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WorksheetsConceptual Framework and Accounting. Standards
Total questions: 50
Worksheet time: 25mins
PAS 1 requires an assessment of the entity’s ability to continue as a going concern each time financial statements are prepared. Who is responsible in making this assessment?
Accountant
Auditor
Management
Government regulatory body
These are the end product of the financial reporting process and the means by which information gathered and processed is periodically communicated to users.
Financial reporting
Financial statements
Financial products
Accounting statements
Which of the following is not one of the general features of financial statements under PAS 1?
Fair presentation and compliance with PFRSs
Going Concern
Cash Basis
Materiality and aggregation
Who is responsible for the preparation and the fair presentation of an entity’s financial statements in accordance with the PFRSs?
Any accountant
Certified Public Accountant
Auditor
Management
This type of presentation of statement of financial position does not show distinctions between current and noncurrent items.
Classified presentation
Unclassified presentation
Non-discriminating presentation
Awesome presentation
In making an economic decision, an investor needs information on the amounts of an entity’s economic resources and claims to those resources. That investor would most likely refer to which of the following financial statements?
Statement of financial position
Statement of comprehensive income
Statement of cash flows
Statement of changes in equity
Which of the following financial statements would be dated as at a certain date?
Statement of financial position
Statement of profit or loss and other comprehensive income
Statement of cash flows
All of these
Imagine you are a business manager. You would be most awesome as a manager in which of the following independent scenarios?
Your company has an average total assets of ₱10M during the year. At the end of the year, your company reported profit of ₱1M. The average return of other similar companies with the same level of assets is 30%.
Your adoption of accounting policy has led to the immediate recognition of expenses. Those costs could have otherwise been allocated over several periods. Accordingly, your company did not declare dividends during the period. This resulted to a decline in the market value of your company’s stocks while the prices of all other stocks in the stock market have increased.
You changed your company’s method of allocating costs from an accelerated method to a straight-line method. The change met the requirements of the PFRSs. This led to the smoothing of expenses, which increased your company’s profit during the period by 12%, above the industry average.
You are great at closing deals, that’s why you’re a boss. Eager to increase your company’s resources, you were able to obtain a ₱20M loan from a bank. Interest expense on the loan during the year was ₱3.4M while the return on investments of loan proceeds was 2%.
This comprises all “non-owner changes in equity.” It excludes owner changes in equity, such as subscription, issuance, and reacquisition of share capital and declaration of dividends.
Other comprehensive income
Changes in equity
Total comprehensive income
Profit or loss
Materiality judgment is least likely to be applied in which of the following?
in determining whether an item warrants separate presentation in the financial statements or is to be aggregated with other items
in determining whether information could influence the decisions of users, and therefore, must be presented in the financial statements
in determining whether the cost of processing and communicating information exceeds the benefits expected to be derived from it
whether additional information needs to be provided, including the level of detail and conciseness of the information’s presentation
What organization that defined accounting as a function that provides quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision.
Accounting Standards Council (ASC)
American Institute of Certified Public Accountants (AICPA)
American Association of Accountants (AAA)
International Accounting Standards Board (IASB)
What is the analytical component of the accounting process?
Interpreting
Measuring
Identifying
Communicating
What is the process of preparing and distributing accounting reports to potential users of accounting information?
Summarizing
Measuring
Identifying
Communicating
Which of the following is NOT among the areas where a CPA can practice his/her profession?
Private Accounting
Financial Accounting
Public Accounting
Government Accounting
What is the highest accounting position in a private company?
Controller
General Accountant
Chief Financial Officer
Bookkeeper
The objectives of financial reporting for business enterprises are based on
The need for conservatism
Generally accepted accounting principles
The need of users of information
Reporting on management’s stewardship
The economic entity assumption
Is applicable to unincorporated business
Recognizes the legal aspects of business organizations
Requires periodic income measurement
Is applicable to all forms of business organizations
Which of the following is not a qualitative characteristic of financial statements?
Materiality
Comparability
Understandability
Relevance
Which area of public accounting means the examination of financial statements by a CPA for the purpose of expressing an opinion as to the fairness of the statements?
Internal Auditing
Taxation
Management advisory services
External auditing
They encompass the conventions, rules, and procedures necessary to define what accepted accounting practice is.
Generally accepted accounting principles
Accounting assumptions
Qualitative characteristics
Recognition principles
These are the attributes that make the information provided in financial statements useful to users.
Qualitative characteristics
Quantitative objectives
Underlying Assumption
Generally accepted accounting principles
The elements directly related to the measurement of financial position are
Assets, liabilities and equity
Assets and liabilities
Income and expenses
Assets, liabilities, equity, income and expenses
Financial accounting standard-setting
Can be described as a social process that reflects political actions of various interested user groups as well as a product of research and logic
Is based solely on research and empirical findings
Is a legalistic process based on rules promulgated by governmental agencies
Is democratic in the sense that a majority of accountants must agree with a standard before it becomes enforceable
Which is not included in the scope of the Conceptual Framework?
Qualitative characteristics that determine usefulness of financial accounting information
Definition, recognition, and measurement of the elements of financial statements
Generally accepted accounting principles
Concepts of capital and capital maintenance
It is an independent private sector body with the objective of achieving uniformity in the accounting principles, which are used by business enterprises for financial reporting around the world.
International Accounting Standards Board
International Federation of Accountants
Financial Accounting Standards Board
Securities and Exchange Commission
It is an independent private sector body with the objective of achieving uniformity in the accounting principles, which are used by business enterprises for financial reporting around the world.
International Accounting Standards Board
International Federation of Accountants
Financial Accounting Standards Board
Securities and Exchange Commission
The Conceptual Framework can override requirements in a Standard.
True
False
When developing requirements for IFRS Standards, can the International Accounting Standards Board depart from the Conceptual Framework?
No Way.
Yes, the Board is not required to use the Conceptual Framework when developing Standards
Yes, but only from aspects of the Conceptual Framework and only if doing so is needed to meet the objective of financial reporting
What are qualitative characteristic 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 financial position and financial performance.
Qualitative characteristics measure the extent to which an entity has complied with all relevant standards and interpretations.
Financial information violates the principle of consistency when
Firms in the same industry use different accounting methods to account for the same type of transactions
A company changes it estimates of the salvage value of a fixed asset
A company fails to adjust its financial statement for changes in the value of the measuring unit
A company changes its inventory valuation method and discloses this change in the notes to financial statements
The concept of verifiability is complied with when an accounting transactions occurs that
involves an arm-length transaction between two independent interests
furthers the objectives of the company
is promptly recorded in a fixed amount of pesos
allocates revenues or expense items in a rational and systematic manner
Which of the following statements on the scope of authority of the PFRSs, and the Conceptual Framework is false?
The Philippine Financial Reporting Standards in the Philippines include the PFRSs, the PASs, and the Philippine Interpretation
The Conceptual framework has the highest level of authority in financial accounting and reporting practice in the Philippines
The Philippine Accounting Standards applies to all reporting enterprises, whether publicly accountable or small and medium-sized entities
The Philippine Interpretation Committee (PIC) assists the FRSC and the public it serves by addressing newly identified financial reporting or controversial issues in the Philippines not specifically covered by the PFRSs.
The International Accounting Standards Board’s conceptual framework includes a cost-benefit constraint. Which of the following best describes the cost-benefit constraint?
The benefits of the information must be greater than the cost of providing it
Financial information should be free from cost to users of the information
Costs of providing financial information are not always evident or measurable, but must be considered
All of the choices are correct
The financial information qualities of faithful representation, verifiability, and freedom from error are typically applied in which of the following steps of the accounting cycle?
Journalizing
Posting
Trial Balance preparation
Adjusting entries
The use of special journal system of transactions and events is an application of which of the following qualities of financial reporting?
Faithful representation
Relevance
Timeliness
Completeness
A soundly developed conceptual framework of concepts and objectives should
Increase financial statements user’s understanding of and confidence in financial reporting
Enhance comparability among companies financial statements
Allow new emerging practical problems to be more quickly solved
All of these
What is the quality of information that is capable of making a difference in a decision?
Faithful representation
Understandability
Timeliness
Relevance
What are the three main areas in the practice of the accountancy profession?
Public accounting, private accounting, and managerial accounting
Auditing, taxation and managerial accounting
Financial accounting, managerial accounting and corporate accounting
Public accounting, private accounting and government accounting
The Continuing Professional Development is required for
Renewal of CPA license
Accreditation to practice the accountancy profession.
Both renewal of CPA license and accreditation to practice the accountancy profession
Neither renewal of CPA license nor accreditation to practice the accountancy profession.
What is the law regulating the practice of accountancy in the Philippines?
R.A. NO. 9298
R.A. NO. 9198
R.A. NO. 9928
R.A. NO. 9892
Choose the right answer.
Statement 1: A CPA shall be temporarily exempted from CPD requirements upon reaching the age of 65 years.
Statement 2: The International Accounting Standards Board or IASB now replaces the International Accounting Standards Committee or IASC.
Statement 3: Republic Act No. 9298 is the law mandating and strengthening the continuing professional development program for all regulated professions, including the accountancy profession.
All statements are true
Statement 1 and 3 are true
Statement 1 and 3 are false
All statements are false
standards that encompass the details, complexities and legalities of business and corporate accounting
Financial Accounting Standards Boards (FASB)
Generally Accepted Accounting Practices (GAAP)
American Institute of Certified Public Accountants (AICPA)
Securities and Exchange Commission (SEC)
private-sector organization, not under direct government control which helps improve accounting standards
Financial Accounting Standards Boards (FASB)
Generally Accepted Accounting Practices (GAAP)
American Institute of Certified Public Accountants (AICPA)
Securities and Exchange Commission (SEC)
What is the purpose of preparing the Statement of Financial Performance?
inform stakeholders the profitability of business
inform stakeholders the income and expenses of business
inform stakeholders the nature of business
inform stakeholders the size of business
What is the purpose of the Statement of Financial Position?
inform stakeholders the assets and liabilities of business
provides information on how resources are obtained and used and the claim by the owner on the net assets of the business at a point in time.
provides information on how resources are obtained and used in the business at a point in time.
inform stakeholders the owner's equity of business
What is the meaning of Profit for the year?
is the overall final money earned from operating the business
is the overall final income earned from operating the business
is the overall final position earned from operating the business
is the overall final profit earned from operating the business
What is the meaning of Gross profit?
profit from providing services to customers
profit from providing money to customers
profit from providing goods to customers
profit from providing loans to customers
What are the steps to calculate Profit for the year?
Gross profit + Income - Capital
Gross profit + Income + Expenses
Gross profit + Income - Expenses
Gross profit - Income - Expenses
What is the accounting equation used in the Statement of Financial Position?
Total assets = Total Income + Equity
Total assets = Total Loan + Equity
Total assets = Total liabilities + Equity
Total assets = Total Liabilities - Equity
