cfas

How is the Conceptual Framework useful to auditors? A. By assisting in forming an opinion as to whether financial statements conform to PFRSs B. By assisting in promoting harmonization of regulations, accounting standards and procedures relating to the presentation of financial statements by providing a basis for reducing the number of alternative accounting treatments permitted by PFRSs C. By assisting in applying the accounting standards D. By assisting in interpreting the information contained in financial statements prepared in conformity with PFRSs

A.

Which statement is incorrect regarding a reporting entity? A. a reporting entity is an entity required or chooses to prepare financial statements B. a reporting entity should be a legal entity C. a reporting entity could be a portion of an entity or comprise more than one entity D. a reporting entity does not comprise an arbitrary or incomplete collection of assets, liabilities, equity, income and expenses

B.

Information about income and expenses is A. less important as information about assets and liabilities B. more important as information about assets and liabilities C. just as important as information about assets and liabilities D. not important

C

The objective of financial statements is to provide financial information about the reporting entity's A, L, E, Inc and Ex that is useful to users of financial statements in assessing A. the prospects for future net cash inflows to the reporting entity B. management's stewardship of the entity's economic resources C. both a & b D. neither a nor b

C

Which of the following financial statements provide information about assets, liabilities, equity, income and expenses of two or more entities that are not all linked by a parent-subsidiary relationship? A. consolidated FS B. unconsolidated FS C. combined FS D. separate FS

C

Which statement is false concerning users and their information needs? A. Lenders are interested in information that enables them to determine whether their loans and the interest on these loans will be paid when due B. The providers of risk capital and their advisers are concerned with the risk inherent in, and return provided by their investment C. Government and its agencies have an interest in information about the continuance of an enterprise especially when they have long-term involvement or are dependent on the enterprise D. Employees and their representative groups are interested in information about the stability and profitability of the entity

C

Which statement is incorrect regarding assets in accordance with the Conceptual Framework? A. assets are resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity B. assets are recognized in the statement of financial position if it is probable that the future economic benefits will flow to the entity and the item has a cost or value that can be measured reliably C. assets are required to be measured at fair value D. assets are presented in the SFP either as current or noncurrent

C

Which is not a specific purpose of the Conceptual Framework? A. To assist FRSC in the development of future Philippine Financial Reporting Standard (PFRSs) and in its review of existing PFRSs B. To assist users of financial statements in interpreting information contained in financial statements C. Provide those who are interested in the work of FRSC with information about its approach to the formulation of PFRSs D. To assist the BOA in promulgating rules and regulations affecting the practice of accountancy in the Philippines

C.

Changing the method of inventory valuation should be reported in the financial statements under what qualitative characteristic of accounting information? A. understandability B. verifiability C. timeliness D. comparability

D

Other comprehensive income includes all of the following except A. Unrealized gain on available for sale financial asset B. Loss from translating the financial statements of a foreign operation C. Actuarial gain on defined benefit plan that is fully recognized D. Share premium

D

What is the quality of information that enables users to better forecast future operations? A. reliability B. materiality C. comparability D. relevance

D

Which of the following helps users make good decisions? A. a faithful representation of an irrelevant phenomenon B. an unfaithful representation of a relevant phenomenon C. both a & b D. neither a nor b

D

Which of the following is (are) essential to the existence of an asset? A. legal right B. physical form C. both a & b D. neither a nor b

D

Which statement is incorrect regarding materiality? A. information is material if omitting it or misstating it could influence decisions that users make on the basis of financial information about a specific reporting entity B. materiality is based on the nature or magnitude, or both, of the items to which the information relates in the context of an individual entity's financial report C. the IASB does not specify a uniform quantitative threshold for materiality or predetermine what could be material in a particular situation D. none of the above

D

Which statement is incorrect regarding prudence? A. neutrality is supported by the exercise of prudence B. prudence is the exercise of caution when making judgments under conditions of uncertainty C. prudence does not allow for overstatement of assets, liabilities, income or expenses D. prudence allows for understatements of assets, liabilities, income or expenses

D

Which statement is incorrect regarding the Conceptual Framework for Financial Reporting? A. Describes the objective of, and the concepts for, general purpose financial reporting B. Serves as a guide in developing future PFRSs and as a guide to resolving accounting issues that are not addressed directly in existing PFRSs C. Is not a PFRS and hence does not define standards for any particular measurement or disclosure nature D. Prevails in cases where there is conflict with a PFRS

D.

TRUE OR FALSE Comprehensive income is the total change in shareholders' equity that occurred during the period.

FALSE

TRUE OR FALSE Inappropriate accounting treatment may be rectified either by disclosure of accounting policies or by notes or explanatory material

FALSE

TRUE OR FALSE Philippine Financial Reporting Standards require a company to classify expenses in an income statement by function.

TRUE

The new Conceptual Framework defines recognition as A. process of capturing for inclusion in the statement of financial position or the statement(s) of financial performance an item that meets the definition of an asset, liability, equity, income or expenses B. process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the criteria for recognition C. removal of a previously recognized asset or liability form an entity's SFP D. process of determining the monetary amounts at which the elements of the financial statements are to be recognized and carried in the balance sheet and income statement

A

The underlying theme of the conceptual framework is A. decision usefulness B. understandability C. reliability D. comparability

A

Which concept of capital should be adopted by an entity if the users of financial statements are primarily concerned with the maintenance of nominal invested capital or the purchasing power of invested capital? A. financial concept B. physical concept C. either a or b D. neither a nor b

A

Which of the following is the foundation of the Conceptual Framework? A. The objective of general purpose financial reporting B. A reporting entity concept C. The qualitative characteristics of and the constraint on useful financial information D. The elements of financial statements

A.

What is an entity-specific aspect of relevance? A. Predictive value B. Confirmatory value C. Timeliness D. Materiality

D.

Financial statements achieved fair presentation when A. The PFRS issued by FRSC are appropriately applied, with additional disclosures when necessary B. Inappropriate accounting treatments are corrected or rectified through disclosures C. They comply with majority of the requirements of each applicable PFRS and each applicable interpretations D. All of the above

A

The fundamental qualitative characteristics are A. relevance and reliability B. relevance and faithful representation C. timeliness and verifiability D. understanding and comparability

B.

A characteristic of the notes to the financial statements is that: A. A characteristic of the notes to the financial statements is that: B. They are separate from the financial statements. C. They are not important. D. They describe accounting policies.

D

The decisions of the 'primary users' involve A. Buying equity and debt instruments B. Selling or holding equity and debt instruments C. Providing or settling loans and other forms of credit D. All of the above

D.

Which of the following remained unchanged in the 2018 Conceptual Framework? A. The reporting entity B. Derecognition C. Presentation and disclosure D. Concepts of capital and capital maintenance

D.

TRUE OR FALSE When the financial statements are not prepared on a going - concern basis, this fact should be disclosed

TRUE