASIC ACCOUNTING PRINCIPLES

Financial Statements
- Balance Sheet
- Income Statement
- Statement of Owner's

- Monetary Unit Assumption - in clude in the accounting records only transaction

data that can be expressed or measured in terms of money.
- Economic Entity Assumption - requires that activities be kept separate and
distinct from the activities of its owner and all other economic entities.

BASIC ACCOUNTING PRINCIPLES

- Objectivity Principle - dictates that transactions should be verified and
substantiated by documents such as official receipts when collecting cash from
clients and customers.
- Going Concern Principle - assumes that the business will be operating for an
indefinite period of time not just for a month or a year.
- Cost Principle (Historical) - dictates that companies record assets at their
cost
- reported at cost when purchased and also over time the asset is held

- cost easily verified, whereas market value is often subjective

- fair value information may be more useful
- Reporting Period - transactions are recorded and financial statements prepared
for period usually one year - Jan- Dec (calendar period) or ending other than Dec
31 (fiscal period)
- Accrual Principle - assets, liabilities, revenues and expenses should be
recorded at the time period they relate or took place regardless of when cash is
collected or paid.