#0001-FAR

#0001-MAS

Accounting
#0001-FAR

Accounting is a service activity. Its function is to

provide quantitative information primarily
financial in nature that is intended to be useful in
making economic decisions.
#0002-FAR
#0001-MAS

Law That Regulates the Practice of Accountancy

in the Philippines
#0002-FAR

Republic Act 9298 – Philippine Accountancy Act

of 2004
#0003-FAR
#0001-MAS
Body Authorized by Law to
Promulgate Rules and
Regulations Affecting the
Practice of the Accountancy
Profession
#0003-FAR

Board Of Accountancy
#0004-FAR
#0001-MAS

Analytical, Technical and

Formal Components of
Accounting
#0004-FAR

Identifying (Analytical),
Measuring (Technical),
Communicating (Formal)
#0005-FAR
#0001-MAS

Internal and External

Transactions
#0005-FAR
External transactions – involve two entities
distinguishable from each other (sale, transfer,
investment, loan)
Internal transactions – transactions other than
external transactions (production loss, acts of
god, departmental transfer)
#0006-FAR
#0001-MAS

Financial Vs. Management

Accounting
#0006-FAR

Management – Provides Information To People

Within An Organization
Financial – Complies With Accounting Standards
And Provides Information For Stakeholders
Outside The Organization
#0007-FAR
#0001-MAS

Four Assumptions in
Accounting
#0007-FAR

Economic Entity Assumption, Monetary Unit

Assumption, Time Period Assumption, Going
Concern
#0008-FAR
#0001-MAS

Four Accounting Principles

#0008-FAR

Historical Cost, Revenue Recognition, Matching

Principle, Disclosure
#0009-FAR
#0001-MAS

Four Accounting
Constraints
#0009-FAR

Estimates & Judgements, Materiality,

Consistency, Conservatism
#0010-FAR
#0001-MAS

Four Equations that Serve

As Foundation of
Accounting
#0010-FAR

Entity Theory (A=L+C),

Proprietary Theory (A-L=C),
Residual Equity Theory (A-L-PS=CS),
Fund Theory (F=CI-CO)
#0011-FAR
#0001-MAS

Four Principal Qualitative

Characteristics of Financial
Reporting
#0011-FAR

Relevance,
Reliability,
Understandability, Comparability
#0012-FAR
#0001-MAS

Three Ingredients of
Relevance
#0012-FAR

Predictive Value, Feedback/Confirmatory Value,

Timeliness
#0013-FAR
#0001-MAS

Five Ingredients of
Reliability
#0013-FAR

Faithful Representation,
Substance Over Form,
Neutrality,
Conservatism/Prudence,
Completeness
#0014-FAR
#0001-MAS

Capital Maintenance Vs.

Transaction Approach
#0014-FAR
Capital maintenance - net income is defined as the
difference between the net assets (assets minus
liabilities) at the beginning of a period and net assets at
the end of the period, excluding owners‘ contributions
and distributions during the period.
Transaction approach – net income is calculated by
analyzing the effects of revenue and expense.
#0015-MAS
#0001-MAS

Management Accounting
#0015-MAS
Involves the application of appropriate
techniques and concepts to economic data so as
to assist management in establishing plans for
reasonable economic objectives and in the
making of rational decisions with view toward
achieving these objectives.
#0016-MAS

Three Tasks Management

Accountants Generally
Perform
#0016-MAS

Data accumulation, interpreting and reporting

information, problem solving
#0017-MAS
Administrative Functions
for Which Management
Accountants Provide
Information
#0017-MAS

Planning, controlling, decision making

#0018-MAS

Cost Accounting
#0018-MAS

A systematic set of procedures for recording and

reporting measurements of the cost of
manufacturing goods and performing services in
the aggregate and in detail.
#0019-MAS

Eight Categories Of
Management Accounting
Activities
#0019-MAS

Planning, reporting, controlling, resource

management, information systems development,
technological implementation, verification,
administration
#0020-MAS

Line Vs. Staff

Relationship/Authority
#0020-MAS

Line – to command action or give orders to

subordinates;
Staff – to advise but not command others
#0021-MAS

Chief Financial Officer Vs.

Controller Vs. Treasurer
#0021-MAS
CFO – oversee the financial operations of an org. (Controllership,
treasury, risk management, taxation, internal audit)
Controller – (chief accounting officer) responsible for financial and
management accounting (planning, control, reporting, accounting)
Treasurer – concerned with the acquisition, financing and
management if assets if a business concern (funds procurement,
banking and custody of funds, investment of funds, other operating
responsibilities)
#0022-MAS
Four Areas That Summarize
The Ethical Responsibilities
Of Management
Accountants
#0022-MAS

Competence, confidentiality, integrity, objectivity

#0023-MAS

Three Certifications
Available To Management
Accountants
#0023-MAS

Certificate of management accounting (CMA),

certificate in public accounting (CPA), certificate
in auditing (CIA)
#0024-rfbt

Obligation
#0024-rfbt

A juridical necessity to give, to do or not to do.

#0025-rfbt

Four Elements of
Obligations
#0025-rfbt

Obligor, Obligee, Prestation/Object,

Juridical/Legal Tie
#0026-rfbt

Five Sources of Obligations

#0026-rfbt

Law, Contracts, Quasi-contracts, Delicts, Quasi

Delicts
#0027-rfbt

Two Kinds of Quasi-

contracts
#0027-rfbt

Negotiorum Gestio, Solutio Indebiti

#0028-rfbt

Determinate Vs. Generic

Things
#0028-rfbt

A thing is determinate if it can be particularly

designated or physically segregated from all
others of the same class why generic things
cannot.
#0029-rfbt

Obligations of One Obliged

to Give a Determinate
Thing
#0029-rfbt

Exercise the right level of diligence and deliver

the thing, fruits, accessions and accessories.
(DFAT)
#0030-rfbt
Remedies of the Creditor If
the Debtor Fails to Perform
His Obligation to Deliver a
Determinate Thing
#0030-rfbt

1) Compel the debtor to make the delivery and

2) demand damages from the debtor
#0031-rfbt
Remedies of the Creditor If
the Debtor Fails to Perform
His Obligation to Deliver a
Generic Thing
#0031-rfbt

1) Ask that the obligation be complied with at

the expense of the debtor and
2) demand damages from the debtor
#0032-rfbt
Remedies of the Creditor If
the Debtor Fails to Perform
His Obligation in
Obligations to Do
#0032-rfbt

1) have the obligation executed at the expense of

the debtor and
2) demand damages from the debtor
 Remedies
#0033-rfbt of the Creditor If
the Debtor Performs the
Obligation but does It
Poorly or Contravenes to
the Tenor thereof in
#0033-rfbt

1) have the performance be undone at the

debtor’s expense and
2) demand damages from the debtor
#0034-rfbt

Remedies of the Creditor If

the Debtor Does What Has
Been Forbidden Him
#0034-rfbt

1) demand that what has been done be undone

and
2) demand damages from the debtor
#0035-tax

Taxation
#0035-tax

Taxation is a means by which governments

finance their expenditures by imposing charges
on citizens and corporate entities.
#0036-tax

Three Inherent Powers of

The State
#0036-tax

Police Power (for Public Good/Welfare), Power of

Eminent Domain (for Public Use), Power of
Taxation (for Revenue)
#0037-tax

Six Inherent Limitations on

the Power of Taxation
#0037-tax
•Tax must be levied for public purpose
• The power of taxation cannot be delegated
• The rule against direct double taxation
• Government instrumentalities and agencies which the
government exercises sovereign powers are exempt from tax
• The power of taxation is limited to the territorial jurisdiction
of the taxing state
• The tax laws cannot apply to the property of foreign
governments (international comity)
#0038-tax

Four Constitutional
Limitations on The Power
of Taxation
#0038-tax
• No law impairing the obligations of contracts will be
passed
• No person can be imprisoned for debt or non-payment of
a poll tax
• The rule on taxation must be uniform and equitable
• Institutions and properties that serve religious or
charitable purposes will be exempt from tax
#0039-tax

Three Basic Principles of a

Sound Tax System
#0039-tax

Fiscal Adequacy, Theoretical Justice,

Administrative Feasibility
#0040-tax

Six Essential Characteristics

of Tax
#0040-tax

It is: a forced contribution, legislative in nature,

poportionate in character, payable in money,
imposed for the purpose of raising revenue, to be
used for public purpose
#0041-tax

Three Classification of
Taxes as to Subject Matter
#0041-tax

Personal/Capitation/Poll Tax, Property Tax,

Excise Tax
#0042-tax

Two Classification of Taxes

as to Who Bears the Burden
#0042-tax

Direct and Indirect Taxes

#0043-tax

Two Classifications of Taxes

as to Determination of
Amount
#0043-tax

Specific Tax, Ad Valorem Tax

#0044-tax

Two Classifications of Taxes

as to Purpose
#0044-tax

General and Special Taxes

#0045-tax

Three Classifications of
Taxes as to Proportionality
#0045-tax

Progressive, Regressive, Proportional

#0046-AFAR

Partnership
#0046-AFAR

A contract where two or more persons bind

themselves to contribute money, property or
industry to a common fund with the intention of
dividing the profits among themselves.
#0047-AFAR

Six Characteristics of a
Partnership
#0047-AFAR

Separate Legal Personality, Ease of Formation,

Co-ownership of Partnership Property and
Profits, Limited Life, Mutual Agency, Unlimited
Liability
#0048-AFAR

Three Ledger Accounts of

Partners
#0048-AFAR

Capital accounts, Drawing/Personal Accounts,

Accounts for Loans to or from Partners
#0049-AFAR

Three Transactions where

Partners’ Capital Accounts
are Credited
#0049-AFAR

Original Investment, Additional Investment,

Partner’s Share in the Profits
#0050-AFAR

Three Transactions Where

Partners’ Capital Accounts
are Debited
#0050-AFAR

Permanent Withdrawal of Capital, Debit Balance

of the Drawing Account at the End of the Period,
Partner’s Share in the Losses
#0051-AFAR

Three Transactions Where

Partners’ Drawing Accounts
are Credited
#0051-AFAR
Partnership Obligations Assumed or Paid by the
Partner, Personal Funds or Claims or Partner
Collected and Retained by the Partnership,
Periodic Partner’s Salaries Depending on the
Accounting and Disbursement Procedures Agreed
Upon
#0052-AFAR

Four Ways to Form a

Partnership
#0052-AFAR

Formed by Two or More Individuals, One Sole

Proprietorship and an Individual, Two or More
Sole Proprietorships, Admission of a New Partner
#0053-AFAR

Items that Can be

Contributed by Partners &
Initial Measurements
#0053-AFAR

Cash (Face Value), Non-Cash Assets (Fair Value),

Assumed Liabilities (Fair Value), Industry (Not
Recognized)
#0054-AFAR

Bonus Vs. Goodwill on

Initial Investments
#0054-AFAR
Bonus Method – Total agreed capital equals total
contributed capital. Bonus is used to transfer portion of
capital from one partner to another to achieve agreed
capital ratio
Goodwill Method – Total agreed capital does not equal
total contributed capital. Goodwill is recognized to increase
a partner’s capital to achieve agreed capital ratio
#0055-audit

Auditing
#0055-audit
A systematic process of objectively obtaining and
evaluating evidence regarding assertions about
economic actions or events to ascertain the
degree of correspondence between these
assertions and established criteria and
communicating the results to interested users.
#0056-audit

Assurance Vs. Non-

assurance Engagements
#0056-audit
The objective of assurance engagements is to
express an opinion that enhances the degree of
confidence that intended users can have. Non-
assurance engagements are those services
performed by CPAs which do not involve the
expression of an opinion.
#0057-audit

Assertion-based Vs. Direct

Reporting Engagement
#0057-audit

Assertion-based – client prepares the FS and auditor

expresses an opinion regarding the FS
Direct reporting – the client does not prepare the fs,
the auditor does it or obtains a representation from a
third party who does it, and expresses an opinion
regarding the FS
#0058-audit

Reasonable Vs. Limited

Assurance Engagement
#0058-audit

Reasonable assurance – independent financial

statement audit
Limited assurance – review of non-financial
performance, human resources, internal control
#0059-audit

Three Types of Audit

#0059-audit

External Audit, Operational Audit, Compliance

Audit
#0060-audit

Three Types of Auditors

#0060-audit

Internal Auditor, External Auditor, Government

Auditor
#0061-audit

Five Elements of an
Assurance Engagement
#0061-audit

Three Party Relationship, Appropriate Subject

Matter, Suitable Criteria, Sufficient Appropriate
Evidence, Written Assurance Report/Opinion
#0062-audit

Five Forms of Appropriate

Subject Matter
#0062-audit
Financial performance/conditions (fs), non-
financial performance/conditions (efficiency and
effectivity), physical characteristics (capacity of
facility), systems & processes (internal control &
it system), behavior (corporate governance,
human resource practices)
#0063-audit

Five Characteristics of
Suitable Criteria
#0063-audit

Relevance, Completeness, Reliability, Neutrality,

Understandability (Rrcun)
#0064-audit

Five Generalizations
Regarding the Reliability of
Evidence
#0064-audit
Evidence is more reliable when:
Obtained from independent sources;
Related controls are effective (if generated internally);
Directly obtained by practioner than by inference
(observation vs inquiry)
In documentary form than oral
Original documents than photocopies or fascimiles
#0065-audit

Five Factors That Limit the

Auditor from Providing
Absolute Assurance
#0065-audit

Sampling Risks, Human Weaknesses

/Non-sampling Risks, Reliance on Management’s
Representation, Inherent Limitations of The
Clients Accounting and Internal Control Process,
Nature of Evidence
#0066-audit

Four Sources of Need for

Independent Financial
Statement Audit
#0066-audit

Conflict of Interest Between Management And

Users of Financial Statements, Expertise,
Remoteness, Financial Consequences
#0067-Far

Cash
#0067-Far

Any item that is acceptable by bank or other financial

institution for deposit at face value. An item is considered
cash if it is unrestricted and immediately available for use in
current operation.
#0068-Far

Three Items that Comprise Cash

#0068-Far

Cash on Hand - Coins and Currencies, Checks, Bank Drafts,

Money Orders,
Cash in Bank - Demand Deposits like Checking and Savings
Accounts
Cash Fund - Petty Cash, Payroll and Dividend Funds
#0069-Far

Po
#0069-Far

Postdated Checks from Customers

#0070-Far

Cash Equivalents
#0070-Far

Short-term highly liquid investments that are acquired three

months before maturity.
#0071-Far

Example Items that Comprise

Cash Equivalents
#0071-Far

Three-Month BSP Treasury Bill, One-Year BSP Treasury Bill

Acquired Three Months Before Date of Maturity, Three-Month
Time Deposit, Preference Shares Acquired Three Months
Before Redemption Date
#0072-Far

Three Classifications of
Investment of Excess Cash
#0072-Far

Cash Equivalent – 3 Months or Less

Short-Term Investments – More than 3 Months Up to 12
Months
Long-Term Investments – More than 12 Months
#0073-Far

Measurement of Cash
#0073-Far

Cash in General – Face Value

Cash in Foreign Currency – Current Exchange Rate
Cash Held by a Financial Institution in Bankruptcy or under
Financial Difficulty – Estimated Realizable Value
#0074-Far

Three Classifications of Cash

Fund Set aside for a Specific
Purpose
#0074-Far

For Current Operations – Cash;

For Settlement of Liability – Current/Non-Current Parallel to
Related Liability;
For Acquisition of Property, Plant or Equipment – Non-
Current
#0075-Far

Bank Overdraft
#0075-Far

Exists when issuance of checks exceed the amount of deposits

and results in a credit balance in a Cash in Bank account.

In general – current liability;

When there are two or more existing accounts in the bank where
there is a bank overdraft or when the amount is immaterial – the
amount of overdraft is offset against the other accounts
#0076-Far

Compensating Balance
#0076-Far
Minimum checking or demand deposit account balance that
must be maintained in connection with a borrowing
arrangement with a bank.

In general – unrestricted/informal – cash

If restricted/formal – “cash held as compensating balance”
current or non-current depending on related liability
#0077-Far

Two Items to Be Reverted to

Cash
#0077-Far

Unreleased/Undelivered Checks and Postdated Checks

Payable to Suppliers/Creditors
#0078-Far

Stale Checks
#0078-Far

Are checks outstanding for a reasonably long period of time

(usually 6 months).

Reverted to Cash crediting:

Miscellaneous Income – in General
Liability – if amount is material
#0079-Far

Cash Shortage and Overage

#0079-Far

Cashier is held responsible:

Shortage (Dr. Receivable from Cashier, Cr. Cash)
Overage (Dr. Cash, Cr. Due to Cashier)

Unknown Cause:
Shortage (Dr. Loss from Cash Shortage, Cr. Cash)
Overage (Dr. Cash, Cr. Miscellaneous Income)
#0080-Far

Imprest System
#0080-Far

System of control of cash which requires that all cash receipts

should be deposited intact and all cash disbursement should
be made by means of check.
#0081-Far

Petty Cash Fund Under Imprest

System
#0081-Far

In imprest system, payment of expenses requires no formal

entries. Petty cashier generally requires a signed petty cash
voucher for such payments and prepares memo entry in the
petty cash journal.
Petty cash disbursement should be replenished only by means
of check and not from undeposited collection
#0082-Far

Imprest system: entry when

disbursing from the petty cash
fund,entry to replenish petty
cash fund, when no
replenishment is made
#0082-Far

1. No Entry
2. Dr. Expenses Cr. Cash In Bank
3. Dr. Expenses Cr. Petty Cash Fund
#0083-Far

Petty Cash Fund under

Fluctuating Fund System
#0083-Far

Under fluctuating fund system, checks drawn to replenish the

fund do not necessarily equal the petty cash disbursement.
Expenses are immediately recorded and PCF fluctuates from
to time.
#0084-Far

Fluctuating fund system: entry

when disbursing from the petty
cash fund, entry to replenish
petty cash fund, when no
replenishment is made
#0084-Far

1. Dr. Expenses Cr. Petty Cash Fund

2. Dr. Petty Cash Fund Cr. Cash In Bank
3. No Entry
#0085-MAS

Fourteen Contemporary
Management Techniques
#0085-MAS

Just-in-time, total quality management, process

reengineering, benchmarking, mass customization, balanced
scorecard, activity-based costing and management, theory of
constraints, life cycle costing, target costing, computer-aided
design manufacturing, automation, e-commerce, value chain
#0086-MAS

Two Strategies That Demonstrate

Focus On The Customers
#0086-MAS

Cost Leadership, Superior Product Through Differentiation

#0087-MAS

Value Chain
#0087-MAS

Refers to the sequence of business functions in which

usefulness is added to the products or services of a company.
#0088-MAS

Seven Key Success Factors

#0088-MAS

Cross-functional Teams, Computer-integrated Manufacturing,

Product Life Cycles And Diversity, Time-based Competition,
Global Competition, Information And Communication
Technology Management, Cost Management Systems
#0089-RFBT

Four Grounds for Liability to

Pay Damages
#0089-RFBT

Fraud, Negligence, Delay, Contravention of the Tenor of the

Obligation [FNDC]
#0090-RFBT

Six Kinds Of Damages

#0090-RFBT

Actual, Moral, Nominal, Temperate, Liquidated, Exemplary

[Mantel]
#0091-RFBT

Two Kinds of Fraud in Obtaining

Consent
#0091-RFBT

Causal Fraud (Dolo Causante) and Incidental Fraud (Dolo

Incidente)
#0092-RFBT

Two Kinds of Obligation

According to Time of Commission
#0092-RFBT

Future And Past Fraud

#0093-RFBT

Three Kinds of Negligence

#0093-RFBT

Contractual (Culpa Contractual), Civil (Culpa Aquiliana),

Criminal (Culpa Criminal)
#0094-RFBT

Three Kinds of Delay

#0094-RFBT

Mora Solvendi, Mora Accipiendi, Compensatio Morae

#0095-RFBT

Two Kinds of Mora Solvendi

#0095-RFBT

Ex Re and Ex Persona
#0096-RFBT

Four Requisites of Delay

#0096-RFBT

1) Obligation is demandable and liquidated,

2) Debtor does not perform the obligation,
3) Creditor demands the performance either judicially or
extra-judicially,
4) Debtor fails to comply with such demand
#0097-RFBT

Five Cases When Delay Will

Exist Even Without Demand
#0097-RFBT

When the law so provides, when the obligation expressly so

declares, when time is of the essence, when demand would be
useless, in reciprocal obligations where one of the parties
fulfills his obligation
#0098-RFBT

Effects of Default on the Part

of the Debtor
#0098-RFBT

Shall be liable for damages & shall be liable for any fortuitous
event until delivery (determinate things)
#0099-RFBT

Effects of Delay on the Part of

the Creditor
#0099-RFBT

Bear the risk of loss and the expenses for the preservation of
the thing & the debtor may resort to the consignation of the
thing due
#0100-tax

Three Forms of Income Taxpayers

in the Philippines
#0100-tax

Individuals, Corporations, Partnerships Other Than General

Professional Partnerships
#0101-tax

Five Kinds of Taxable

Individuals
#0101-tax

Resident citizen, non-resident citizen, resident alien, non-

resident alien engaged in trade/business in the Philippines,
non-resident alien not engaged in trade/business in the
Philippines but with income from within the Philippines
#0102-tax

Three Kinds of Taxable

Corporations
#0102-tax

Domestic Corp., Resident Corp., Non-resident Corp. But With

Income From Within The Philippines
#0103-tax

Individual Taxpayers Taxed on

Income from within the
Philippines
#0103-tax

RC, NRC, RA, NRA EIBWTP

#0104-tax

Individual Taxpayers Taxed on

Income from Outside the
Philippines
#0104-tax

Resident Citizen
#0105-tax

Taxable Individual Taxed on

Gross Income from within the
Philippines
#0105-tax

Non-resident alien not engaged in business in the Philippines

but with an isolated income from within the Philippines
#0106-tax

Taxable Corporations Taxed on

Net Income From Within The
Philippines
#0106-tax

DOMESTIC CORPORATION, RESIDENT CORPORATION

#0107-tax

TAXABLE CORPORATIONS TAXED ON

NET INCOME FROM OUTSIDE THE
PHILIPPINES
#0107-tax

DOMESTIC CORPORATION
#0108-tax

TAXABLE CORPORATIONS TAXED ON

GROSS INCOME FROM WITHIN THE
PHILIPPINES
#0108-tax

NON-RESIDENT CORPORATION
#0109-tax

HOW ARE TAXABLE PARNERSHIPS

TAXED?
#0109-tax

SAME RULES AS CORPORATIONS

#0110-afar

Six Methods of Dividing Net

Income or Loss among Partners
#0110-afar

Equally, Arbitrary Ratio, Ratio of Capital Balances on a

Particular Date or Average Capital Balances during the Year,
Interest, Salaries, Bonus
#0111-afar

Rules when Net Income is to Be

Divided Using Capital Account
Balances
#0111-afar

If no method is stated, use the following balances in order of

priority depending on data given:
peso-month/peso-day average
Simple average
Original capital balances
#0112-afar

Special Cases in Partnership

Operations
#0112-afar

Change in the Profit or Loss Ratio, Correction of Partnership

Net Income of Prior Period
#0113-audit

TEN GENERALLY ACCEPTED AUDITING

STANDARDS
#0113-audit

TECHNICAL TRAINING AND PROFICIENCY,

INDEPENDENCE, PROFESSIONAL CARE, PLANNING,
INTERNAL CONTROL CONSIDERATION, EVIDENTIAL
MATTER, GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, INCONSISTENCY, DISCLOSURE, OPINION
#0114-audit

SIX ELEMENTS OF A SYSTEM OF

QUALITY CONTROL
#0114-audit

LEADERSHIP RESPONSIBILITIES FOR QUALITY ON AUDITS,

RELEVANT ETHICAL REQUIREMENTS, ACCEPTANCE AND
CONTINUANCE OF CLIENT RELATIONSHIPS, HUMAN
RESOURCES AND ASSIGNMENT, ENGAGEMENT
PERFORMANCE, MONITORING
#0115-audit

RESPONSIBILITIES OF THE
ENGAGEMENT PARTNER DURING THE
ENGAGEMENT PERFORMANCE
#0115-audit

DIRECTION, SUPERVISION, REVIEW, CONSULTATION

#0116-FAR

Three Kinds of Bank Deposits

#0116-FAR

Demand Deposit (Non-interest Bearing), Saving Deposit

(Interest Bearing), Time Deposit (Interest Bearing)
#0117-FAR

Bank Reconciliation
#0117-FAR

A statement which brings into agreement the cash balance per

book and cash balance per bank.
#0118-FAR

Bank Statement
#0118-FAR

An exact copy of the depositor’s ledger account in the records

of the bank.
#0119-FAR

Six Book and Bank Reconciling Items

#0119-FAR

Book – Credit Memos, Debit Memos, Book Errors

Bank – Deposits in Transit, Outstanding Checks, Bank Errors
#0120-FAR

Three Typical Examples of Credit Memos

#0120-FAR

Notes Receivable collected by bank in favor of the depositor,

proceeds of bank loan, matured time deposits transferred to
the current account of the depositor
#0121-FAR

Four Typical Examples of Debit Memos

#0121-FAR

No Sufficient Fund Checks (NSF)/DAIF Checks, Technically

Defective Checks, Bank Service Charges, Reduction of Loan
#0122-FAR

Two Typical Examples of Deposits in

Transit
#0122-FAR

Collections forwarded to the bank for deposit but too late to

appear in the bank statement, Undeposited collections
#0123-FAR

Two Typical Examples of Outstanding

Checks
#0123-FAR

Checks drawn and delivered to payees but not yet presented

to bank for payment, Certified checks (Deduction from
outstanding checks if included)
#0124-FAR

Three Forms of Bank Reconciliation

#0124-FAR

Adjusted Balance Method (Preferred), Book to Bank Method,

Bank to Book Method
#0125-FAR

Proforma for Adjusted Balance Method

#0125-FAR
Book Balance + Credit Memos – Debit Memos = Adjusted
Book Balance

Bank Balance + Deposits in Transit – Outstanding Checks =

Adjusted Bank Balance

*Errors are also taken into account.

#0126-FAR

Proforma for Book to Bank & Bank to

Book
#0126-FAR

Book Balance + Credit Memos – Debit Memos + Outstanding

Checks – Deposits in Transit = Bank Balance

Bank Balance + Deposits in Transit – Outstanding Checks +

Debit Memos – Credit Memos = Book Balance
#0127-MAS

Five Financial Statements

#0127-MAS

STATEMENTS OF FINANCIAL POSITION, COMPREHENSIVE

INCOME, CHANGES IN EQUITY, CASH FLOWS AND NOTES
TO FINANCIAL STATEMENTS
#0128-MAS

Current Vs. Noncurrent

#0128-MAS

CURRENT ASSETS/LIABILITIES ARE THOSE EXPECTED TO

BE CONVERTED TO CASH OR TO BE USED or consumed or
satisfied within one year or one operating cycle whichever is
longer.
Noncurrent assets/liabilities are those that do not fall under
current assets/liabilities/
#0129-MAS

Operating Cycle
#0129-MAS

Operating cycle is the time required to purchase or

manufacture inventory, sell the product, and collect the cash.
#0130-MAS

Working Capital
#0130-MAS

Working capital is used to designate the amount by which

current assets exceed current liabilities.
#0131-MAS

Nine Basic Items In The Income

Statement
#0131-MAS

Net sales, cost of goods sold, gross profit, operating expenses,

operating profit/earnings before interest and taxes, other
income(expense), earnings before income taxes, net
income/earnings, earnings per ordinary share
#0132-MAS

Five Items Presented In The Statement

Of Changes In Equity
#0132-MAS

Net profit/loss; items of income/expense which are directly

recognized in equity; cumulative effect of changes in
accounting policy and the correction of fundamental errors;
capital contributions and distributions with the owners;
reconciliation between the carrying amounts of each class of
equity capital, share premium, and each reserve at the
beginning and the end of the period
#0133-MAS

Three Classifications Of Cash Flows

#0133-MAS

Cash flows from operating, investing, and financing activities

#0134-MAS

Two Methods Of Reporting Cash Flows

From Operating Activities
#0134-MAS

Direct and indirect methods

#0135-MAS

Challenges And Obstacles Confronting

The Users Of Financial Statements
#0135-MAS

Volume of information, complexity of accounting rules,

variations in the quality of financial reporting, impact of
inflation on financial statement data, omission or difficult to
find financial information
#0136-RFBT

Two Kinds Of Fortuitous Events

#0136-RFBT

ACTS OF GOD (CASO FORTUITO) & ACTS OF MAN (FORCE

MAJEURE)
#0137-RFBT

Four Cases Where The Obligor Becomes

Liable For Fortuitous Events
#0137-RFBT

WHEN THE LAW EXPRESSLY SO PROVIDES, WHEN IT HAS

BEEN AGREED UPON BY THE PARTIES, WHEN THE
NATURE OF THE OBLIGATION REQUIRES THE
ASSUMPTION OF RISK, WHEN THE DEBTOR IS IN LEGAL
DELAY
#0138-RFBT

Presumptions On Receipt Of Principal Or

Later Installments
#0138-RFBT

WHEN THE CREDITOR MAKES NO RESERVATION AS TO

THE INTEREST OR PRIOR INSTALLMENTS, IT IS
PRESUMED THAT THEY HAVE BEEN PAID
#0139-RFBT

Three Remedies Of Creditor To Enforce

Payment Of His Claims Against Debtor
#0139-RFBT

ACCION DIRECTA, ACCION SUBROGATORIA, ACCION

PAULIANA
#0140-RFBT

Three Instances Where Rights Are Not

Transmissible
#0140-RFBT

IF THE LAW PROHIBITS TRANSMISSION, IF THE PARTIES

AGREED AGAINST TRANSMISSION, IF THE RIGHT BY
NATURE IS NOT TRANSMISSIBLE
#0141-RFBT

Eight Primary Classifications Of

Obligations Under The Civil Code
#0141-RFBT

PURE, CONDITIONAL, WITH A PERIOD, ALTERNATIVE,

FACULTATIVE, JOINT, SOLIDARY, DIVISIBLE
#0142-RFBT

Two Types Of Condition According To

Effect On Demandability Of Obligation
#0142-RFBT

SUSPENSIVE AND RESOLUTORY

#0143-RFBT

Three Types Of Condition According To

Whose Will The Condition Depends
Upon
#0143-RFBT

POTESTATIVE, CASUAL, MIXED

#0144-RFBT

Possible Vs. Impossible Condition

#0144-RFBT

POSSIBLE – ONE THAT IS CAPABLE OF FULFILLMENT IN

ITS NATURE AND BY LAW,
IMPOSSIBLE – ONE THAT IS NOT
#0145-RFBT

Positive Vs. Negative Condition

#0145-RFBT

POSITIVE – SOMETHING HAS TO HAPPEN NEGATIVE –

SOMETHING SHOULD NOT HAPPEN (BOTH WITHIN A
PERIOD OF TIME)
#0146-RFBT

Divisible Vs. Indivisible Obligation

#0146-RFBT

DIVISIBLE – CAPABLE OF PARTIAL PERFORMANCE

INDIVISIBLE – INCAPABLE OF PARTIAL PERFORMANCE
#0147-RFBT

Effect Of Fulfillment Of Suspensive

Condition And The Two Exceptions To It
#0147-RFBT

IT RETROACTS TO THE DAY OF THE CONSTITUTION OF

THE OBLIGATION EXCEPT IN RECIPROCAL AND
UNILATERAL OBLIGATIONS
#0148-RFBT

Rights Of The Parties (Debtor And

Creditor) Before The Fulfillment Of The
Condition
#0148-RFBT

CREDITOR – BRING APPROPRIATE ACTIONS FOR THE

PRESERVATION OF HIS RIGHT DEBTOR – RECOVER WHAT
HE HAS PAID BY MISTAKE
#0149-RFBT

Effect When The Debtor Voluntarily

Prevents The Fulfillment Of The
Condition
#0149-RFBT

THE OBLIGATION BECOMES IMMEDIATELY DEMANDABLE

#0150-TAX

Formula For Taxable Income

#0150-TAX

GROSS INCOME XXX

LESS: DEDUCTIONS XXX
=
TAXABLE INCOME XXX
#0151-TAX

Taxable Income Brackets Under The

Graduated Income Tax Table
#0151-TAX

NOT OVER 250,000

OVER 250,000 BUT NOT OVER 400,000
OVER 400,000 BUT NOT OVER 800,000
OVER 800,000 BUT NOT OVER 2,000,000
OVER 2,000,000 BUT NOT OVER 8,000,000
OVER 8,000,000
#0152-TAX

Tax Amount And Rates Under The

Graduated Income Tax Table
#0152-TAX

0%
20%
30,000 + 25% OF EXCESS OVER 250,000
130,000 + 30% OF EXCESS OVER 500,000
490,000 + 32% OF EXCESS OVER 2,000,000
2,410,000 + 35% OF EXCESS OVER 5,000,000
#0153-TAX

Three Rules On Centavos In The

Computation Of Individual Income Tax
#0153-TAX

1. CENTAVOS ARE ALLOWED IN THE GROSS INCOME

AND DEDUCTIONS
2. IN THE TAXABLE INCOME, 50 CENTS OR MORE ARE
CONSIDERED P1.00
3. IN THE TAXABLE INCOME, CENTAVOS LESS THAN 50
CENTS ARE DISREGARDED
#0154-TAX

Rule # 1: Those Whose Gross Annual

Sales Or Receipts And Other Non-
operating Income Do Not Exceed The
Threshold Of P3,000,000
#0154-TAX

1. WITH INCOME LEVEL NOT OVER P250,000 – EXEMPT

FROM INCOME TAX
2. WITH INCOME LEVEL P250,000 AND ABOVE – [OPTION
1] 8% ON GROSS SALES OR RECEIPTS IN EXCESS OF
250,000
[OPTION 2] GRADUATED TAX ON THE TAXABLE INCOME
#0155-TAX

RULE # 2: THOSE WHOSE GROSS SALES

OR RECEIPTS AND OTHER NON-
OPERATING INCOME EXCEED THE
THRESHOLD OF P3,000,000
#0155-TAX

GRADUATED TAX ON THE TAXABLE INCOME

#0156-TAX

Income Tax Rule On Mixed Income

Earners
#0156-TAX

ON COMPENSATION INCOME: GRADUATED RATES + ON

INCOME FROM BUSINESS OR PROFESSION: RULES # 1 AND
2
#0157-TAX

MR. A, A RESIDENT CITIZEN, HAD A

GROSS COMPENSATION INCOME OF
P240,00 IN 2018. HOW MUCH WAS
THE INCOME TAX?
#0157-TAX

P0.00
#0158-TAX

MR. B, A RESIDENT CITIZEN, HAD A

GROSS COMPENSATION INCOME OF
P300,000 IN 2018.
#0158-TAX

P10,000
#0159-TAX

MR. C, A RESIDENT CITIZEN, HAD A

GROSS COMPENSATION INCOME OF
P2,100,000 IN 2018. HOW MUCH WAS
THE INCOME TAX?
#0159-TAX

P522,000
#0160-TAX
MR. D IS IN BUSINESS WITH THE
FOLLOWING DATA IN A YEAR: GROSS
SALES (P2,000,000), BUSINESS
EXPENSES (P1,800,000). HOW MUCH
WAS THE INCOME TAX?
#0160-TAX

P0.00
#0161-TAX
MR. E IS IN BUSINESS WITH THE
FOLLOWING DATA IN A YEAR: GROSS
SALES (P2,000,000), BUSINESS
EXPENSES (P900,000). HOW MUCH
WAS THE INCOME TAX?
#0161-TAX

OPTION 1 (P140,000)
OPTION 2 (P220,000)
#0162-TAX
MR. F IS IN BUSINESS WITH THE
FOLLOWING DATA IN A YEAR: GROSS
SALES (P4,000,000), BUSINESS
EXPENSES (P2,900,000). HOW MUCH
WAS THE INCOME TAX?
#0162-TAX

P220,000
#0163-TAX
MISS F HAD THE FOLLOWING DATA IN 2018:
GROSS RECEIPTS FROM PROFESSION
(P4,500,000); EXPENSES ON THE PRACTICE OF
PROFESSION (P2,500,000); GROSS
COMPENSATION INCOME AS A CEO IN A
PRIVATE CORPORATION (P6,000,000). HOW
MUCH WAS THE INCOME TAX?
#0163-TAX

P2,410,000
#0164-TAX

Rules On The Computation Of Income

Tax Of Married Taxpayers
#0164-TAX

EACH SPOUSE SHALL COMPUTE HIS OR HER INCOME TAX

SEPERATELY; AND ANY INCOME THAT CANNOT BE
DEFINITELY IDENTIFIED AS INCOME EXCLUSIVELY
EARNED BY EITHER OF THE SPOUSES WILL BE DIVIDED
EQUALLY BETWEEN THEM IN THE DETERMINATION OF
TAXABLE INCOME.
#0165-TAX
SPOUSES MR. A (OPTION 2) AND MRS. A (OPTION 1) HAD
THE FOLLOWING DATA IN A YEAR:
GROSS SALES OF MR. A FROM BUSINESS (P4,500,000)
GROSS RECEIPTS OF MRS. A FROM PRACTICE OF
PROFESSION (P900,000)
GROSS RENT INCOME (P500,000)
COST AND EXPENSES, BUSINESS OF MR. A (P2,500,000)
COST AND EXPENSES, PROFESSION OF MRS. A (P20000)
EXPENSES ON RENTAL PROPERTY (P200,000)
#0165-TAX

MRS. A – OPTION 1 (630,000); MRS. A – OPTION 2

(683,000)
#0166-AFAR

TWO WAYS TO ADMIT A NEW PARTNER IN A

PARTNERSHIP
#0166-AFAR

1. PURCHASE OF ALL OR PART OF THE INTEREST OF

ONE OR MORE OF THE EXISTING PARTNERS
2. INVESTMENT OF ASSETS BY THE INCOMING PARTNER
#0167-AFAR

TWO METHODS WHEN CONSIDERATION PAID BY

INCOMING PARTNER EXCEEDS THE AMOUNT OF
INTEREST TRANSFERRED TO HIM
#0167-AFAR

1. BOOK VALUE OF INTEREST PURCHASED IS TRANSFERRED TO NEW

PARTNER, AND CASH IS DISTRIBUTED TO OLD PARTNERS ON THE BASIS
OF INTEREST TAKEN FROM THEM AND THE EXCESS THROUGH PROFIT
OR LOSS RATIO
2. THE IDENTIFIABLE ASSETS OR GOODWILL (IN ORDER OF PRIORITY) ARE
REVALUED TO THEIR FAIR VALUE SO THAT EXCESS PAYMENT IS
ACCOUNTED FOR. THEN CAPITAL IS TRANSFERRED TO NEW PARTNER
#0168-AFAR

THREE CASES REGARDING THE INVESTMENT COST AND

AGREED CAPITAL OF THE NEW PARTNER
#0168-AFAR

1. INVESTMENT COST = AGREED CAPITAL

2. INVESTMENT COST < AGREED CAPITAL
3. INVESTMENT COST > AGREED CAPITAL
#0169-AFAR

METHODS TO ACCOUNT FOR ADMISSION IF INVESTMENT

COST = AGREED CAPITAL
#0169-AFAR

AS IS, NO REVALUATION, GOODWILL OR BONUS

#0170-AFAR

METHODS TO ACCOUNT FOR ADMISSION IF INVESTMENT

COST > AGREED CAPITAL
#0170-AFAR

1. ALLOCATE BONUS TO OLD PARTNERS

2. REVALUE ASSETS UP TO FAIR VALUE AND ALLOCATE
TO OLD PARTNERS
3. RECORD UNRECOGNIZED GOODWILL AND ALLOCATE
TO OLD PARTNERS
#0171-AFAR

METHODS TO ACCOUNT FOR ADMISSION IF INVESTMENT

COST < AGREED CAPITAL
#0171-AFAR

1. ASSIGN BONUS TO NEW PARTNER

2. REVALUE ASSETS DOWN TO FAIR VALUE AND
ALLOCATE TO OLD PARTNERS
3. RECOGNIZE GOODWILL BROUGHT IN BY NEW
PARTNER
#0172-AFAR

THREE CASES REGARDING THE CAPITAL BALANCE OF

THE RETIRING PARTNER AMOUNT PAID TO HIM
#0172-AFAR

1. SETTLEMENT = INTEREST
2. SETTLEMENT > INTEREST
3. SETTLEMENT < INTEREST
#0173-AFAR

METHODS TO ACCOUNT FOR WITHDRAWAL IF

SETTLEMENT = WITHDRAWING PARTNER’S INTEREST
#0173-AFAR

1. AS IS. NO BONUS, REVALUATION, OR GOODWILL

#0174-AFAR

METHODS TO ACCOUNT FOR WITHDRAWAL IF

SETTLEMENT > WITHDRAWING PARTNER’S INTEREST
#0174-AFAR
1. PARTIAL GOODWILL METHOD – EXCESS PAYMENT
DEBITED AS GOODWILL
2. TOTAL GOODWILL METHOD – EXCESS PAYMENT
DIVIDED BY WITHDRAWING PARTNER’S P/L RATIO
DEBITED AS GOODWILL AND ALLOCATED IN THE
CREDIT SIDE TO OLD PARTNERS
3. EXCESS PAYMENT IS TREATED AS BONUS FROM
REMAINING PARTNERS
#0175-AFAR

METHODS TO ACCOUNT FOR WITHDRAWAL IF

SETTLEMENT < WITHDRAWING PARTNER’S INTEREST
#0175-AFAR

1. DIFFERENCE IN PAYMENT AND INTEREST IS

ALLOCATED TO SPECIFIC ASSETS WHICH ARE
OVERSTATED
2. DIFFERENCE IS TREATED AS BONUS TO REMAINING
PARTNERS
#0176-AFAR

TWO OTHER CAUSES OF PARTNERSHIP DISSOLUTION

#0176-AFAR

1. DEATH OF A PARTNER
2. INCORPORATION OF THE PARTNERSHIP
#0177-AFAR

FORMULA FOR NEW PROFIT SHARING RATIO

1. ADMISSION
2. RETIREMENT
#0177-AFAR

1. 1-NEW PARTNER’S RATIO=RATIO LEFT TO OLD

PARTNERS (TO BE ALLOCATED USING OLD PARTNERS’
EXISTING RATIO)
2. 1 WHOLE (TO BE ALLOCATED USING REMAINING
PARTNERS’ EXISTING RATIO)
#0178-AUDIT

ACCOUNT-BASED AUDITING VS. RISK-BASED AUDIT

#0178-AUDIT

ACCOUNT-BASED – ASSESSES CONTROL RISKS ON

SPECIFIC ACCOUNTS

RISK-BASED – VIEWS ALL ACTIVITIES IN TERMS OF RISKS

AND HOW THE MANAGEMENT ACTS TO MITIGATE THE
RISKS
#0179-AUDIT

FOUR CRITICAL COMPONENTS OF RISKS

#0179-AUDIT

AUDIT RISK, ENGAGEMENT RISK, FINANCIAL REPORTING

RISK, BUSINESS RISK
#0180-AUDIT

THREE PHASES OF THE RISK-BASED AUDIT PROCESS

#0180-AUDIT

RISK ASSESSMENT, RISK RESPONSE, REPORTING

#0181-AUDIT

THREE SUBPHASES OF PHASE 1

#0181-AUDIT

PRELIMINARY ENGAGEMENT ACTIVITIES, PLANNING,

RISK ASSESSMENT PROCEDURES
#0182-AUDIT

TWO SUBPHASES OF PHASE 2

#0182-AUDIT

DESIGNING RESPONSE TO ASSESSED RISK AND FURTHER

AUDIT PROCEDURES, IMPLEMENTING RESPONSES TO
ASSESSED RISK OF MATERIAL MISTATEMENT
#0183-AUDIT

TWO SUBPHASES OF PHASE 3

#0183-AUDIT

EVALUATING AUDIT EVIDENCE OBTAINED, FORMING AN

OPINION AND PREPARING AUDITOR’S REPORT
#0184-AUDIT

PHASE 1 – SUBPHASE 1: THREE PURPOSES OF

PRELIMINARY ENGAGEMENT ACTIVITIES
#0184-AUDIT

TO MAINTAIN NECESSARY INDEPENDENCE (ETHICAL

REQUIREMENT) AND ABILITY (COMPETENCE) TO
PERFORM THE ENGAGEMENT, TO MAKE SURE THERE
ARE NO ISSUES WITH MANAGEMENT INTEGRITY, TO
MAKE SURE THERE IS NO MISUNDERSTANDING WITH
THE CLIENT AS TO THE TERMS OF THE ENGAGEMENT
#0185-AUDIT

TWO PRECONDITIONS TO BE ESTABLISHED FOR AN

AUDIT
#0185-AUDIT

1. WHETHER THE FINANCIAL REPORTING FRAMEWORK

TO BE APPLIED IS ACCEPTABLE
2. MANAGEMENT’S ACKNOWLEDGEMENT AND
UNDERSTANDING OF ITS RESPONSIBILITIES
#0186-AUDIT

THREE RESPONSIBILITIES OF THE MANAGEMENT

INCLUDED IN THE PRECONDITIONS FOR AUDIT
#0186-AUDIT

1. RESPONSIBILITY TO PREPARE FINANCIAL STATEMENTS

IN ACCORDANCE WITH APPLICABLE FINANCIAL
REPORTING STANDARDS
2. RESPONSIBILITY TO EMPLOY NECESSARY INTERNAL
CONTROL TO ENABLE THE PREPARATION OF FS FREE
FROM MATERIAL MISSTATEMENTS
3. TO PROVIDE THE AUDITOR WITH CERTAIN NEEDS
#0187-AUDIT

THREE CERTAIN NEEDS OF THE AUDITOR, THE

MANAGEMENT IS RESPONSIBLE TO PROVIDE
#0187-AUDIT

1. ACCESS TO ALL INFORMATION RELEVANT TO THE

PREPARATION OF FINANCIAL STATEMENTS,
2. ADDITIONAL INFORMATION UPON REQUEST OF THE
AUDITOR,
3. UNRESTRICTED ACCESS TO PERSONS WITHIN THE
ENTITY FROM THE AUDITOR MAY OBTAIN AUDIT
EVIDENCE
#0188-AUDIT

FIVE ITEMS INCLUDED IN AN ENGAGEMENT LETTER

#0188-AUDIT

1. OBJECTIVE AND SCOPE OF THE AUDIT OF FS

2. RESPONSIBILITIES OF THE AUDITOR
3. RESPONSIBILITIES OF THE MANAGEMENT
4. IDENTIFICATION OF APPLICABLE FINANCIAL REPORTING
FRAMEWORK
5. REFERENCE TO THE EXPECTED FORM AND CONTENT OF
ANY REPORTS TO BE ISSUED BY THE AUDITOR
#0189-AUDIT

TWO THINGS TO BE CONSIDERED BEFORE ACCEPTING

RECURRING AUDITS
#0189-AUDIT

1. ASSESS WHETHER TERMS OF AUDIT ENGAGEMENT

NEED TO BE REVISED
2. OR WHETHER THERE IS A NEED TO REMIND THE ENTITY
OF THE EXISTING TERMS OF THE AUDIT ENGAGEMENT
#0190-AUDIT

ACTIONS TO BE DONE IF THE AUDITOR AGREES OR

DISAGREES WITH THE CHANGES IN THE TERMS OF THE
AUDIT ENGAGEMENT
#0190-AUDIT

AGREE – RECORD THE CHANGES IN THE ENGAGEMENT

LETTER
DISAGREE – WITHDRAW IF POSSIBLE UNDER APPLICABLE
LAW OR REGULATION; OR REPORT TO THOSE CHARGED
WITH GOVERNANCE, OWNERS OR REGULATORS
#0191-AUDIT

PHASE 1 – SUBPHASE 2: FIVE COMPONENTS OF THE

OVERALL AUDIT STRATEGY
#0191-AUDIT

1. INDENTIFYING CHARACTERISTICS AND SCOPE OF ENGAGEMENT

2. PLANNING THE TIMING OF THE AUDIT AND NATURE OF THE
COMMUNICATION REQUIRED
3. CONSIDERATION OF IMPORTANT FACTORS THAT WILL DETERMINE THE
FOCUS AND DIRECTION OF THE ENGAGEMENT TEAMS EFFORTS
4. CONSIDERING RESULTS OF PRELIMINARY ENGAGEMENT AND
KNOWLEDGE FROM OTHER ENGAGEMENTS PERFORMED
5. ASCERTAINING THE NATURE, TIMING AND EXTENT OF RESOURCES
NECESSARY TO PERFORM THE ENGAGEMENT
#0192-AUDIT

THREE ASPECTS OF THE AUDIT PLAN WHERE

MATERIALITY SHOULD BE CONSIDERED
#0192-AUDIT

1. DETERMINING THE NATURE, TIMING AND EXTENT OF AUDIT

PROCEDURES,
2. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL
MISSTATEMENTS,
3. DETERMINING THE NATUTE, TIMING AND EXTENT OF
FURTHER AUDIT
#0193-AUDIT

TWO LEVELS OF MATERIALITY

#0193-AUDIT

OVERALL MATERIALITY, SPECIFIC MATERIALITY

#0194-AUDIT

PERFORMANCE MATERIALITY
#0194-AUDIT

A MATERIALITY LEVEL SET AT A LOWER AMOUNT THAN THE

OVERALL OR SPECIFIC MATERIALITY TO SECURE THAT ALL
UNDETECTED AND UNCORRECTED MISSTATEMENTS WILL NOT
LIKELY ACCUMULATE TO REACH AN AMOUNT THAT WOULD
CAUSE THE FINANCIAL STATEMENTS TO BE MATERIALLY
MISSTATED