CPA EXAMINATION REVIEW LESSON - SIMPLIFIED

Obligation is a juridical necessity to give, to do or not to do (Art. 1156) Essential Requisites of obligation A juridical or legal tie , which binds parties to the obligation and which may arise either from bilateral or unilateral acts of persons. (also called vinculum, vinculum juris, efficient tie, efficient cause) An active subject known as the creditor or obligee, who can demand the fulfillment of the obligation; A passive subject known as the debtor or obligor from whom the obligation is juridically demandable; and The fact, prestation or service which constitutes the object or subject matter of the obligation; The act (not the thing or subject matter) to give or to do or not to do. SOURCES OF OBLIGATION Law - (example, the obligation to pay taxes); Contracts - When there is an agreement between contracting parties. Quasi-contracts - When they arise from lawful, voluntary and unilateral acts and which are enforceable to the end that no shall be unjustly enri...

The Accounting Process (or accounting cycle) consists of 2 interrelated parts, namely: Recording Phase - concerned w/ collecting information about economic transactions and events and distilling that information into a form useful to accounting process. Reporting Phase - the recorded information is organized and summarized using various formats for a variety of decision-making purposes. STEPS IN THE ACCOUNTING PROCESS RECORDING PHASE (during the accounting period) Step 1 - Step 3 Step 1 - Business documents analyzed Analysis of documentation provides basis for making an initial record of each transaction or other economic events. Economic events that have consequences to the business entity: Transactions - are transfers or exchanges of something w/ value between the firm and 1 or more independent outside parties. Other Economic Events: Internal Events - events that occur within and have economic consequences for the firm. Example: use of the inventor...