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WorksheetsCFAS - Conceptual Framework
Total questions: 35
Worksheet time: 18mins
Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgement and decision by users of the information. This accounting definition is given by
Accounting Standards Council (ASC)
American Accounting Association
American Institute of CPA (AICPA)
International Accounting Standards Board (IASB)
Which accounting process is the recognition or nonrecognition of business activities as accountable events?
Identifying
Measuring
Recording
Classifying
These are events that affect the entity and in which other entities participate.
Past events
Current events
External events
Internal events
It is the law mandating and strengthening the continuing professional development program for all regulated professions, including the accounting profession.
R.A. No. 9298
R.A. No. 9198
R.A. No. 10912
R.A. No. 11912
This is the area of accounting where a CPA is employed in business entities in various capacity as accounting staff, chief accountant, internal auditor, and controller
Public Accounting
Government Accounting
Financial Accounting
Private Accounting
Which is not required to be represented in the FRSC?
Department of Budget and Management
Bureau of Internal Revenue
Commission on Audit
Bangko Sentral ng Pilipinas
Financial accounting is concerned with
General purpose reports on financial position and financial performance.
Specialized reports for inventory management and control.
Specialized reports for income tax computation and recognition.
General purpose reports on changes in stock prices and future estimate for market position.
Financial accounting is the area of accounting that emphasizes reporting to
Management
Regulatory bodies
Internal auditors
Creditors and Investors
Generally accepted accounting principles.
Are accounting adaptations based on the laws of economic science.
Derive their credibility and authority from legal rulings and court precedents.
Derive their credibility and authority from the national government through SEC.
Derive their credibility and authority from general recognition and acceptance by
the accountancy profession.
Proper application of accounting principles is most dependent upon the
Existence of specific guidelines
Oversight of regulatory bodies
External audit function
Professional judgment of the accountant
Once an accounting standard has been established
The standard is continually reviewed to see if modification is necessary.
The standard is not reviewed unless the SEC makes a complaint.
The task of reviewing the standard to see if modification is necessart is given to PICPA.
The principle of consistency requires that no revisions ever be made to the standard.
Which of the following is not true?
As independent auditor, CPAs are responsible for expressing an opinion as to the
fairness of financial statements.
The work of an accountant begins when the work of an auditor ends.
The focus of government accounting is the custody and administration of public funds.
All of the above are true.
The International Accounting Standards Board was formed to
Enforce IFRS to foreign countries
Develop worldwide accounting standards
Establish accounting standards for multinational entities
Develop accounting standards for countries that do not have their own standard-setting bodies
Which of the following terms best describes financial statements whose basis of accounting recognizes transactions and other events when they occur?
Accrual basis of accounting
Going concern basis of accounting
Cash basis of accounting
None of the above
The accrual basis of accounting is based primarily on
Conservatism and revenue realization
Conservatism and matching
Consistency and matching
Revenue realization and matching
The Conceptual Framework mentions only one assumption, namely?
Going concern
Time period
Accounting entity
Monetary unit
Which of the following assumptions may not be followed when an entity in bankruptcy reports financial results?
Going concern
Time period
Accounting entity
Monetary unit
The valuation of a promise to receive cash in the future at present value is valid because of the accounting concept of
Going concern
Accounting entity
Time Period
Monetary unit
This accounting concept justifies the usage of accruals and deferrals.
Going concern
Materiality
Consistency
Monetary unit
The primary measurement basis currently used to value assets in external financial statements of an entity is
The current market price if the assets currently held by an enity were sold on the open market
The current market price if the assets currently held by an enity were purchased on the open market
The present value of the cash flows the assets are expected to generate over their remaining
useful lives,
The market price of the assets held by an entity at the date the assets were acquired.
A conceptual framework of accounting should
Lead to uniformity of financial statements among entities within the same industry
Eliminate alternative accounting principles and methods
Guide the PICPA in developing generally accepted auditing standards
Define the basic objectives, terms, and concepts of accounting
Which of the following is not a purpose of the conceptual framework of accounting?
To provide definitions of key terms and fundamental concepts
To provide specific guidelines for resolving situations not covered by existing accounting standards
To assist accountants and others in selecting amont alternative accounting and reporting methods
To assist FRSC in the standard setting process
The conceptual framework is intended to establish
Generally accepted accounting principles in financial reporting by entities
The meaning of "present fairly in accordance with GAAP"
The objectives and concepts for use in developing standards of financial accounting and reporting
The hierarchy of sources of GAAP
Which of the following is incorrect concerning the conceptual framework?
The framework applies to the financial statements of all entities, whether in the public and private sector
Special purpose financial reports such as prospectuses and computations prepared for tax purposes are
within the scope of the framework
The framework is not a Philippine Financial Reporting Standard and hence does not define standard for
any particular measurement or disclosure issue
The framework is concerned with general purpose financial statements including consolidated FS
Which of the following is listed in the framework as underlying assumption regarding financial statements?
The financial statements are reliable
Any changes in accounting policy are neutral
The financial statements are prepared under the accrual basis
The entity can be viewed as a liquidating concern
Which of the following statements concerning the objectives of financial reporting is correct?
The objectives are intended to be specific in nature
The objectives are directed primarily toward the needs of internal users of accounting information
The objectives are the end result of the conceptual framework project
The objectives encompass not only financial statement disclosures but other information as well
What are the qualitative characteristics of financial statements?
Qualitative characteristics are the attributes that make the information provided in financial statements useful to users
Qualitative characteristics are broad classes of financial effects of transactions and other events
Qualitative characteristics are nonqualitative aspects of an entity's position and performance and changes in financial position
Qualitative characteristics measure the extent to which an entity has complied with all relevant standards and interpretations
Which of the qualitative characteristics relate to the content of financial statements?
Relevance and reliability
Understandability and comparability
Reliability and understandability
Reliability and comparability
Which of the qualitative characteristics relate to the presentation of financial statements?
Relevance and reliability
Understandability and comparability
Reliability and understandability
Reliability and comparability
It is the quality of information that assures readers that the information is free from bias or errors and faithfully represents what it purports to show
Understandability
Relevance
Reliability
Comparability
The financial accounting information is directed toward the common needs of users and is independent of presumptions about particular needs and desires of specific users.
Relevance
Verifiability
Neutrality
Completeness
The overriding qualitative characteristic of accounting information is
Relevance
Understandability
Decision usefulness
Completeness
Conservatism is best described as selecting an accounting alternative that
Understates assets and net income
Has the least favorable impact on owner's equity
Overstates, as opposed to understates, liabilities
Is least likely to mislead users of financial informations
An item would be considered material and therefore would be disclosed in financial statements if
The expected benefits of disclosure exceed the additional costs
The impact on earnings is greater than 10%
The standard definition of materiality is met
The omission or misstatement of the amount would make a difference to the users
Financial information exhibits consistency when
Accounting procedures re adopted which smooth net income and make results consistent between years
Gains and losses are shown separately on the income statement
Accounting entities give similar events the same accounting treatment each period
Expenditures are reported as expenses and netted against revenue in the period in which the are paid
