IAC1 Introduction

1. PFRSs approved by the FRSC include paragraphs in bold-type and plain text. In relation to the PFRS paragraphs in bold type, are the following statements true or false? (1) Bold-type paragraphs should be given greater authority than the paragraphs in plain text. (2) Bold-type paragraphs indicate the main principles of the standard. A. False, true C. False, false B.True, trueD.True, false

A

1. What are the accounting principles commonly known as? A. Standards C. Rules B.MethodsD.Regulations

A

1. The role of International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) is A. to reduce possible number of accounting differences B. to produce globally recognized standards. C. both of the above. D.neither of the above.

C

1. PFRSs consist of A. PFRSs C. Interpretations B. PASsD. all of these

D

1. Determine whether the following statements are true or false: I. Independent external auditors perform attest function. II. If a CPA wants to practice public accountancy, one must obtain first certificate of recognition from the board of accountancy. A. True, false C. False, false B.False, trueD.True, true

A

Consider the following definitions: I. The recognition or nonrecognition of business activities as accountable events. II. The assigning of peso amounts to the accountable events. A. I - Identifying, II - Measuring C. I - Recording, II - Measuring B.I - Identifying, II - RecordingD.I - Measuring, II - Recording

A

1. The practice of accountancy in the Philippines is regulated under A. R.A. 9892 C. R.A. 8992 B. R.A. 9298 D. RH bill

B

1. Who is permanently exempted from the CPE requirement for the renewal of CPA license? A. A 60-year old CPA B. A 65-year old CPA C. A CPA studying abroad during the period of stay. D. A CPA practicing the profession abroad during the period of stay.

B

1. 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, with a view to reaching consensus as to the appropriate accounting treatment? A. International Financial Reporting Interpretations Committee (IFRIC) B. Standards Advisory Council (SAC) C. International Accounting Standards Board (IASB) D. International Accounting Standards Committee Foundation (IASC Foundation)

C

1. All of the following are events considered as internal events, except A. Transfer of goods from work-in-process to finished goods inventory B. Losses from flood, earthquake, fire and other calamities C. Transformation of biological assets from immature to mature D.Vandalism committed by the entity's employees

D

1. As independent or external auditors, CPAs are primarily responsible for A. Filing financial statements with the SEC B. Certifying the accuracy of financial statements C. Preparing financial statements in conformity with GAAP D. Expressing an opinion as to the fairness of financial statements

D

1. All of the following are represented in the FRSC, except A. Board of Accountancy (1) B. Securities and Exchange Commission (1) C. Bangko Sentral ng Pilipinas (1) D. Bureau of Internal Revenue (1) E.None, all of the above are represented in the FRSC

E

1. Fiduciary accounting is an application of A. Entity theory C. Proprietary theory B. Fund theoryD. Residual equity theory

B

1. It is the area of the accountancy profession that encompasses the process of analyzing, classifying, summarizing and communicating all transactions involving the receipt and disposition of government funds and property and interpreting the results thereof. A. External auditing C. Internal auditing B. Government accountingD. Private accounting

B

1. All of the following are events considered as exchange or reciprocal transfer, except A. purchase of investment in equity securities B. sale of equipment for non-interest bearing note C. subscription of the entity's own equity instrument D. exchange of a note payable for an account payable E. borrowing of money from a bank

C

1. All of the following is an incorrect statement regarding the due process of standard setting, except: A. Consideration of pronouncements of the IFRIC B. Formation of a task force, in all cases, to give advice to FRSC. C. Approval of a standard or an interpretation by a MAJORITY of the FRSC members. D. Issuing for comment an exposure draft approved by a majority of the FRSC members; comment period will be at least 90 days, unless a shorter period (not less than 60 days) is considered appropriate by the FRSC.

C

1. These are events result to a sudden or unanticipated loss from fortuitous events A. Internal Events C. External Events Other Than Transfers B.Non-reciprocal transfersD. Casualty

D

1. Determine whether the following statements are true or false: I. The term "recognition" as used in accounting refers to the process of incorporating the effects of an accountable event in the statement of financial position or the statement of profit or loss and other comprehensive income through a journal entry. II. The accounting process of assigning numbers, commonly in monetary terms, to the economic transactions and events is referred to as classifying A. True, false C. False, false B.False, trueD.True, true

A

1. Determine whether the following statements are true or false: Statement 1: FRSC members are appointed by PRC with a term of 3 years renewable for another 3 years. Statement 2: PIC members are appointed by PRC. Statement 3: All sectors of the accountancy profession are represented in FRSC but majority of which came from Public Practice Statement 4: FRSC members render services on a part-time basis and receive financial support from the Bangko Sentral ng Pilipinas. A. True, false, false, false C. True, false, false, true B.True, true, false, falseD.True, true, true, true

A

1. Once a financial reporting standard has been established A. the standard is continually reviewed to see if modification necessary. B. the standard is not reviewed unless the SEC makes a complaint. C. the task of reviewing the standard to see if modification is necessary is given to the PICPA. D. the principle of consistency requires that no revisions ever be made to the standard.

A

1. One of the basic features of financial accounting is A. Direct measurement of economic resources and obligations and changes in them in terms of money. B. Direct measurement of economic resources and obligations and changes in them in terms of money and sociological impact. C. Direct measurement of economic resources and obligations and changes in them in terms of money and psychological impact. D. Direct measurement of economic resources and obligations and changes in them in terms of money and sociological and psychological impact.

A

1. Standards approved by the FRSC include paragraphs in bold type and plain type, which have equal authority. Paragraphs in bold type indicate main principles. Any limitation of the scope of a PFRS is made clear in the standard. A. True, True C. False, False B.False, TrueD.True, False

A

1. The period of exposing the draft of a proposed PFRS will be at least sixty (60) days, unless a shorter period is considered appropriate by the FRSC. The shorter period should A. Not less than 30 days. C. Less than 30 days. B. 30 days no more less. D. More than 30 days but not exceeding 59 days.

A

1. The principles which constitute the ground rules for financial reporting are termed "generally accepted accounting principles". To qualify as "generally accepted," an accounting principle must A. Receive substantial authoritative support. B. Guide an entrepreneur of the choice of an accounting entity like single proprietorship, partnership or corporation. C. Usually guide corporate managers in preparing financial statements, which will be understood by widely scattered shareholders. D.Guide corporate managers in preparing financial statements, which will be used, for collective bargaining agreement with trade unions.

A

1. Which of the following applies to financial accounting? I. Information meets general needs of particular statement users II. Emphasized objective data III. Past/Historical-oriented IV. Basically not concerned with income determination and asset valuation A. Yes, No, Yes, No C. No, No, Yes, No B.No, Yes, No, YesD.No, No, No, Yes

A

1. Which of the following statements is correct? I. Accounting provides qualitative information, financial information, and quantitative information. II. Qualitative information is found on the notes to the financial statements only. III. Accounting is considered an art because of it is supported by an organized body of knowledge IV. Accounting is considered a science because it involves the exercise of skill and judgment. V. Measurement is the process of assigning numbers to objects such inventories or plant assets and to events such as purchases sales. VI. All quantitative information is also financial in nature. VII. The accounting process of assigning peso amounts or numbers to relevant objects and events is known as Identification. A. I, V C. I, II, III, IV, V B. I, II, VI, VD. II, VI, V

A

1. Consider the following statements: S1: The Board of Accountancy (BOA) shall be composed of a Chairman and six (6) members for a total of seven (7) individuals S2: Continuing Professional Education is required for both renewal of CPA license and accreditation to practice the accountancy profession S3: All firms practicing public accountancy in the Philippines are formed in any type of business organization. A. False, true, true C. False, true, false B.True, true, falseD.False, false, false

B

1. Financial Reporting Standards Council (FRSC) has A. 14 members with a chairman C. 16 members with a chairman B.15 members with a chairmanD.8 members with a chairman

B

1. In relation to PFRS, which of the following statements are true or false? I. PFRS apply to Government Owned and Controlled Corporations (GOCCs) doing business or trade. II. Any limitation in the PFRS is clearly stated on a separate paragraph in the standard itself. III. PFRS are rules based rather than principle based. IV. Bold and plain type paragraphs in a standard are with equal authority. Plain type indicates the main principles of the standard. A. True, false, false, false C. False, false, false, false B.True, true, false, falseD.False, true, false, false

B

1. It is the accounting standard-setting body in the Philippines at the present time. A. Accounting Standards Council C. Philippine Accounting Standards Board B. Financial Reporting Standards Council D. Auditing and Assurance Standards Council

B

1. PFRS is applicable to all of the following, except A. General-purpose financial reports C. Public and state-owned enterprises B. Special-purpose financial reports D. Commercial and industrial enterprises

B

1. Statement 1: In current practice, accounting provides only quantitative information that is useful in making economic decisions. Statement 2: The basic purpose of accounting is to provide information about economic activities intended to be useful in making economic decisions. A. True, false C. False, false B.False, trueD.True, true

B

1. The Board of Accountancy (BOA) shall be composed of a A. Six (6) members with a chairman for a total of six (6) individuals B. Chairman and six (6) members for a total of seven (7) individuals C. Chairman and fifteen (15) members D.Chairman and seventeen (17) members

B

1. The International Accounting Standards Board was formed A. To enforce IFRS in foreign countries B. To develop a single set of high quality IFRS C. To establish accounting standards for multinational entities D. To develop accounting standards for countries that do not have their own standard-setting bodies

B

1. The International Financial Reporting Interpretations Committee (IFRIC) issues interpretations as authoritative guidance. For which of the following should IFRIC consider issuing an Interpretation? I. Narrow, industry-specific issues II. Newly identified financial reporting issues not specifically addressed in IFRSs III. Issues where unsatisfactory or conflicting interpretations have developed, or seem likely to develop IV. Areas where members of the IASB cannot reach unanimous agreement A. I, II C. III, IV B. II, III D. II, IV

B

1. The role of the Philippine Interpretations Committee (PIC) is principally to issue implementation guidance on PFRSs. Interpretations of PFRSs are intended to give authoritative guidance on issues that are unlikely to receive divergent or unacceptable treatment, in the absence of such guidance. A. True, True C. False, False B.True, FalseD.False, True

B

1. Which of the following statements is incorrect? I. The information contained in the financial statements is obtained exclusively from the firm's accounting records. II. Financial accounting is a science rather than an art while management accounting is an art rather than a science. III. Management decisions are oriented to the future whereas the decisions of external users are oriented to the past. IV. Financial accounting is a branch of accounting which deals primarily with the common needs of users while management accounting is a branch of accounting which deals primarily with the specific needs of users. V. Quantitative information is always more useful than non-quantitative information for the purpose of making economic decisions. VI. Financial statements are only one source of information needed by users to make rational economic decisions. VII. Financial statements have the same basic purpose as financial accounting. VIII. Financial statements are the only source of information needed by users to make rational economic decisions. A. IV, VII, VIII C. IV, VI, VII B. I, II, III, V, VIIID.I, II, III, V, VI, VII

B

1. Which of the following statements is true? I. Loss from theft should be classified as a nonreciprocal transfer II. Internal events are changes in economic resources by actions of other entities that do not involve transfers of enterprise resources and obligations III. Nonreciprocal transfers involve the transfer of resources in only one direction, either from an entity to other entities or from other entities to the entity. IV. Internal events are sudden, substantial, unanticipated reductions in enterprise resources not caused by other entities V. Fire, earthquake and flood are examples of accountable events classified as internal events. A. I, II, III, V C. II, III, IV, V B. I, III, VD. I, III, IV, V

B

1. Which of the following statements is true? I. Loss from theft should be classified as a nonreciprocal transfer II. Internal events are changes in economic resources by actions of other entities that do not involve transfers of enterprise resources and obligations III. Nonreciprocal transfers involve the transfer of resources in only one direction, either from an entity to other entities or from other entities to the entity. IV. Internal events are sudden, substantial, unanticipated reductions in enterprise resources not caused by other entities V. Fire, earthquake and flood are examples of accountable events classified as internal events. A. I, II, III, V C. II, III, IV, V B. I,III, VD. I, III, IV, V

B

1. Arrange in proper order the due process for projects of FRSC: I. Issuing for comment an exposure draft approved by a majority of the FRSC members; comment period will be at least 60 days, unless a shorter period (not less than 30 days) is considered appropriate by the FRSC. II. Consideration of pronouncements of the IASB. III. Formation of a task force, when deemed necessary, to give advice to FRSC. IV. Approval of a standard or an interpretation by a majority of the FRSC members. V. Consideration of all comments received within the comment period and, when appropriate, preparing a comment letter to the IASB. A. I, II, III, IV and V C. II, III, I, V and IV B.III, II, I, V and IVD.II, III, V, I and IV

C

1. Choose the correct statement about financial reporting standards. A. They are laws B. The Bureau of Internal Revenue enforces PFRSs C. Firms that do not comply with PFRSs may suffer negative economic consequences. D. GAAP in the Philippines is represented by PSAs

C

1. RA 9298 is known as A. The Philippine Accounting Law C. Philippine Accountancy Law B.The Law on Commerce and AccountingD.Philippine Accountancy Code

C

1. Statement 1: General purpose financial statements are those statements that cater to the common and specific needs of a wide range of external users. Statement 2: The practice of accountancy in the Philippines is regulated under R.A. 9892 A. True, false C. False, false B.False, trueD.True, true

C

1. Which of the following is not an important characteristic of the financial statements that accountants currently prepare? A. Financial statements can be justified only if the benefits they provide exceed the costs. B. The information in financial statements is summarized and classified to help meet users' needs. C. The information in financial statements is expressed in units of money adjusted for changing purchasing power. D. Financial statements articulate with one another because measuring financial position is related to measuring changes in financial position.

C

1. Which of the following is true in comparing ASC and FRSC? A. ASC is the successor of FRSC. B. Part of the member of ASC is a representative from BIR which is not represented in FRSC. C. ASC has 8 members including the chairman while FRSC has 14 members without the chairman. D.All of the above.

C

Accounting has been given various definitions, which of the following is not one of those definitions? A. Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. B. 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 of at least, of a financial character and interpreting the results thereof. C. Accounting is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria and communicating the results to interested users. D.Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgment and decisions by users of information.

C

1. Choose the correct statement A. Financial accounting is a social science and cannot be influenced by changes in legal, political, business and social environments. B. Financial accounting is an information system designed to provide information primarily to internal users. C. General-purpose financial statements must be prepared by a certified public accountant. D. The preparation of general-purpose financial statements is usually based on the assumption that the primary users of the information are external decision makers.

D

1. Choose the incorrect statement A. Disclosure notes facilitate the evaluation of enterprise position and performance because they include information which helps to explain the quality of earnings. B. Disclosure notes are an integral part of the financial statements. C. Companies often look for opportunities to smooth earnings. D.Accounting concepts, principles and standards are just as broad and general today as they were sixty years ago.

D

1. Classifying preference dividends as expense is an application of what concept? A. Entity C. Proprietary B. Fund D. Residual equity

D

1. Determine whether the following statements are true or false: I. Any limitation of any standard is made clear on the standard itself. II. PFRS apply to all profit-oriented entities even though Government owned and/or controlled. III. PFRS is collectively known as PFRS, PAS and Philippine Interpretations. A. False, false, true C. True, true, false B.False, true, trueD.True, true, true

D

1. Determine whether the following statements are true or false: I. PFRS are principle-based guidelines. II. The current standard setting body internationally is ASC. III. Any limitation of a standard is made clear on the standard itself. A. False, false, true C. True, true, false B.False, true, trueD.True, false, true

D

1. Determine whether the statements are true or false I. PFRS sets guidelines on how to deal with the internal reports of a company. It should be in accordance with GAAP. II. Charities and religious organizations are within the scope of PFRS. A. True, false C. True, true B.False, trueD.False, false

D

1. Due process for projects of FRSC normally includes the following, except A. Consideration of pronouncement of IASB. B. Formation of a task force, when deemed necessary, to give advice to the FRSC. C. Issuing for comment an exposure draft approved by at least eight members of the Council; comment period will be at least 60 days. D.Approval of a standard or an interpretation by all of the council members.

D

1. Generally accepted accounting principles A. Are accounting adaptations based on the law of economic science. B. Derive their credibility and authority from legal rulings and court precedents. C. Derive their credibility and authority from the national government through the financial reporting section of the SEC. D. Derive their credibility and authority from general recognition and acceptance by the accountancy profession.

D

1. In relation to PFRS, determine which of the following statements is (are) correct? I. PFRS are generally accepted principles patterned from economic and legislative issues. II. PFRS governs reports prepared by non-profit organizations. A. I only C. Both I and II B.II onlyD.Neither I nor II

D

1. In the event of conflict between the PFRSs and the local standards, which among the following will prevail? A. The provisions of the Corporation Code and Tax Code will prevail B. The rule of the Philippine Securities and Exchange Commission prevails C. The rule of the International Accounting Standards prevails D. The rule of local standards, laws and regulations shall prevail.

D

1. Mr. Maestro Yessur, a topnotch CPA, is a professor in a university where he teaches mainly home economics, music and physical education. Those subjects require that the teacher must be awesome. Mr. Maestro is also frequently invited as a judge in beauty pageants and singing contests and as a referee in mixed martial arts competitions. Mr. Maestro is considered to be practicing accountancy in which of the following sectors? A. Academe C. Commerce and industry B. Public accountingD. None of these

D

1. Representatives from the following is included in the composition of FRSC, except I. CHED IV. SEC II. BIR V. FINEX III. PDIC A. II, IV and V D. I and III B. I, III and V E. I, III and IV C. II and IV

D

1. Statement 1: All firms practicing public accountancy in the Philippines are formed in any type of business organization. Statement 2: All firms practicing public accountancy in the Philippines must be first registered, registration requires 4 years of meaningful experience. A. Only the first statement is true. C. Both statements are true. B.Only the second statement is true.D.Both statements are false.

D

1. The PIC members were appointed by the ___________ and include accountants in public practice, the academe and regulatory bodies and users of financial statements A. SEC C. BOA B. PRC D. FRSC

D

1. The following statements correctly refer to the accounting process. I. Measuring is the accounting process of analyzing business activities as to whether or not they will be recognized in the books. II. Recognition refers to the process of including the effects of an event in the totals of the statement of financial position or the statement of profit or loss and other comprehensive income through memo entries. III. Disclosure of events in the notes to financial statement without including in the totals of the statement of financial position or statement of profit or loss and other comprehensive income is not an application of the recognition principle. IV. An accountable event is an event that has an effect on the assets, liabilities or equity of an entity and its effect can be measured reliably. V. Sociological and psychological matters are within the scope of accounting. A. I, II, III, IV, V C. IV B. I, II, III, IV D. III, IV

D

1. The important points made in the definition of accounting include all of the following, except (E) A. Accounting information is quantitative. B. Accounting information is financial in nature. C. Accounting information is useful in decision-making. D. Accounting information is both quantitative and qualitative.

D

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

D

1. What is "due process" in the context of standard-setting by 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 standards. D. All of these are part of due process in standard-setting.

D

1. What is the basic purpose of accounting? A. To provide quantitative financial information about economic activities. B. To provide all information that users need in making economic decisions. C. To provide qualitative financial information about economic activities intended to be useful in making economic decisions. D.Toprovidequantitativefinancialinformationabouteconomic activities intended to be useful in making economic decisions

D

1. Which is incorrect concerning FRSC? A. The FRSC replaced the ASC as the standard setting-body in the Philippines. B. The FRSC is composed of 15 members with a Chairman and 14 representatives from various sectors. C. The Chairman and members of the FRSC shall have a term of 3 years renewable for another term. D.Any member of the ASC shall be disqualified from being appointed to the FRSC.

D

1. Which of the following correctly refer to the various branches of accounting? I. Government accounting deals with accounting for the national government and its instrumentalities, focusing attention on the custody of public funds and the purpose or purposes to which such funds are committed. II. Institutional accounting deals handling of accounts managed by a person entrusted with the custody and management of property for the benefit of another. III. Estate accounting deals with the handling of accounts for fiduciaries who wind up the affairs of a deceased person. IV. Social responsibility accounting is the process, of measuring and disclosing the performance of firm in terms of community involvement and related criteria. V. Accounting Systems deals with the installation of accounting procedures for the accumulation of financial data; includes designing of accounting forms to be used in data gathering. VI. Cost accounting is the systematic recording and analysis of the costs of material, labor, and overhead incident to production. VII. Fiduciary accounting is the accounting for not-for-profit entities other than the government. A. I, II, III, IV, V, VI, VII C. I, III, IV, V, VI, VII B. I, II, IV, V, VI, VIID. I, III, IV, V, VI

D

1. Which of the following government agency is not represented in FRSC? A. Bangko Sentral ng Pilipinas C. Bureau of Internal Revenue B.Securities and Exchange CommissionD.Commission on Higher Education

D

1. Which of the following is not part of the due process of FRSC in forming new PFRS and reviewing current PFRS? A. Formation of task force the purpose of which is to give advice to FRSC. B. Preparation of comment letter, if necessary, after considering all the comments on the exposure draft. C. Approval of the standard by MAJORITY of FRSC members and eventually PRC. D. Consideration of pronouncement of IAASB.

D

1. Which statement is correct regarding the Financial Reporting Standards Council (FRSC)? (M) A. Established by PICPA in 2006 under the Implementing Rules and Regulations of the Philippine Accountancy Act of 2004. B. The main function is to establish generally accepted auditing standards in the Philippines. C. The Chairman and members of the FRSC (BOA) are appointed by the president of the Philippines upon recommendation of the PRC in coordination with APO. D.The FRSC is the successor of the Accounting Standards Council (ASC) which was created in November 1981 by the Philippine Institute of Certified Public Accountants (PICPA).

D

What is the basic purpose of accounting? A. To provide quantitative financial information about economic activities. B. To provide all information that users need in making economic decisions. C. To provide qualitative financial information about economic activities intended to be useful in making economic decisions. D. To provide quantitative financial information about economic activities intended to be useful in making economic decisions.

D