Group Activity No. 2 - FABM 1

The set of accounting standards followed in the Philippines.

• IFRS

• PFRS

• GAAP

• FASB

According to this concept, revenues, and exhibiting cause-and-effect relationships should be recognized in the same accounting period.

• Matching Principle

• Accrual Basis of Accounting

• Cash Basis of Accounting

• Time Period Assumption

Which of the following statements regarding accounting estimates is true?

• Accounting estimates are necessary for the preparation of the financial statements.

• The use of accounting estimates undermines the reliability of the financial statements.

• Accounting estimates should be determined based purely on research.

• It is better to not recognize items in the accounting records than to use estimates for them.

It is also known as conservatism.

• Use of judgement and estimates

• Accounting entity assumption

• Matching principle

• Prudence

This assumption states that a business is an entity separate and distinct from its owners.

• Separate legal existence

• Going concern assumption

• Accounting entity assumption

• Time period assumption

Which of the following statements describes the time period assumption?

• The indefinite life of a company can be subdivided into periods of varying lengths for financial reporting purposes.

• The indefinite life of a company can be subdivided into periods of equal lengths for financial reporting purposes.

• The main reason why financial reports are generated periodically is the benefit derived by management from such reports.

• The first two statements only

A company entered into a contract purporting to be a lease but really is a sale. Which of the following is true?

• The company can decide whether to treat the transaction as a lease or as a sale.

• The company should treat the transaction as a lease.

• The company should treat the transaction as a sale.

• When substance differs from legal form, the company should not recognize the transaction in the accounting records.

Which of the following is/are included in the accounting standards being applied in the Philippines?

I. Philippine Financial Reporting Standards

II. Philippine Accounting Standards

III. Interpretations of the accountings standards by the Philippine Interpretations Committee

• I only

• I and II only

• I and III only

• All of the above

All of the following are objectives of the IFRS, EXCEPT:

I. To enhance the consistency and comparability of the financial statements of all companies

II. To cope with the change brought by globalization

III. To create accounting standards that will be acceptable and applicable to all countries

• I only

• I and II only

• I and III only

• All of the above

Which of the following is NOT an accounting assumption?

• Going concern

• Time period

• Matching principle

• Accounting entity