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Homework answers / question archive / Bulacan State University, Malolos ACCTG MISC 1)“Accounting is a service activity”, definition was provided by: Accounting Standards Council Committee on Accounting Terminology of AICPA American Accounting Association International Accounting Standards Board   “The accounting function is to provide quantitative information, primarily financial in nature, about, economic entities, that is intended to be useful in making economic decision”, definition was provided by: Accounting Standards Council Committee on Accounting Terminology of AICPA American Accounting Association International Accounting Standards Board   “Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof”, definition was provided by: Accounting Standards Council Committee on Accounting Terminology of AICPA American Accounting Association International Accounting Standards Board   “Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information”, definition was provided by: Accounting Standards Council Committee on Accounting Terminology of AICPA American Accounting Association International Accounting Standards Board   The accounting definition of American Accounting Association states that the very purpose of accounting is to provide quantitative information to be useful in making an economic decision

Bulacan State University, Malolos ACCTG MISC 1)“Accounting is a service activity”, definition was provided by: Accounting Standards Council Committee on Accounting Terminology of AICPA American Accounting Association International Accounting Standards Board   “The accounting function is to provide quantitative information, primarily financial in nature, about, economic entities, that is intended to be useful in making economic decision”, definition was provided by: Accounting Standards Council Committee on Accounting Terminology of AICPA American Accounting Association International Accounting Standards Board   “Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof”, definition was provided by: Accounting Standards Council Committee on Accounting Terminology of AICPA American Accounting Association International Accounting Standards Board   “Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information”, definition was provided by: Accounting Standards Council Committee on Accounting Terminology of AICPA American Accounting Association International Accounting Standards Board   The accounting definition of American Accounting Association states that the very purpose of accounting is to provide quantitative information to be useful in making an economic decision

Accounting

Bulacan State University, Malolos

ACCTG MISC

1)“Accounting is a service activity”, definition was provided by:

    1. Accounting Standards Council
    2. Committee on Accounting Terminology of AICPA
    3. American Accounting Association
    4. International Accounting Standards Board

 

  1. “The accounting function is to provide quantitative information, primarily financial in nature, about, economic entities, that is intended to be useful in making economic decision”, definition was provided by:
    1. Accounting Standards Council
    2. Committee on Accounting Terminology of AICPA
    3. American Accounting Association
    4. International Accounting Standards Board

 

  1. “Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof”, definition was provided by:
    1. Accounting Standards Council
    2. Committee on Accounting Terminology of AICPA
    3. American Accounting Association
    4. International Accounting Standards Board

 

  1. “Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information”, definition was provided by:
    1. Accounting Standards Council
    2. Committee on Accounting Terminology of AICPA
    3. American Accounting Association
    4. International Accounting Standards Board

 

  1. The accounting definition of American Accounting Association states that the very purpose of accounting is to provide quantitative information to be useful in making an economic decision. Which of the following components of it are false?
  1. Identifying as the analytical component
  2. Measuring as the technical component
  3. Communicating as the formal component

 

    1. I only                                                                     c.   I, II and III
    2. I and II only                                                         d.    none of the choices

 

  1. The accounting process of recognition or nonrecognition of business activities as accountable events is
    1. Communicating                                                c. Identifying
    2. Measuring                                                          d. Recording

 

  1. S1. All business activities are accountable.

S2. An event is unaccountable and unquantifiable when it does not affect assets, liabilities and equity.

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. S1. Economic activity comprises of economic resources and economic obligations, and are emphasized and recognized in accounting.

S2. Sociological and psychological matters are accountable such as entering into a contract and death of all the board of directors.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. External transactions or exchange transactions are those economic events involving one entity and another entity. Which of the following are external transactions?
  1. Purchase of goods from a supplier
  2. Borrowing money from a bank
  3. Sale of goods to a customer
  4. Payment of salaries to employees
  5. Payment of taxes to the government
  6. Production and casualty loss
    1. I only                                                                     c.   I, II, III, IV and V only
    2. I, II, III                                                                   d.    I to VI

 

  1. The accounting process of assigning monetary amounts to the accountable economic transactions and events is
    1. Communicating                                                c.     Identifying
    2. Measuring                                                          d.    Recording

 

  1. S1. Financial statements without monetary amounts would be largely unintelligible or incomprehensible.

S2. US Dollar is the generally accepted unit of measuring accountable economic transactions

    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. S1. Current value is the most common measure of financial transactions

S2. Historical cost includes fair value, value in use, fulfillment value and current cost.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.    False, False

 

  1. The accounting process of preparing and distributing accounting reports to potential users of accounting information is
    1. Communicating                                                c.     Identifying
    2. Measuring                                                          d.   Recording

 

  1. S1. Communicating includes recording, classifying and summarizing economic transactions and events S2. Identifying and measuring are pointless if the information contained in the accounting records cannot be communicated in some form to potential users.
    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

 

  1. The process of systematically maintaining a record of all economic business transactions after they have need identified and measured is
    1. Analyzing                                                             c. Classifying
    2. Recording                                                            d.   Summarizing

 

  1. The preparation of financial statements which include the statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows is
    1. Analyzing                                                             c. Classifying
    2. Recording                                                            d. Summarizing

 

  1. The sorting or grouping of similar and interrelated economic transactions and events into their respective classes is
    1. Analyzing                                                             c. Classifying
    2. Recording                                                            d.    Summarizing

 

  1. S1. The documents that report financial information about an entity to decision makers is called financial statements

S2. Accounting is an information system that measures business activities, processes information into reports and communicates the reports to decision makers.

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. S1. The overall objective of accounting is to provide quantitative financial information about a business that is useful to statement users particularly owners and creditor in making economic decisions.

S2. An accountant’s primary task is to supply financial information so that the statement users could make informed judgment and better decision

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. Republic Act 9298 is known as the
    1. Revised Accountancy Law
    2. Code of Ethics for Professional Accountants
    3. Philippine Accountancy Law of 2004
    4. Philippine Accountancy Act of 2004

 

  1. Which of the following is not an objective of Republic Act 9298?
    1. The standardization and regulation of accounting education
    2. The examination for registration of certified public accountants
    3. The supervision, control, and regulation of the practice of accountancy in the Philippines
    4. The development and improvement of accounting standards that will be generally accepted in the Philippines

 

  1. The practice of Accountancy shall include but not limited to the following:
  1. Practice of Public Accountancy
  2. Practice in Commerce and Industry
  3. Practice in Education/Academe
  4. Practice in the Government
    1. I only                                                                     c.   I, II and III only
    2. I and II only                                                         d.    I, II, III and IV

 

  1. A CPA is in public accounting practice when he/she
    1. Represents his/her employer before government agencies on tax and other matters related to accounting.
    2. Represents his/her clients before government agencies on tax and other matters related to accounting.
    3. Teaches accounting, auditing, management advisory services, accounting aspect of finance, business law, taxation and other technically related subjects.
    4. Holds, or is appointed to, a position in an accounting professional group in government or in a government-owned and/or controlled corporation where decision making requires professional knowledge in the science of accounting.

 

  1. Section 4 of the Rules and Regulations Implementing RA 9298 (IRR) provides that any position in any business or company in the private sector which requires supervising the recording of financial transactions, preparation of financial statements, coordinating with external auditors for the audit of such financial statements, and other related functions should be occupied by a duly registered CPA.

It provides further that

    1. the business or company where such position exists has a paid-up capital of at least P 5,000,000 and/or annual revenue of at least P 10,000,000.
    2. the business or company where such position exists has a paid-up capital of at least P 10,000,000 and/or annual revenue of at least P 5,000,000.
    3. the section applies to all incumbents to the position.
    4. the section applies only to persons to be employed after the effectivity of the IRR of RA 9298.

 

  1. Which of the following statements concerning the practice of accountancy in the academe/education is incorrect?
    1. CPAs are allowed to teach business law subjects.
    2. Members of the Integrated Bar of the Philippines are not allowed to teach business law and taxation subjects.
    3. The position of either the Dean or the Department Chairman or its equivalent that supervises the Bachelor of Science in Accountancy program of an educational institution is deemed to be in practice of accountancy in the academe/education.
    4. The position of either the Dean or the Department Chairman or its equivalent that supervises the Bachelor of Science in Accountancy program of an educational institution must be occupied only by a duly registered CPA.

 

  1. Which of the following statements concerning the practice of accountancy in commerce and industry is incorrect?
    1. A CPA in the practice of accountancy in commerce and industry when he/she involved in decision making professional knowledge in the science of accounting, as well as the accounting aspects of finance and taxation.
    2. A CPA in the practice of accountancy in commerce and industry when he/she represents his/her employer before government agencies on tax and other matters related to accounting.
    3. A CPA in the practice of accountancy in commerce and industry when such employment or position requires that the holder thereof must be a Certified Public Accountant
    4. A CPA in the practice of accountancy in commerce and industry when he/she renders professional services as a Certified Public Accountant to more than one client on a fee basis.

 

  1. Which of the following statements concerning the practice of accountancy is correct?
    1. A CPA in public accountancy when he/she renders his/her professional services as a CPA to more than one client on a fee basis in the design, installation, review, and revision of accounting systems and controls.
    2. A CPA in the practice of accountancy in the academe/education when he/she is in an educational institution teaching any of the subjects included in the Bachelor of Science in Accountancy curriculum.
    3. A CPA is in the practice of accountancy in commerce and industry when his/her position requires civil service eligibility as a Certified Public Accountant.
    4. A CPA is in the practice of accountancy in the government when he/she is involved in the audit or verification of financial transactions and accounting records of his/her clients.

 

  1. What is the body authorized by law to promulgate rules and regulations affecting the practice of the accountancy profession in the Philippines?
    1. Professional Regulatory Board of Accountancy
    2. Philippine Institute of Certified Public Accountants [Accredited Professional Organization (APO)]
    3. Securities and Exchange Commission
    4. Financial Reporting Standards Council

 

  1. S1. No person shall practice accountancy in this country, or use the title "Certified Public Accountant", or use the abbreviated title "CPA" or display or use any title, sign, card, advertisement or other device to indicate such person practices or offers to practice accountancy, or is a certified public accountant, unless such person shall have received from the BOA a certificate of registration/Professional license and be issued a professional identification card or a valid temporary/special permit duly issued to him/her by the BOA and the PRC.

S2. Single practitioners and partners of partnerships for the practice of public accountancy shall be registered certified public accountants in the Philippines: Provided, That from the effectivity of RA 9298, a certificate of accreditation shall be issued to certified public accountant in public practice only upon showing, in accordance with rules and regulations promulgated by the BOA and approved by the PRC, that such registrant has acquired a minimum of three (3) years meaningful experience in any of the areas of public practice including taxation: Provide, further, that this requirement shall not apply to those already granted a certificate of accreditation prior to the effectivity of RA 9298. The Securities and Exchange Commission shall not register any corporation organized for the practice of public accountancy.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. A “meaningful experience” shall be considered as satisfactory compliance with the requirements of Section 28 of RA 9298 if it is earned in any following provided that such meaningful experience shall certified under oath by the employer where such meaningful experience was obtained:
  1. Commerce and industry and shall include significant involvement in general accounting, budgeting, tax administration, internal auditing, liaison with external auditors, representing his/her employer before government agencies on tax and matters to accounting or any other related functions
  2. Academe/education and shall include teaching for at least three (3) trimester or two (2) semesters subjects in either financial accounting, business law and tax, auditing problems, auditing theory, financial management and management services. Provided, that the accumulated teaching experience on these subjects shall not be less than three (3) school years
  3. Government and shall include significant involvement in general accounting, budgeting, tax administration, internal auditing, liaison with the Commission on Audit or any related functions
  4. Public Practice and shall include at least one year as audit assistant and at least two years as auditor in charge of audit engagement covering full audit functions of significant clients
    1. I only                                                                     c.   I, II or III only
    2. I or II only                                                            d.    I, II, III or IV

 

  1. This field of public accountancy engages with the examination of financial statements by independent CPA for the purpose of expressing an opinion as to the fairness with which the financial statements are prepared.
    1. Taxation                                                               c. Management Advisory Services
    2. External Auditing                                             d. Financial Accounting

 

  1. This field of public accountancy includes the preparation of annual income tax returns and determination of tax consequences of certain proposed business endeavors. CPAs in this field does not frequently represents the client in tax investigations. CPAs in this field must have thorough knowledge with the tax laws and regulation and updated with changes in taxation law and court cases concerned with interpreting taxation law.
    1. Taxation                                                               c.   Management Advisory Services
    2. External Auditing                                             d. Financial Accounting

 

  1. This field of public accountancy generally refers to services to client on matters of accounting, finance, business policies, organization procedures, product costs, distribution and many other phases of business conduct and operations.
    1. Taxation                                                               c.   Management Advisory Services
    2. External Auditing                                             d. Financial Accounting

 

  1. S1. Republic Act No. 10963 is the law mandating and strengthening the continuing professional development program for all regulated professions, including the accountancy profession

S2. Under the new BOA Resolution, all CPAs regardless of area or sector of practice shall require to comply with 120 credit hours required for the renewal of CPA license and accreditation of a CPA to practice accountancy profession in a compliance period of three years.

    1. True, True                                                           c.   False, True
    2. True, False                                                          d.   False, False

 

  1. This refers to the mandatory inculcation and acquisition of advanced knowledge, skill, proficiency, and ethical and moral values after initial registration of the CPA for assimilation into professional practice and lifelong learning.
    1. Continuing Professional Development
    2. Continuing Professional Learning
    3. Continuing Professional Enhancement
    4. Continuing Professional Advancement

 

  1. A CPA shall be permanently exempted from 120 credit hours required for the renewal of CPA license and accreditation of a CPA to practice accountancy profession in a compliance period of three years upon reaching the age of

a.   55                                                                            c.    60

b.   56                                                                           d.    65

 

  1. The initial implementation of the 120 credit hours required for the renewal of CPA license and accreditation of a CPA to practice accountancy profession in a compliance period of three years is gradual in the following period:

 

80 credit units

100 credit units

120 credit units

a.      2015

2016

2017

b.      2016

2017

2018

c.       2017

2018

2019

d.      2018

2019

2020

 

  1. S1. Generally accepted accounting principles represent the rules, procedures, practice and standards followed in the preparation of financial statements.

S2. The process of establishing GAAP is a political process which incorporated political actions of various interested user groups as well as professional judgment, logic and research.

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. Which of the following statements regarding accounting theory is incorrect?
    1. Accounting concepts are human-made.
    2. Accounting concepts are components of accounting theory.
    3. Accounting theory has developed primarily in response to government regulations.
    4. Accounting theory can be defined as a coherent set of hypothetical, conceptual and pragmatic principles that form a general frame of reference for a field of inquiry.

 

  1. Which of the following is not directly involved in the accounting standard-setting “due process” in the Philippines?
    1. Board of Accountancy
    2. Bureau of Internal Revenue
    3. Professional Regulation Commission
    4. Financial Reporting Standards Council

 

  1. S1. The overall purpose of accounting standards is to identify proper accounting practices for the preparation and presentation of financial statements.

S2. A set of high-quality accounting standards is a necessity to ensure comparability and uniformity in financial statements based on the same financial information.

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. Any persons applying for examination shall establish the requisites to the satisfaction of the Board that he/she:
  1. is Filipino citizen
  2. is of good moral character
  3. is a holder of the degree of Bachelor of Science in Accountancy conferred by a school, college, academy or institute duly recognized and/or accredited by the CHED or other authorized government offices
  4. has not been convicted of any criminal offense involving moral turpitude
    1. I only                                                                     c.   I, II and III only
    2. I and II only                                                         d.    I, II, III and IV

 

  1. Under Resolution No. 262 Series of 2015 of the Professional Regulatory Board of Accountancy, the following subjects in the CPA Licensure Examination includes the following
  1. Theory of Accounts
  2. Financial Accounting and Reporting
  3. Practical Accounting Problems I
  4. Advance Financial Accounting and Reporting
  5. Practical Accounting Problems II
  6. Management Advisory Services
  7. Management Services
  8. Auditing
  9. Auditing Theory
  10. Taxation
  11. Auditing Problems
  12. Regulatory Framework for Business Transaction
  13. Business Law and Taxation
  1. I, III, V, VII, IX, XI and XIII                              c. I, II, V, VII, VIII, X and XIII
  2. II, IV, VI, VIII, X and XII                                   d. I, III, IV, VI, VII and XI

 

  1. S1. To be qualified as having passed the licensure examination for accountants, a candidate must obtain a general average of seventy-five percent (75%) with no grades lower than sixty-five percent (65%).

S2. In the event a candidate obtains the rating of seventy-five percent (75%) and above in at least a majority of subjects he/she shall receive a conditional credit for the subjects passed.

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. S1. A candidate who received a conditional credit for the subjects passed shall take an examination in the remaining subjects within three (3) years from the preceding examination.

S2. A candidate who received a conditional credit for the subjects passed and took another examination within the prescribed period fails to obtain at least a general average of seventy-five percent (75%) and a rating of at least sixty-five percent (65%) in each of the subjects reexamined, he/she shall be considered as failed in the entire examination.

    1. True, True                                                           c.   False, True
    2. True, False                                                          d.   False, False

 

  1. A candidate for CPA Licensure examination obtained the following grades: 100, 74, 73, 72, 71, 65. He/She:
    1. Passed                                                                  c. Conditioned
    2. Failed                                                                    d. Retired

 

  1. A candidate for CPA Licensure examination obtained the following grades: 100, 100, 100, 100, 74, 64. He/She:
    1. Passed                                                                  c. Conditioned
    2. Failed                                                                    d. Retired

 

  1. A candidate for CPA Licensure examination obtained the following grades: 85, 74, 75, 74, 74, 65. He/She:
    1. Passed                                                                  c. Conditioned
    2. Failed                                                                    d. Retired

 

  1. S1. The Board of Accountancy shall submit to the Commission the ratings obtained by each candidate within ten (10) calendar days after the examination, unless extended for just cause.

S2. Any candidate who fails in two (2) complete Certified Public Accountant Board Examinations shall be disqualified from taking another set of examinations unless he/she submits evidence that he/she enrolled in and completed at least twenty-four (24) units of subject given in the licensure examination.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. S1. In the Philippines, the development of generally accepted accounting principles is formalized through the creation of Financial Reporting Standards Council (FRSC)

S2. FRSC is a body created by the Board of Accountancy by the recommendation of Professional Regulation Commission to assist the commission in carrying out its powers and functions provided under RA 9298.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. S1. The accounting standards promulgated by the FRSC constitute the “high hierarchy” of generally accepted accounting principles in the Philippines.

S2. Philippine Accounting Standards or PAS and Philippine Financial Reporting Standards or PFRS are the approved statements of the FRSC.

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. S1. The FRSC is composed of 15 members and a Chairman who had been or is presently a senior accounting practitioner.

S2. Any member of the Accounting Standards Council shall be qualified to be appointed to the FRSC

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. S1. The Philippine Interpretation Committee of PIC was formed by the ASC in August 2006 and has replaced the Interpretations Committee or IC formed by FRSC in May 2000.

S2. The role of the PIC is to prepare interpretations of PFRS for approval by the FRSC and to provide timely guidance on financial reporting issues specifically addressed in current PFRS.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.    False, False

 

  1. The name that is presently used for standards issued by the International Accounting Standards Board (IASB) is
    1. International Accounting Standards (IAS)
    2. International Financial Reporting Standards (IFRS)
    3. International Financial Accounting Interpretations (IFAI)
    4. International Generally Accepted Accounting Principles (IGAAP)

 

  1. Which of the following is responsible for setting International Financial Reporting Standards?
    1. Financial Accounting Committee
    2. Financial Accounting Standards Board
    3. International Accounting Standards Board
    4. International Accounting Standards Committee

 

  1. The process of establishing financial accounting standards
    1. is a legislative process based on rules promulgated by government agencies.
    2. is based solely on economic analysis of the effect standard will have if it is implemented.
    3. is a democratic process in that a majority of practicing accountants must agree with standard before it becomes implemented.
    4. is a social process which incorporates political actions of various interested user groups as well as professional research and logic.

 

  1. The international Accounting Standards (IAS) are
    1. focused on quantitative rules.
    2. based on regulations not concepts.
    3. principles-based rather than rules-based.
    4. rules-based rather than principles-base

 

  1. The purpose of the International Financial Reporting Standards is to
    1. promote uniform accounting standards among the countries of the world
    2. arbitrate accounting disputes between auditors and international entities
    3. issue enforceable standards which regulate the financial reporting of multinational entities
    4. develop a uniform currency in which the financial transactions of entities throughout the world would be measure

 

  1. The Conceptual Framework is intended to assist
    1. CPAs in public practice
    2. Users of financial information
    3. Financial Reporting Standards Council
    4. All of these

 

  1. Which is the basic purpose of the Conceptual Framework of Financial Reporting?
    1. To develop a single set of high quality IFRS.
    2. To promulgate rules and regulations affecting the practice of Philippine Accountancy Profession.
    3. To address accounting issues with divergent and unacceptable treatments in the absence of an authoritative guidance issued by FRSC
    4. To assist preparers of financial statements in applying accounting standards and in dealing with issues that have yet to form the subject of accounting standards

 

  1. What is the authoritative status of the Conceptual Framework?
    1. The framework applies when FRSC develops new or revised Standards. An enterprise is never required to consider this framework.
    2. It has the highest level of authority. In case of conflict between the Framework and the Standard or Interpretation, The Framework overrides the Standard or Interpretation.
    3. If there is a Standard or Interpretation that specifically applies to a transaction, it overrides the Framework. In the absence of a Standard or an Interpretation that specifically applies, the Framework should be followed.
    4. If there is a Standard or Interpretation that specifically applies to a transaction, management should consider the applicability of Framework in developing and applying an accounting policy which results in information that is relevant and reliable.

 

  1. Which of the following is the first step within the hierarchy of guidance to which management refers, and whose applicability at considers, when selecting accounting policies?
    1. Apply the requirements in PFRS dealing with similar and related issues
    2. Apply a standard from PFRS if it specifically relates to the transaction, event, or condition.
    3. Consider the applicability of definitions, recognition criteria, and measurement concepts in the Conceptual Framework.
    4. Consider the most recent pronouncements of other standard-setting bodies to the extent they do not conflict with PFRS or the Conceptual Framework

 

  1. What statements are intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs?
    1. Separate financial statements                                    c.     Business entity financial statements
    2. Consolidated financial statements                           d.    General purpose financial statements

 

  1. Which of the following best states the purpose of general-purpose financial statements?
    1. To identify shareholders
    2. To help users make decisions.
    3. To determine compliance with tax laws.
    4. To disclose the market value of the firm.

 

  1. Under Revised Conceptual Framework for Financial Reporting, the objective of general purpose financial reporting is to provide financial reporting about the reporting entity that is useful to
    1. existing and potential investors.
    2. existing investors, lenders and other creditors.
    3. potential investors, lenders and other creditors.
    4. existing and potential investors, lenders and other creditors.

 

  1. A primary objective of financial reporting is to assist
    1. investors in analyzing the company
    2. investors in predicting prospective cash flows
    3. banks to determine an appropriate interest rate for their commercial loans
    4. suppliers in determining an appropriate discount to offer a particular company

 

  1. The following are the Scope of the Revised Conceptual Framework
  1. Objective of financial reporting
  2. Qualitative characteristic of useful financial information
  3. Financial statements and reporting entity
  4. Elements of financial statements
  5. Recognition and derecognition
  6. Measurement
  7. Presentation and disclosure
  8. Concepts of capital and capital maintenance
  9. Limitations of financial reporting
    1. I, II, III, IV, V, VI, VII, VIII and IX                                  c.   I, II, III, IV, V, VI and VII
    2. I, II, III, IV, V, VI, VII and VIII                                        d. I, II, III, IV, V and VI

 

  1. The following are objectives of financial reporting, which is not?
  1. To provide information that is useful to management
  2. To provide information about those investing in the entity
  3. To provide information that is useful in making investing and credit decisions
    1. I only                                                                                     c.   I, II and III
    2. I and II only                                                                         d.    none of the choices

 

  1. The term “assessing cash flow prospects” as an objective of financial reporting means
    1. cash basis is preferred over accrual basis of accounting
    2. over the long run, trends in revenue and expenses are generally more meaningful than trends in cash receipts and payments
    3. information about the financial effects of cash receipts and cash payments is considered the best indicator of continuing ability to generate favorable cash flows
    4. All of these are correct regarding assessing cash flow prospects

 

  1. S1. Liquidity is the availability of cash over a long term to meet financial commitments when they fall due.

S2. Solvency is the availability of cash in the near future to cover currently maturing obligations.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.    False, False

 

  1. What are the qualitative characteristics of financial statements according to the Framework?
    1. Qualitative characteristics are broad classes of financial effects of transactions and other events.
    2. Qualitative characteristics are the attributes that make the information provided in financial statements useful to others.
    3. Qualitative characteristics measure the extent to which an entity has complied with all relevant Standards and Interpretations.
    4. Qualitative characteristics are non-quantitative aspects of an entity’s position and performance and changes in financial position.

 

 

  1. Which term best describes information that influences the economic decision of users?
    1. Prospective                                                                        c.     Reliable
    2. Relevant                                                                              d.    Understandable

 

  1. It is an entity-specific aspect of relevance based on the nature and magnitude, or both, of the items to which the information relates in the context of an individual entity’s financial report.
    1. Comparability                                                                    c. Feedback value
    2. Confirmatory value                                                         d.    Materiality

 

  1. If financial information that is presented in a balance sheet or income statement is misstated and it influences the economic decisions of user, that information is described as
    1. Faithful                                                                                 c.    Prudent
    2. Material                                                                               d.   Reliable

 

  1. Under PFRS Conceptual Framework, which of the following is considered a fundamental characteristic rather than an enhancing characteristic of financial information?
    1. Faithful representation                                                 c.     Understandability
    2. Timeliness                                                                           d. Verifiability

 

  1. Under the Revised Conceptual Framework, which of the following fundamental characteristics replaces the “reliability” characteristic under the old Conceptual Framework?
    1. Faithful representation                                                 c.     Substance over form
    2. Prudence                                                                            d.    Verifiability

 

  1. Which of the following is not an ingredient of “faithful representation” characteristic of financial information based on the Conceptual Framework of Financial Reporting?
  1. Completeness                                           IV. Prudence
  2. Confirmatory Value                                  V.    Neutrality
  3. Free from Error
    1. I and III                                                                 c.     I, III, V
    2. II and IV                                                               d.   IV only

 

  1. Under the Revised Conceptual Framework, the following statements are features of financial information’s comparability characteristics except one
    1. Comparability is uniformity
    2. A comparison requires at least two items
    3. Consistency, although related to comparability, is not the same
    4. Comparability is the goal, consistency helps to achieve the goal

 

  1. Which of the following is correct regarding the qualitative characteristic of “understandability” in relation to information in financial statements?
    1. Financial statements should exclude complex matters
    2. Financial statements should be free from material error
    3. Users are expected to have significant business knowledge
    4. Users should be willing to study the information with reasonable diligence

 

  1. What is basic underlying assumption?
    1. The financial statements are complete, neutral and free from error
    2. The financial statements have predictable value and confirmatory value
    3. The financial statements are comparable, understandable, verifiable and timely
    4. The financial statements are normally prepared on the basis that the entity will continue in operation for the foreseeable future

 

  1. Information is material if its omission or misstatement could influence the economic decision that the users make on the basis of the financial information about an entity. The factors of materiality are the following, except:
  1. Size
  2. Timing
  3. Nature
    1. I only                                                                                     c.   III only
    2. II only                                                                                    d. I and II only

 

  1. S1. Completeness is the result of the adequate disclosure standard or the principle of full disclosure. S2. The standard of adequate disclosure is best described by disclosure of any financial facts significant enough to influence the judgment of informed users.
    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. S1. An accountant shall disclose a material fact known to him which is not disclosed in the financial statements but disclosure of which is necessary on order that the financial statements would be misleading.

S2. Notes to financial statements provide narrative description or disaggregation of the items presented in the financial statements and information about items that qualifies for the recognition.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. S1. A neutral depiction is without bias in the preparation or presentation of financial information. S2. The Revised Conceptual Framework reintroduced the concept of Prudence. Prudence is the exercise of care and caution when dealing with the uncertainties in the measurement process such that assets or income are not understated and liabilities or expenses are not overstated.
    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. S1. Under conservatism, as alternatives exist, the alternative which has the least effect on equity should be chosen.

S2. In the simplest words, conservatism means “in case of doubt, record any loss and do not record any gain.”

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. S1. Free from error means an estimate of an unobservable price or value cannot be determine to be accurate or inaccurate, however, a presentation of that estimate can be faithful if the amount is described clearly and accurately as an estimate.

S2. The nature and limitation of the process estimating an observable price or value are explained, and no errors have been made in selecting and applying an appropriate process for developing the estimate, it is said that the representation of the estimate is faithful.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. S1. Measurement uncertainty arises when monetary amounts in financial reports can be observed

directly and must instead be estimated.

S2. As long as the estimate is clearly and accurately described and explained, a high level of measurement will affect the usefulness of the financial information.

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. S1. Representing a legal form that differs from the economic substance of the underlying economic phenomenon or transaction could result in a faithful representation

S2. Measurement uncertainty can affect faithful representation if the level of uncertainty in providing an estimate is low.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.    False, False

 

  1. Which of the following is a fundamental quality of useful accounting information?
    1. Comparability                                                    c.    Materiality
    2. Consistency                                                        d.    Relevance

 

  1. The following are enhancing qualitative characteristics relate to the presentation or form of the financial information:
  1. Verifiability
  2. Materiality
  3. Understandability
  4. Completeness
  5. Consistency
  6. Periodicity
  7. Timeliness
  1. I, III, V, and VII only                                         c.     I, II, VI and V only
  2. I, III, IV, and VII only                                       d.    I, II, IV and VI only

 

  1. To achieve faithful representation, the financial statements
    1. must have predictive and confirmatory value.
    2. are comparable, understandable, verifiable and timely.
    3. must be complete, neutral and reasonable free from error.
    4. All of these would achieve faithful representation.

 

  1. For the information to be useful, the link between the users and decisions made is
    1. materiality.                                                         c.     reliability.
    2. relevance.                                                           d.    understandability.

 

  1. Where is materiality not used in providing financial information?
    1. Determining the level of disclosure.
    2. Applying the going concern assumption.
    3. Applying the revenue recognition principle.
    4. Determining what items to include in the financial statements.
  2. What is the concept that supports the issuance of interim reports?
    1. Consistency                                                        c.   Relevance
    2. Faithful representation                                 d. Materiality

 

  1. S1. Enhancing qualitative characteristics should be maximized to extent necessary.

S2. Enhancing qualitative characteristics, either individually or collectively, cannot render information useful if that information is irrelevant or not presented faithfully.

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. Which of the following is true regarding the cost constraint?
    1. Benefit are more difficult to quantify than costs.
    2. The IASB seeks inputs on costs and benefits as part of due process.
    3. Benefits to preparers may include access to capital at a lower cost.
    4. All of the choices are correct.

 

  1. S1. Cost is a pervasive constraint on the information that can be provided by financial reporting.

S2. Under cost constraint, the benefit derived from the information should equal the cost incurred in obtaining the information.

    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

 

  1. S1. Financial statements provide information about economic resources of the reporting entity, claims against the entity and changes in the economic resources and claims.

S2. Financial statements provide financial information to users in assessing future cash flows to the reporting entity and assessing management stewardship of the entity’s economic resources.

    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

 

  1. The following are information providers:
  1. Statement of financial position – recognition of assets, liabilities and equity.
  2. Statement of financial performance – recognition of income and expenses.
  3. Other statement and notes – presentation and disclosures of information about recognized assets, liabilities, equity, income and expenses
  4. Other statement and notes – disclosures of information about unrecognized assets and liabilities
  5. Statement of Cash Flows
  6. Other statement and notes – contribution from equity holders and distribution to equity holders
  7. Other statement and notes – method, assumption and judgment in estimating amount presented
  1. I, II, III, IV, V, VI and VII                                 c.   I, II, III, IV, VI and VII only
  2. I, II, and III only                                                 d.   I, II, III, IV and V only

 

  1. The Revised Conceptual Framework recognizes and following types of financial statement:
  1. Consolidated financial statements
  2. Combined financial statements
  3. Unconsolidated financial statements
  4. Uncombined financial statements
    1. I only                                                                     c. I, II and III only
    2. I and II only                                                         d.   I, II, III and IV

 

 

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