CFAS

LIQUIDITY

Refers to the ability of the business to raise cash to meet unexpected cash requirements.

I and III

According to the IASB Framework for the preparation and presentation of financial statements, which TWO of the following are examples of expenses? I. A loss on the disposal of a non-current asset II. A decrease in equity arising from a distribution to equity participants III. A decrease in economic benefits during the accounting period IV. A reduction in income for the accounting period

II and III

According to the Preface to International Financial Reporting Standards, which of the following are objectives of the IASB? I. To harmonize financial reporting between IFRS and US GAAP and European II. To work actively with national standard setters III. To promote the use and strict application of financial accounting standards

DERECOGNITION, DISCLOSURE

Accounting standards set out the recognition, ____________, presentation and _____________ requirements of transactions and events that are important in financial statements.

IASB due process step #4

After comments on the first exposure draft have been effected, the IASB considers whether to publish its revised proposals for another round of comments.

IASB due process step #5

After the due process is completed, all outstanding issues are resolved, and the IASB members have balloted in favor of publication, the IFRS is issued.

IASB due process step #2

All comments received on discussion document and exposure draft are considered.

LOSS

An expiration of cost which is incurred without compensation or return and is not absorbed as cost of revenue is called

FRSC Due Process step #2

An exposure draft approved by a majority of the FRSC members for comments (comment period 60 - 30 days)

IASB due process step #3

An exposure draft, which is IASB's main vehicle for consulting the public, is published for public comment.

FRSC Due Process step #4

Approval of a standard or an interpretation by a majority of the FRSC members.

ENTITY PERSPECTIVE

As part of the objective of general-purpose financial reporting, ________________ an is adopted. This means that companies are viewed as separate and distinct from their owners.

CURRENT COSTS

Assets that are carried at the amount of cash or cash equivalents that would have to be paid if the same or an equivalent asset was acquired currently is measured using the ____________.

FRSC Due Process step #3

Consideration of all comments received within the comment period and, when appropriate, preparing a comment letter to the IASB

FRSC Due Process step #1

Consideration of pronouncement of IASB.

D. can be described as a social process which reflects political actions of various interested user groups as well as a product of research and logic.

Financial accounting standard-setting A. is based solely on research and empirical findings. B. is a legalistic process based on rules promulgated by governmental agencies. C. is democratic in the sense that a majority of accountants must agree with a standard before it becomes enforceable. D. can be described as a social process which reflects political actions of various interested user groups as well as a product of research and logic.

Relevant

If accounting information is timely, and has predictive as well as feedback value, then it is considered to be

IFRS

If there are any conflict in the framework and IFRS, the ________ prevails.

Completeness or full disclosure

In the first week of December 2016, Elisa Company signs a major contract to develop an accounting information system for Edward Inc. No work is begun the current year, yet the notes to the financial statements discuss the nature and peso amount of the contract. This is an example of:

The Philippine Accountancy Act of 2004.

RA 9298 is officially known as

BENEFIT

One constraint on useful financial reporting is that costs should be justified by the ________ of the reported financial information.

ASSET

One of its recognition criteria is that it is probable that the future economic events will flow to the enterprise

FINANCIAL STATEMENTS

Portray the financial effects of transactions and other events by grouping them into broad classes according to their economic characteristics.

GAIN ON SALE

Result if an asset is sold more than book value.

C. enables interested parties to express their views on issues under consideration

The "due process" system in developing financial reporting standards. A. is an efficient system for collecting dues from members. B. identifies the accounting issues that are the most important. C. enables interested parties to express their views on issues under consideration. D. requires that all accountants must receive a copy of financial accounting standards.

FALSE

The Conceptual Framework does not in any was assist prepares of financial statements in applying PFRS and in dealing with topics that have yet to form the subject of PFRS.

TRUE

The Conceptual Framework is a source of guidance for determining an accounting treatment where a standard does not provide specific guidance.

TRUE

The Conceptual Framework is not a PFRS, and nothing in it overrides any specific PFRS, including PFRS that is in some respect in conflict with the Conceptual Framework.

TRUE

The Conceptual Framework serves as a guide in developing future financial reporting standards and in reviewing existing ones.

FALSE

The GPFS are prepared at least annually and are directed to both the common and specific information needs of a wide range of statement users.

TRUE

The GPFS provide information about the financial position, performance and cash flows of an enterprise that is useful to a wide range of users in making economic decisions.

TRUE

The GPFS show the results of the stewardship of the management for the resources entrusted to it by the capital providers.

a position of neutrality.

The IASB declared that the merits of proposed standards are assessed from

NORMAL OPERATING CYCLE

The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash.

Financial and physical capital

The capital maintenance concept followed under present GAAP is

FALSE

The concept of capital maintenance chosen by an entity shall determine the accounting model used in the preparation of its financial statements.

GOING CONCERN

The conceptual framework specifically mentions one underlying assumption, namely, ___________.

ACCOUNTING STANDARDS COUNCIL.

The creation of FRSC in 2006 replaced the __________

STATEMENT OF CHANGES IN EQUITY

The financial report that shows the changes due to events and transactions other than financial performance such as the issue of equity instruments and distributions of cash or other assets to shareholders.

STATEMENT OF FINANCIAL POSITION

The financial report that shows the reporting entity's economic resources and claims.

C. The Professional Regulation Commission may remove from the Board of Accountancy, any member whose certificate to practice has been revoked or suspended.

The following statements relate to the Board of Accountancy. Select the incorrect statement: A. The Board consists of a Chairman and six members. B. The chairman and members of the Board are appointed by the President of the Philippines upon recommendation of the Professional Regulation Commission. C. The Professional Regulation Commission may remove from the Board of Accountancy, any member whose certificate to practice has been revoked or suspended. D. All sectors of accountancy practice shall as much as possible be equitably represented in the Board.

EDUCATION, GOVERNMENT, PUBLIC, & PRIVATE PRACTICE

The four sectors of accountancy under PICPA are: ___________, __________, _________, & ________

COMPARABILITY

The objective of PAS 1 is to prescribe the basis for presentation of general-purpose financial statements in order to ensure __________.

FRSC

The objective of the ________ is to establish generally accepted accounting principles in the Philippines.

B. the needs of the users of the information

The objectives of financial reporting for business enterprises are based on A. the need for conservative information B. the needs of the users of the information C. the need to report on management's stewardship D. the need to comply with financial accounting standards

TRUE

The principal difference between two concepts of capital maintenance is the treatment of the effects of changes in the prices of assets and liability of the entity

ACCOUNTING

The process of identifying, measuring, and communicating economic information to permit informed judgment and decision by users of the information.

TRUE

The selection of the appropriate concept of capital by an entity should be based on the needs of the users of its financial statements

IAS7

The standard that sets out the requirements for the presentation of the cash flow statement and related disclosures.

INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)

The standard-setting body who issues the International Financial Reporting Standards.

FINANCIAL ACCOUNTING STANDARDS BOARD (FASB)

The standard-setting organization who issues the U.S. GAAP.

A. Entity theory.

This accounting objective emphasizes the importance of the Income Statement as it is geared toward proper income or performance determination of the enterprise. A. Entity theory. C. Proprietary theory. B. Fund theory D. Residual equity theory.

HISTORY COSTS

This is used when assets are recorded at the amount of cash or cash equivalents or the fair value of the consideration given to acquire them at the time of their acquisition

PHILIPPINE INTERPRETATIONS COMMITTEE

This was created to issue implementing guidelines on PFRS.

REPORTING ENTITY/MANAGEMENT

Those responsible for the preparation and presentation of financial statements.

IASB due process step #1

Topics are identified and placed on IASB's agenda.

B. events are recorded in the period in which the event occurs.

Under Philippine Financial Reporting Standards A. the cash basis of accounting is accepted. B. events are recorded in the period in which the event occurs. C. net income will be lower under the cash basis than accrual basis accounting. D. all of the choices are correct.

The president of the Republic of the Philippines.

Under Section 5 of RA 9298, who shall appoint the members of the Professional Regulatory Board of Accountancy?

D. The reporting entity.

Under the Conceptual Framework for Financial Reporting 2010, which of the following is a new item added in its scope but is still a work-in-progress? A. Consolidated financial statements. C. The government entity. B. Mergers and acquisitions. D. The reporting entity.

A. Comparability is uniformity.

Under the Conceptual Framework for Financial Reporting which of the following statements is not a feature of financial information's "comparability" characteristics? A. Comparability is uniformity. B. A comparison requires at least two items. C. Consistency, although related to comparability, is not the same. D. Comparability is the goal; consistency helps to achieve that goal.

B. Primary users (existing and potential investors and creditors) and other users.

Under the Conceptual Framework of Financial Reporting, users of financial information may be classified into A. Heavy users (management) and slight users (public, government). B. Primary users (existing and potential investors and creditors) and other users. C. Internal users (employees, customers) and external users (investors, creditors). D. Main users (existing investors, creditors) and incidental users (potential investors, creditors)

CAPITAL RECOVERY/ CAPITAL MAINTENANCE

Under the ____________/________ approach, investment must be recovered before a company can have income.

PHYSICAL CAPITAL MAINTENANCE CONCEPT

Under this concept a profit is earned only if the physical productive capacity (or operating capability) of the entity (or the resources or funds needed to achieve that capacity) at the end of the period exceeds the physical productive capacity at the beginning of the period, after excluding any distributions to, and contributions from, owners during the period.

D. Chris James, a Quezon City resident who owns a chain of beauty salons.

Which of the following is not an economic entity? A. SM Group of Companies. B. Lions Club International, a civic organization. C. ABS-CBN Foundation, a charitable institution. D. Chris James, a Quezon City resident who owns a chain of beauty salons.

B. Qualitative characteristics are the attributes that make the information provided in financial statements useful to others.

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

Capital maintenance concept

What concept is critical in distinguishing an enterprise's return on investment from return of its investment?

D. All of these.

What is due process in the context of standard-setting at the IASB? A. IASB operates in full view of the public. B. Interested parties can make their views known. C. Public hearings are held on proposed accounting standards. D. All of these.

C. 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.

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

A. Discussion paper, Exposure draft and Standard

What is the chronological order in the evaluation of a typical standard? A. Discussion paper, Exposure draft and Standard. B. Exposure draft, Discussion paper and Standard. C. Exposure draft, Standard and Discussion paper. D. Standard, Discussion paper, and Exposure draft.

D. Price based on assessed value of government bodies.

When fair value is used in measuring assets in the financial statements, current GAAP provides following references as basis of fair value, except A. Price in active market. B. Price in recent transaction. C. Price taken from industry or sector benchmarks. D. Price based on assessed value of government bodies.

A & B

Which TWO of the following are listed in the IASB Framework as 'underlying assumptions' regarding financial statements? A. The financial statements are prepared under the accrual basis B. The entity can be viewed as a going concern C. The financial statements are reliable D. Accounting policies are consistently applied

A. IFRS Foundation.

Which body appoints the members of International Accounting Standards Board (IASB) that make the present IFRS? A. IFRS Foundation. B. IFRS Advisory Council. C. International Accounting Standards Committee. D. International Financial Reporting Interpretations Committee.

I, II and V only

Which of the following are parts of the "due process" of the IASB in issuing a new International Financial Reporting Standard? I. Establishing an advisory committee to give advice II. Developing and publishing a discussion document for public comment III. Issuance of an interpretation as authoritative guidance IV. Reviewing compliance and enforcement procedures V. Issuance of the final standard with number and title

I, III, V

Which of the following assets are initially and subsequently measured at Fair Value? I. Biological assets IV. Property and Equipment II. Available for sale securities V. Held for trading securities III. Inventories VI. Intangible assets

D. Losses results from peripheral or incidental transactions whereas expenses result from ongoing major or central operations of the entity

Which of the following best describes the distinction between expenses and losses? A. Losses are material items whereas expenses are immaterial items B. Losses are extraordinary charges whereas expenses are ordinary charges C. Losses are reported net-of-related-tax effect whereas expenses are not reported not-of tax D. Losses results from peripheral or incidental transactions whereas expenses result from ongoing major or central operations of the entity

International Financial Reporting Interpretations Committee (IFRIC)

Which of the following bodies is responsible for reviewing accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance, whit a view to reaching consensus as to the appropriate accounting treatment?

C. The IASB and the IFRS Advisory Council.

Which of the following bodies report to the IFRS Foundation? A. The IASB and AASB. B. The IASB and the FASB. C. The IASB and the IFRS Advisory Council. D. The IASB, AASB, and the IFRS Advisory Council.

B. It receives financial support principally from the Professional Regulations Commission (PRC).

Which of the following is not a description or a function of the Financial Reporting Standards Council (FRSC)? A. It establishes generally accepted accounting principles in the Philippines. B. It receives financial support principally from the Professional Regulations Commission (PRC). C. It is the successor of Accounting Standards Council (ASC) and the creator of Philippine Interpretations Committee (PIC). D. It assists the Professional Regulatory Board of Accountancy (BOA) in carrying out its power and function to promulgate accounting standards in the Philippines. 19. Which of the following situations violates the conc

B. Freedom from material error and bias

Which of the following is the best description of reliability in relation to information in financial statements? A. Comprehensibility to users C. Influence on the economic decisions B. Freedom from material error and bias D. Inclusion of degree of caution of users

B. Apply a standard from PFRS if it specifically relates to the transaction, event, or condition.

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

D. Financial statements include a property with a carrying amount increased to management's estimate of market value.

Which of the following situations violates the concept of reliability? A. Data on segments having the same expected risks and growth rates are reported to analysts estimating future profits. B. Financial statements are issued nine months late. C. Management reports to stockholders new projects undertaken, but the financial statements never report the projected results. D. Financial statements include a property with a carrying amount increased to management's estimate of market value.

D. Financial statements include a property with a carrying amount increased to management's estimate of market value.

Which of the following situations violates the concept of reliability? A. Data on segments having the same expected risks and growth rates are reported to analysts estimating future profits. B. Financial statements are issued nine months late. C. Management reports to stockholders' new projects undertaken, but the financial statements never report the projected results. D. Financial statements include a property with a carrying amount increased to management's estimate of market value.

I, II and III

Which of the following situations violates the concept of reliability? *NOTE: W/C OF THE FF QUALITATIVE CHARACTERISTIC IS TRUE I. Relevance is the capacity of information to make difference in decision by helping users from predictions about outcome of past, present and future events, or confirm/correct prior expectations II. The quality of reliability assures readers that the financial information is free from bias and faithfully represents what it purports to show, including adequate disclosure of significant information III. Under the IASB Framework for the Preparation and presentation of financial statements, conservatism is not a concept that is recognized as a qualitative objective.

I, II, III and IV

Which of the following statements about accounting recognition is (are) true? I. In accounting, there are instances when a gain/loss would arise upon initial recognition of an asset. II. No asset can simultaneously be an asset of more than one entity III. At times, two or more entities may share the benefits that an asset provides IV. An appropriate basis for recognizing an asset is when a particular enterprise acquires the right to utilize and control access to the asset's benefits

C. They are prepared at least annually and are directed to both the common and specific information needs of a wide range of statement users.

Which of the following statements about financial statements is incorrect? A. They are the primary responsibility of the management of the enterprise. B. They show the results of the stewardship of the management for the resources entrusted to it by the capital providers. C. They are prepared at least annually and are directed to both the common and specific information needs of a wide range of statement users. D. The provide information about the financial position, performance and cash flows of an enterprise that is useful to a wide range of users in making economic decisions.

C. The International Accounting Standards Board (IASB) was established with the purpose of narrowing the range of divergence in accounting standards throughout the world.

Which of the following statements about international accounting standards is true? A. Accounting professionals in the USA consider US GAAP superior to IAS and has no intention to adopt International Accounting Standards. B. The IASB is able to enforce its standards by prohibiting the listing of companies which do not comply on stock exchanges which sell internationally. C. The International Accounting Standards Board (IASB) was established with the purpose of narrowing the range of divergence in accounting standards throughout the world. D. Legal and psychological hurdles to achieving common reporting standards will be fully overcome by the year 2012, the time frame set for convergence between IAS and US GAAP.

C. The ability of the entity to continue in operation for the foreseeable future

Which of the following statements best describes the term "going concern"? A. The expenses of an entity exceed its income B. When current liabilities of an entity exceed current assets C. The ability of the entity to continue in operation for the foreseeable future D. The potential to contribute to the flow of cash and cash equivalents to the entity

I & III

Which of the following statements is (are) true, concerning the Going Concern assumption? I. When preparing financial statements, management is required to make an assessment of an enterprise's ability to continue as a going concern which should be at least twelve months from balance sheet date. II. When an enterprise has a history of profitable operations and ready access to financial resources it is not a detailed analysis as to is ability to operate as a going concern is not necessary. III. When the financial statements are not prepared on a going-concern basis, this fact should be disclosed

A. Managers of an entity are considered to be internal decision makers.

Which of the following statements regarding users of financial information is correct? A. Managers of an entity are considered to be internal decision makers. B. Accounting information is prepared for and useful to only outside decision makers. C. External decision makers can obtain whatever financial data they need and whenever they need it. D. The members of the Board of Directors are not internal rather than external users of financial information.

Fair value

Which one of the following terms best describes the amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal?

EXPENSE

_________ are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrence of liabilities that result in decreases in equity other than those relating to distributions to equity participants.

ASSETS

___________ is a resource controlled by the enterprise as a result of past events and from which future economic events are expected to flow to the enterprise.

CONCEPTUAL FRAMEWORK

_____________ sets out the concepts that underlie the preparation and presentation of financial statements for external users.

GENERAL PURPOSE FINANCIAL STATEMENTS

provide financial reporting information to a wide variety of users.