Intermediate accounting 1

Barter system - swapping ng gold kaya nag implement ang

products with each other (win-win government noon na nag karoon ng
situation as people like what the tao na namamalit ng ginot, the
other person have). But the flaw of goldsmith, in which ang mga tao
the barter system is (ex. Kapag pigtatao ang ginto (deposit) saiya
meron ka nakang ibabarter niya, tas tatawan naman sinda ni
pero gusto kang other person kang goldsmith na papel (proof of
ibabarter mo) that’s the flaw of deposit) na nagsasabing may ilang
that. kilos ng ginto sila sa bodega ni
goldsmith. And duman na nag start
-Nag evolved siya until we have the ang pera.
cash, however this is not a imposed
but rather a natural process Cash- unrestricted
wherein nasa barter system pa tayo CASH - money > standard medium
BUT may isang item na gusto ng of exchange.
lahat in a sense na kahit anong -most liquid
gusto niya (si may kapot kadtong - currency and coins that is
item), lahat ay papayag sa pag circulating and is legal tender (pag
barter sakanya , maari pa nga na inabot mo matic okay siya).
siya ang tumanggi sa pag barter.
The reasoning behind that is ang - includes money (bills and coins)
item niya ang ay gusto ng lahat. and any other negotiable
instruments that is payable in
Item/mineral resources – GOLD > money and acceptable by the bank
cash noon.to the point na nag for deposit and immediate credit.
karoon ng standard na kung gaano
kadaming ginto meron ka ay - unrestricted – free kung sain
equivalent kung gano ka kayaman gusto gamiton ang cash. Available
kadtong panahon. GOLD MEANS and free to use.
WEALTH.
PRESENTATION (a, l, e) – current
Since si gold na ang common na asset
ipang barter sa lahat, kaso ang Dae lang siya magiging current
problema naman niya ay ang BIGAT asset if may restriction, ang
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restriction ay kapag more than 12 Dollar > peso
months > hindi na siya CA since di
na siya malaya. And ang current General – Face value
asset ay madali lang dapat makuha, Foreign - Current exchange rate
or maka abot sa kamot mo. Bankrupt – Realizable value

MEASUREMENT ( pag kakaag CASH ITEMS

value )– face value. CASH ON HAND – undeposited
Ex, equipment, dae na collections (bills and coins),
subsequently customer’s check, manager’s check,
>how do we measure initially - ano cashier’s check, Traveler’s check,
siya nong una mo siyang makita ? bank draft ad money order
FACE VALUE
>how do we measure subsequently customer’s check – tinao ni
– ano na siya pag lipas nang customer (kapag tinawan kang
panahon? Same lang, FACE VALUE cheke kang customer, on hand siya
pa din. since yaon saimo si checke),

>estimated recoverable manager’s check - guaranteed by

account/realizable Value – pag the bank
may problema ang cash, kapag ang (if sa customer’s check dae ka sure
cash aydae na face value ang gamit if totoo/ may laog ang cheke,ditto
= iba na ang amount sa sa mc sure siyang totoo since ang
subsequently. manager na kang bank ang nag
- pag nag bankrupt na ang bank taong checke ),
- 1M deposit > bankrupt > 500 cashier’s check – same with the
min. makakabalik saimo managers check but the difference
is that the cashier is the one who
approved it.
(sure na may laman ang checke)

Traveler’s check, (same lang sa

mc, pero ini checke na dara dara
Foreign currency > convert
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kang traveler na approved kang a. Undelivered/ Unreleased
bank ) checks – checks that are prepared
but not delivered.
bank draft (written, issued by the Proforma intial: adj:
bank, from bank to the person who A/P xxx CIB xxx
requested it) CIB xxx A/P xxx
*kaya inadj kasi kinokorek siya
money order – need to request for since dae man talaga siya nag
a money order in an bayad.
institution/company by paying the Correc What Correcting
amount of money to be placed on t Actually
the money order. happened
(ginagamit siya pambayad.)
- A/P xx Cash xx
CASH IN BANK (CIB) – checking Cash A/P
account and saving account. xx xx
1. Checking account/demand
deposit – for transaction/for
b. post – dated checks –
everyday use.
check dated after the reporting
Checking account siya since
date.
may document na negotiable
-check na written in future dates
instrument na tinatawag na
-no value until the written date
check.
(future date)
- Every time maluwas kang
Proforma is same as undelivered
cheke, your checking
check (adj)
account decreases.
Corr What Correc
2. Savings deposit – ipon, ect Actual ting
nilalagay sa banko to save ly
money. happe
Checks ned
Check rule : the moment you write
the check, is the moment you 1- Cash A/R
entry in cash. xx xx Oversta
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ted (-) -a liability (current liability) of the
A/R Cash entity to the bank, utang kay banko
xx xx Restricted/ no offset
Negative balance – current liability
2- A/P Cash Underst Ex.
xx xx ated (+) BPI checking acc (20,000)
BDO savings acc 50,000
Cash A/P BDO checking acc (10,000)
xx xx BSP savings acc 30,000
= 70,000

c. stale checks (expired) – if the depositor if the

checks that are expired
has 3 accounts on depositor has
-checks that are not encoded
the same bank, many accounts
within reasonable time.
-based on banking irreasonable right of offset is in different
time is within 180 days or 6 allowed. Same banks,
months from the date of the bank, pwede I offsetting isn’t
check. offset if negative allowed.
na ang sarong acc
*if naiwala ang check the maker of
the check can refuse making a
check again even tho there’s no ⮚ Diff. of cash on hand and cash
loss or bawas sa pera ng gumawa in bank is the location (bank vs.
ng cheke. hand)
⮚ Pag inaadd mo ang tatlo = cash
Bank overdraft – illegal in siya
Philippines - not cash
Over – sobra draft – sulat =
sobrang sulat na cheke CASH FUND – change fund, tax
-this is when the amount of issued fund, payroll fund, dividend fund.
check is more than the deposit -cash pero may restriction pa din
account. - as long as funds are related in
current operation, it is
unrestricted
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 Intermediate accounting 1
Compensating balance- condition
change fund - panukli of the bank to have a maintaining
tax fund, pera pero pambayad ng balance.
tax Restricted to use
payroll fund, cash pero for salaries Not cash if formal, otherwise it is
exp cash if it’s informal.
dividend fund. Cash but for A balance that must be kept with a
dividends lender in order for a borrower to
quality for a line of credit or/f
Liability: installment loan.
Current Liability / 12 month
maturity – unrestricted *if problem is silent, use the
Non-Current Liability/ more than informal one (cash), unrestricted
12 months – restricted Restricted kapag may sinabi sa
problem, dae ni kaiba sa cash.
One time transactions, not
included in cash equivalents:
Long term investment for assets – Cash Equivalents – 3 months
plant expansion fund rule
Fund for the liabilities – cash
sinking fund Cash Equivalents – short term and
- one time transactions, is highly-liquid (dae risky)
restricted. Dae related sa current investments that are readily
operation. convertible into cash and so near
their maturity that they present
a. operation – current (parts of insignificant risk of changes in value
cash/ cash equivalent) because of changes in interest
b. capital expenditure – non rates.
current
c. payment of long –term debts – *change in value – ang pagbaba/
sinking fund pag taas ng risk. Nag baba/taas ang
d. petty cash – for minor expenses ininvest mo because of interest
rate
-span of acquisition to maturity.
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¹San miguel Corp
CASH CASH EQUIVALENTS commercial paper- mayong date,
cash equivalents.
Medium For investement na di Local/family business
of masyado nababago
exchang ang value because its Since SMC or other big companies
e highly-liquid and can’t just go bankrupt in 3
short term months, will local stores can
compared to SMC.
PRESENTATION : one line sa
balance sheet, cash and cash ²ex. of this is the commercial
equivalents paper
Breakdown sa notes, fs. Money market instrument- iinvest
sa stop market, pag nag kita ang
Example: kung gaano ka short term pera mo may share ka. Masmalaki
a. Three – month BSP (Banko ang interest
Sentral ng Pilipinas) treasury Bills
– issued by the BSP, called d. xxx-year BSP Treasury bills/
treasury bills commercial paper/ redeemable
preference share purchased three
exp. Mautang sayo si BSP ng 90 – months before maturity rate.
tas after 3 months babayadan
kang 100 ni BSP Date of purchased magiging cash
equivalent siya. It doesn’t matter
b. Three – month time deposit – kalian siya binili what matter is
deposit that u can’t withdraw in a binili mo siya before maturity
certain time period. rate.

c. Three – month money market Redeemable preference share –

instrument² or commercial paper¹ share means no maturity date.
– issued by business/ private Pero the redeemable preference
entities and its called commercial share may maturity date from the
paper start palang. In substance it is not
a share but an liability.
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 Intermediate accounting 1
*bills and coins aren’t used to pay
Excess cash > investment off cash expenses instead they use
checks to pay this is called Imprest
3 months > cash equivalent System.
Disbursement are recorded at petty
More than 3 months but not cash register/log book.
more than 12 months > short
term investment ex. during the day u shall wait till
afternoon to collect all receipts and
more than 12 months > long term deposit it to the bank.
investment
Imprest System – all cash collection
*should be 3 months or less to be are kept intact and deposited in the
considered as cash equivalent. bank and all cash disbursement are
*even if its highly-liquid but not made through checks.
short term it is not considered as -convenient
cash equivalent. *pag nanakawan ka, only 1 day
revenue lang makukuha saimo if
Petty Cash Fund your using imprest system.

Petty Cash Fund – is money set Petty – small

aside to pay small expenses which Petty cash custodian – tawag sa
cannot be paid conveniently by taga hawak ng petty cash fund (bills
means of check. and coins)
Petty cash memorandum – records
Cash in Cash Out all expenses all throughout
Receipts Disbursement *impractical ang pagbayad ning
Bills cash expenses cheke if small bills man lang need
Coins and dae man nag aakong cheke
Checks ang sari² store and market.
Bank draft
Money order 1. Imprest Fund Sytem –
collecting all expenses before
recording expenses.
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Cash In Bank xxx
ESTABLISHMENT of the fund: Cash Overage xxx
Petty cash fund xxx
Cash in bank xxx 2. Fluctuating Fund Sytem – every
time there’s a movement in the
EXPENSES: fund you record it.
No Entry
(no record in journal but ESTABLISHMENT of the fund:
recorded in petty cash Petty cash fund xxx
memorandum) Cash in bank xxx

REPLENISHMENT: EXPENSES:
Expenses xxx Expenses xxx
Cash in Bank xxx Petty Cash Fund xxx
(nirerecord mo here si mga
expenses na naipon) REPLENISHMENT:
Petty Cash Fund xxx
INCREASE: Cash In Bank xxx
Petty cash fund xxx
INCREASE:
Cash in bank xxx
Petty cash fund xxx
DECREASE:
Cash in bank xxx Cash in bank xxx
Petty cash fund xxx DECREASE:
Cash in bank xxx
Petty cash fund xxx
End of reporting period:
Expenses xxx
End of reporting period:
Petty Cash Fund xxx
No entry
(updated sinda kaya no entry)
CASH SHORT:
Cash Shortage xxx CASH SHORT:
Cash In Bank xxx Cash Shortage xxx
OVER:
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Petty Cash Fund xxx Cash shortage
OVER: xxx
Petty Cash Fund xxx >pag dae nindo aram
Cash Overage xxx cash overage xxx
Miscellaneous income/payable
xx
CASH SHORT AND OVER is just an
suspense account/ temporary Bank reconciliation
account.
>pag naaramn mong sala kang Bank reconciliation – is a
custodian tano may statement which bring into
shortage/over agreement the cash balance per
book and cash balance per bank.
Accountability – on record -pag kakabati
Cash count -cash in bank

SHORTAGE * kung nasa kay sisay ang

AC 10 reconciling items siya ang gagawa
ng reconciliation
CC 9 *isay may sala,siya ang ma
reconcile
OVERAGE
AC 10 Book reconciling items-
1. Credit memos- dagdag ni
CC 11 bank in your account but not
yet recorded by the book
(depositor). So the depositor
Receivable from custodian xxx should also record it in the
Cash shortage book.
xxx Ex. Collections, interest,
proceeds from loan,
>pag feeling niyo ma man kasalan
Miscellaneous expense xxx

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2. Debit memos – bawas ni 3. Errors - errors made by
bank in your account but not the bank
yet recorded by the book
(depositor) Bank deposits
Ex. Bank service charges, NSF, 1. Demand Deposit –
payment of loans checking/current account with
a purpose to use it in operation
-ginagamitan ng bank
3. Errors- errors made by the reconciliation
depositor 2. Savings Deposit – to save
money.
Bank reconciling items-
3. Time Deposit – have time
1. Deposit in Transit- deposit
restriction.
made but not yet recorded by
the bank to the depositor’s
*amounts that in the ledger but
bank account. not in the bank statement are
bank reconciling items
2. Outstanding Checks- *amounts that in the bank
checks drawn and released to statement but not in the ledger
payees but are not yet are book reconciling items
encashed with the bank
Excluding: To correct an overstated credit,
Certified checks- are not you need to make a debit.
outstanding checks since direkta To correct an overstated debit,
na siya binabawas sa depositor’s you need to make a credit.
bank account.
To correct an understated credit,
Stale checks- checks that remain you need to make a credit.
outstanding for a long time are To correct an understated debit,
reverted back to cash, meaning you need to make a debit.
tig kakag na sa cash kaya hindi na
siya outstanding.

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-Collectible from customers
-A right to consideration is
unconditional if only the passage
of time is required before
payment of that consideration is
due. ( si ibabayad sayo ay
unconditional , if may paglipas ng
panahon before ka bayaran)

Trade receivables
-unrestricted
-generally current – even if nag
lipas na ng 1 year as long as it is in
normal course of operation cycle,
12 months or within the
operation cycle whichever is
longer.
-directly related to primary
operation.
-claims arising from sale of
merchandise/ service in the
ordinary course of business
operation

-initial measurement – fair value +

transaction cost

a. A/R –open account; not

supported by a promissory
note (ALWAYS TRADE)
b. N/R – formal claim against
another that is evidenced
Receivables by a written promise to
-Right to receive cash
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pay at a later time called, Initial measurement
“time draft” (TRADE OR –Face amount -immaterial
NON-TRADE) (transaction cost) -gross method
BUSS. POV- CUSTOMER PAYING
Subsequent measurement – NRV
*negotiable promissory note – -expected cash to be receive in
unconditional written agreement a/r (dec 31)
to pay at a certain sum of money NRV COMPUTATION:
on a specific/ determinable date A/R ENDING
to order of the payee/bearer. (AFDA)
(AFSR)
*ONLY negotiable promissory (ADSD) OPTIMAL
note is included as part of N/R. NRV
Dishonoured N/R do not qualify
as N/R in SFP as well as overdue
notes, they are classified as A/R
together with accrued interest.

Non-Trade receivables
All receivables that aren’t in trade
are non-trade receivables. SALES DISCOUNT
-claims that arises from sources TRADE DISCOUNT – no entry,
other than from the sales of direct bawas sa receivables
goods/ services in normal course -bcz of volume or suki
of business.
-current if realizable cash within CASH DISCOUNT
12 months. -benefit/incentive para mag
12 months –CURRENT bayad agad ng maaga.
More than 12 months –NON- Ex. 1/10, n/30
CURRENT Nirerecord by:
1. FRS 15
Account Receivables (like net method)
-CURRENT ASSET Assuming may ma avail
-future collection discount
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“PROBABILITY” % OF SALES- bad debts exp
2. TRADITIONAL nalabas /current portion
a. Net method – may bawas Income statement approach
na sa sales discount
AR % OF RECEIVABLES – ilan si
SD ibabawas (direkta)
Balance sheet approach
b. Gross method – buo
SD
% OF AGING – most current
AR -aging for classification
AFDA days amount uncollectible(%)
1. ALLOWANCE METHOD - - -
-pag dae sure na maco- - - -
collect, tig kakaag muna sa Computed bal – ending bal of
allowance AFDA
Balance sheet approach
2. DIRECT WRITE-OFF
Notes Receivables
-kapag I eentry matic
Silent – non-trade receivables
deretsona sa write off, (this formula ang gagamitin)
means matic na -form of note promising to pay
uncollectible na siya Interest- babayadan after kang
principal
PRESENT VALUE (PV) – principal
kang utang, si value today (kasali
ang interest and principal)
AMORTIZED COST – nag babago
ang value sa paglipas ng panahon
END BAL AR -value after mag lipas ang time
(END BAL AFDA) Ordinary note –including all
NRV charges (abala, interest, etc.)

AFDA 3 METHODS: Realistic interest rate – si interest

rate sa note ay same sa market

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Imputed interest – interest based Pagkuhang interest – effective
on average interest rate interest method

INTEREST BEARING – sinasabi at SHORTCUT OF PV OF 1

hiwalay ang principal & interest 1. If hinahanap ang
-may inissue na note/natanggap,
may interest si note
Initial measurement - Face
amount
Subsequent measurement - Face
amount (if lump sum)
-carrying amount (instalment)

NON-INTEREST BEARING – buong

nasa principal ang interest
Short term – materiality principle
Benefit over cost

Long term – si amount na nakaag

sa future value

-para makuha ang PV or principal

amount tatanggalin ang interest;
1 + & divided by (2 times) INSTALLMENT
=(depends kung pirang equal sa
kung ilang years)
1-principal amount

LUMPSUM
Si principal amount dapat at the
end of the period mag abot sa n/r
(amount na nakakaag sa note)

PV OF 1
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