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WorksheetsCFAS REVIEWER PT. 1
Total questions: 111
Worksheet time: 56mins
What is the overall objective of accounting?
a. To provide the information that the managers of an economic entity need to control the operations.
b. To provide information that the creditors can use in deciding whether to grant loans to an entity.
c. To measure the periodic income of the economic entity.
d. To provide quantitative financial information about an entity useful in making economic decision.
What is the law regulating the practice of accountancy in the Philippines?
a. R.A. No. 9298
b. R.A. No. 9198
c. R.A. No. 9928
d. R.A. No. 9892
What is the body authorized by law to promulgate rules and regulations affecting the practice of the accountancy profession in the Philippines?
a. Board of Accountancy
b. Philippine Institute of Certified Public Accountants
c. Securities and Exchange Commission
d. Financial Reporting Standards Council
What are the three main areas in the practice of the accountancy profession?
a. Public accounting, private accounting and managerial accounting.
b. Auditing, taxation and managerial accounting.
c. Financial accounting, managerial accounting and corporate accounting.
d. Public accounting, private accounting and government accounting.
The term recognized is synonymous with the term
a. Recorded
b. Realized
c. Matched
d. Allocated
Which statement is correct in relation to the practice of public accountancy?
a. Single practitioners for the practice of public accountancy shall be registered CPAs in the Philippines.
b. Partners of partnerships formed for the practice of public accountancy shall be registered CPAs in the / Philippines.
c. The Securities and Exchange Commission shall not register any corporation organized for the practice of public accountancy.
d. All of these statements are correct about the practice of public accountancy.
5. CPAs are licensed by
a. The PICPA
b. The SEC
c. The city government
d. State government
What is the standard-setting body in the Philippines at the present time?
a. Accounting Standards Council
b. Auditing and Assurance Standards Council
c. Philippine Accounting Standards Board
d. Financial Reporting Standards Council
All of the following are represented in FRSC, except
a. Board of Accountancy
b. Securities and Exchange Commission
c. Commission on Audit
d. Department of Budget and Management
The Philippine Financial Reporting Standards collectively include
a. PFRS corresponding to IFRS.
b. PAS corresponding to IAS
c. Philippine Interpretations corresponding to IFRIC and SIC Interpretations and Interpretations developed by PIC.
d. All of these are included in Philippine Financial Reporting Standards
Accounting standard-setting has been characterized as
a. A political process
b. Using the scientific method
c. Pure deductive reasoning
d. A legal process
GAAP is an abbreviation for
a. Generally authorized accounting procedures
b. Generally applied accounting procedures
c. Generally accepted auditing practices
d. Generally accepted accounting principles
It is the area of the accountancy profession that encompasses the process of analyzing, classifying, summarizing and communcating all transactions involving the receipt and disposition of government funds and property and interpreting the results thereof.
a. Internal auditing
b. External auditing
c. Private accounting
d.) Government accounting
The Continuing Professional Development is required for
a. Renewal of CPA license
b. Accreditation to practice the accountancy profession
c. Both renewal of CPA license and accreditation to practice the accountancy profession
d. Neither renewal of CPA license nor accreditation to practice the accountancy profession
A CPA shall be permanently exempted from renewal of CPA license
a. At the age of 65 years
b. When working abroad
c. When practicing the profession abroad
d. When studying abroad
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.
The International Accounting Standards Board
a. Was the predecessor to the IASC
b. Can overrule the USA GAAP when their policies disagree.
c. Promotes the use of high-quality and understandable global accounting standards.
d. Has its headquarters in Geneva
The IASB declared that the merits of proposed standards are assessed
a. From a position of neutrality
b. From a position of materiality
c. Based on possible impact on behavior
d. Based on arguments of lobbyist
The standard-setting process includes in the correct order
a. Exposure draft, research, discussion paper and accounting standard
b. Research, exposure draft, discussion paper and accounting standard
c. Research, discussion paper, exposure draft and accounting standard
d. Discussion paper, research, exposure draft and accounting standard
The IASB employs a due process system which
a. Is an efficient system for collecting dues from members.
b. Enables interested parties to express their views on issues under consideration.
c. Identifies the accounting issues that are the most important.
d. Requires that all CPAs must receive a copy of IFRS.
What is due process in standard-setting by IASB?
a. IASB operates in full view of the public.
b. Public hearings are held on proposed standards.
c. Interested parties can make their views known.
d. All of these are part of due process in standard-setting.
The standards published by IASB are called
a. International Accounting Standards
b. Financial Reporting Standards
c. International Financial Reporting Standards
d. Statement of Financial Accounting Standards
What is a possible danger if politics plays too big a role in developing IFRS?
a. Financial reporting standards are not truly generally accepted.
b. Individuals may influence the standards.
c. User groups become active.
d. The IASB delegates its authority to elected officials.
Accounting standard-setting
a Can be described as a political process which reflects political actions of various interested user groups as well as a product of research and logic.
b. Is based solely on research and empirical findings.
c. Is a legalistic process
d. Is democratic in the sense that a majority of accountants must agree with a standard before it becomes enforceable.
IFRIC Interpretations issued by IASB
a. Are considered authoritative and must be followed.
b. Cover newly identified financial reporting issues not specifically addressed.
c. Cover issues where unsatisfactory or conflicting interpretations have developed.
d. All of these are true about IFRIC Interpretations.
Which is true about the Conceptual Framework?
a. The Conceptual Framework is not a Standard.
b. The Conceptual Framework describes the concepts for general purpose financial reporting.
c. In case of conflict, the requirements of the IFRS prevail over the Conceptual Framework.
d. All of these statements are true.
Which is not a purpose of Conceptual Framework?
a. To assist the IASB in developing IFRS.
b. To assist preparers to develop consistent accounting policy when no standard applies to a particular transaction or when Standard allows a choice of accounting policy.
c. To assist all parties to understand and interpret the Standards.
d. To assist regulatory agencies in issuing rules and regulations for a particular industry.
What is the authoritative status of the Framework?
a. The Conceptual Framework has the highest level of authority.
b. In the absence of a standard or an interpretation, the Conceptual Framework shall be followed.
c. In the absence of a standard or an interpretation, management shall consider the Conceptual Framework in developing and applying an accounting policy that results in information that is relevant and reliable
d. The Conceptual Framework applies only when the IASB develops new standards.
The Conceptual Framework is intended to establish
a. GAAP in financial reporting.
b. The meaning of "present fairly in accordance with GAAP".
c. The objectives and concepts for use in developing standards of financial accounting and reporting.
d. The hierarchy of sources of GAAP.
The underlying theme of the Conceptual Framework is
a. Decision usefulness
b. Understandability
c. Timeliness
d. Comparability
A Conceptual Framework should
a. Lead to uniformity of financial statements.
b. Eliminate alternative accounting principles.
C. Guide multinational entities in developing GAAP.
d. Define the basic objectives, terms and concepts.
Which of the following is not a benefit associated with the Conceptual Framework?
a. A Conceptual Framework should increase users' understanding and confidence in financial reporting.
b. Pratical problems should be more quickly solvable.
c. A coherent set of accounting standards should result.
d. Business entities will need far less assistance from accountants.
Which is not true about the Conceptual Framework?
a. The Conceptual Framework should be a basis for standard setting.
b. The Conceptual Framework should allow practical problems to be solved more quickly.
c. The Conceptual Framework should be based on fundamental truth derived from law.
d. The Conceptual Framework should increase users' understanding and confidence in financial reporting.
Which is not a purpose of the Conceptual Framework?
a. To provide definitions of key terms and fundamental concepts.
b. To provide specific guidelines for resolving situations not covered by existing accounting standards.
c. To assist accountants in selecting among alternative accounting and reporting methods.
d. To assist the International Accounting Standards Board in the standard-setting process.
Which is not a purpose of the Conceptual Framework?
a. To enable the accountancy profession to solve more quickly emerging practical problems.
b. To provide a foundation from which to build more useful financial accounting standards.
c. To enhance comparability of financial statements across entities.
d. To assist the Board of Accountancy to promulgate rules and regulations affecting the accountancy profession.
What are the attributes that make the information provided in the financial statements useful to the readers?
a. Qualitative characteristics of financial information
b. Quantitative characteristics of financial information
c. Elements of financial statements
d. Objectives of financial reporting
Qualitative characteristics
a. Are considered either fundamental or enhancing.
b. Contribute to the decision-usefulness of financial reporting information.
c. Distinguish better information from inferior information for decision-making purposes.
d. All of the choices are correct.
3. The fundamental qualitative characteristics are
a. Relevance and faithful representation
b. Relevance, faithful representation and materiality
c. Relevance and reliability
d. Faithful representation and materiality
What is the quality of information that gives assurance that it is reasonably free of error and bias
a. Relevance
b. Faithful representation
c. Verifiability
d. Neutrality
4. Accounting information is considered relevant when it
a. Can be depended on to represent the economic conditions and events that it is intended to represent.
b. Is capable of making a difference in a decision.
c. Is understandable by reasonably informed users of accounting information.
d. Is verifiable and neutral.
The ingredients of relevant financial information are
a. Predictive value and confirmatory value
b. Predictive value, confirmatory value and timeliness
c. Predictive value, confirmatory value and materiality
d. Predictive value, confirmatory value, timeliness and materiality
Which of the following is the best description of faithful representation in relation to information in financial statements?
a. Influence on the economic decisions of users
b. Inclusion of a degree of caution
c. Freedom from material error
d. Comprehensibility to users.
To achieve faithful representation, the financial statements
a. Must have predictive and confirmatory value.
b. Must be complete, neutral and reasonably free from
error.
c. Are understandable, comparable, verifiable and timely.
d. Must possess all of these.
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.
a. Relevance
b. Verifiability
c. Neutrality
d. Completeness
In the event of conflict between the economic substance of a transaction and the legal form, the economic substance shall prevail.
a. Form over substance
b. Substance over form
c. Relevance
d. Completeness
The overriding qualitative characteristic of accounting information is usefulness for decision-making.
a. Relevance
b. Understandability
c. Faithful representation
d. Decision usefulness
An entity issuing the annual financial reports within one month after the end of reporting period is an example of which enhancing quality of accounting information?
a. Neutrality
b. Timeliness
c. Predictive value
d. Representational faithfulness
Allowing entities to estimate rather than physically count inventory at interim periods is an example of a tradeoff between
a. Verifiability and comparability
b. Timeliness and comparability
c. Timeliness and verifiability
d. Neutrality and consistency
Which of the following terms best describes information that influences the economic decisions of users?
a. Reliable
b. Prospective
c. Relevant
d. Understandable
Which qualitative characteristic of financial information requires that information should not be biased in favor of one group of users to the detriment of others?
a. Relevance
b. Free from error
c. Completeness
d. Neutrality
What is the quality of information that enables users to better forecast future operations?
a. Faithful representation
b. Materiality
c. Comparability
d. Relevance
According to the Conceptual Framework, predictive value and confirmatory value are ingredients of
a. Relevance
B. Faithful representation
c. Understandability
d. Comparability
For information to be useful, the linkage between the users and the decisions made is
a. Relevance
b. Faithful representation
c. Understandability
d. Verifiability
Which statement is true in relation to the enhancing quality of understandability?
a. Users have a reasonable knowledge of business and economic activities and review the information with reasonable diligence.
b. Users are expected to have significant business knowledge.
c. Financial statements shall exclude complex matters.
d. Financial statements shall be free from material error.
The enhancing qualitative characteristics of financial information are
a. Comparability and understandability
b. Verifiability and timeliness
c. Comparability, understandability and verifiability
d. Comparability, understandability, verifiability and timeliness
Financial information exhibits consistency when
a. Accounting procedures are adopted which smooth net income and make results consistent between years.
b. Gains and losses are shown separately on the income statement.
c. Accounting entities give similar events the same accounting treatment each period.
d. Expenditures are reported as expenses.
When information about two different entities engaged in the same industry has been prepared and presented in similar manner, the information exhibits the enhancing qualitative characteristic of
a. Relevance
b. Faithful representation
c. Consistency
d. Comparability
The characteristic that is demonstrated when a high degree of consensus can be secured among independent measurers using the same measurement method is
a. Relevance
b. Understandability
c. Verifiability
d. Neutrality
Which term best describes information in financial statements that is neutral?
a. Understandable
b. Comparable
c. Relevant
d. Unbiased
What is meant by comparability when discussing financial accounting information?
a. Information has predictive and confirmatory value.
b. Information is reasonably free from error.
c. Information is measured and reported in a similar fashion across entities.
d. Information is timely.
What is meant by consistency when discussing financial accounting information?
a. Information is measured and reported in a similar fashion across points in time.
b. Information is timely.
c. Information is measured similarly across the industry.
d. Information is verifiable.
Which of the following is not an enhancing qualitative characteristic?
a. Understandability
b. Profit-oriented
c. Timeliness
d. Comparability
Changing the method of inventory valuation should be reported in the financial statements under what enhancing quality of accounting information?
a. Understandability
b. Verifiability
c. Timeliness
d. Comparability
When an entity applies the same accounting treatment to similar events from period to period, the entity is exhibiting which quality?
a. Verifiability
b. Consistency
c. Predictive value
d. Neutrality
When there is agreement between a measure or description and the phenomenon it purports to represent, the information possesses which characteristic?
a. Verifiability
b. Predictive value
c. Faithful representation
d. Timeliness
The qualitative characteristic of faithful representation includes
a Predictive value
b. Neutrality
c. Confirmatory value
d. Timeliness
Enhancing qualitative characteristics of accounting information include all of the following, except
a. Timeliness
b. Materiality
c. Comparability
d. Verifiability
The enhancing quality of understandability means that information should be understood by
a. Those who are experts in the interpretation of financial information
b. Those who have a reasonable understanding of business and economic activities
c. Financial analysts
d. CPAs
Enhancing qualitative characteristics of accounting information include
a. Relevance and comparability
b. Comparability and timeliness
c. Understandability and relevance
d. Neutrality and comparability
When different competent accountants independently agree on the amount and method of reporting an economic event, what is the concept demonstrated?
a. Reliability
b. Comparability
c. Completeness
d. Verifiability
According to the conceptual framework, verifiability implies
a. Legal evidence
b. Logic
c. Consensus
d. Legal verdict
When an entity has started placing its quarterly financial statements on its web page, thereby reducing by ten days the time to get information to investors and creditors, the qualitative concept involved is
a. Comparability
b. Consistency
c. Timeliness
d. Faithful representation
When an entity changed the inventory valuation method, which characteristic is jeopardized by this change?
a. Comparability
b. Representational faithfulness
c. Consistency
d. Feedback value
Recognizing expected losses immediately but deferring expected gains is an example of
a. Materiality
b. Conservatism
c. Cost effectiveness
d. Timeliness
Which statement about materiality is true?
a. An item must make a difference or it need not be disclosed.
b. Materiality is a matter of relative size or importance.
c. An item is material if the omission or mistatement
would influence the judgment of a primary user.
d. All of these statements are true about materiality.
Conservatism is selecting an accounting alternative that
a. Understates assets and net income
b. Has the least favorable impact on equity
c. Overstates liabilities
d. Is least likely to mislead users of financial information
An item would be considered material when cost
a. The expected benefit exceeds the additional cost.
b. The impact on earnings is greater than 10%.
c. The standard definition of materiality is met.
d. Omitting, misstating or obscuring the information would make a difference to the primary users.
Which best describes the cost-benefit constraint?
a. The benefit of the information must be greater than the cost of providing it.
b. Financial information should be free from cost to users.
c. Cost of providing financial information is not always evident or measurable but must be considered.
d. All of the choices are correct.
What is the general objective of financial statements?
a. To provide information about economic resources of an entity, claims against the entity and changes in the economic resources and claims.
b. To assess future cash flows to the entity.
c. To assess management stewardship of economic
resources.
d. To satisfy the information needs of users of financial statements.
Gains on assets unsold are identified, in a precise sense, by the term
a. Unrecorded
b. Unrealized
c. Unrecognized
d. Unallocated
Which statement conforms to the realization concept?
a. Depreciation was assigned to product unit cost
b. Equipment was sold in exchange for a note receivable
c. Cash was collected on accounts receivable
d. Product unit costs were assigned to cost of goods sold
Gains on assets unsold are identified, in a precise sense, by the term
a. Unrecorded
b. Unrealized
c. Unrecognized
d. Unallocated
Which of the following is not a theoretical basis for the allocation of expense?
a. Immediate recognition
b. Systematic and rational allocation
c. Cause and effect association
d. Profit maximization
Which of the following is an example of the cause and effect association principle?
a. Sales commission
b. Allocation of insurance cost
c. Depreciation of property, plant and equipment
d. Officers' salaries
Which of the following is an application of the systematic and rational allocation principle?
a. Doubtful accounts
b. Research and development cost
c. Warranty cost
d. Amortization of intangible asset
Which of the following would be matched with current revenue on a basis other than association of cause and effect?
a. Goodwill
b. Cost of goods sold
c. Sales commission
d. Warranty cost
Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting periods?
a. To reduce the income tax liability
b. To aid management in the decision-making process
c. To match the cost of production with revenue
d. To adhere to the accounting concept of conservatism
Which of the following principles best describes the conceptual rationale for the method of matching depreciation with revenue?
a. Associating cause and effect
b. Systematic and rational allocation
c. Immediate recognition
d. Partial recognition
Which of the following should be expensed under the principle of systematic and rational allocation?
a. Salesmen's monthly salaries
b. Insurance premiums
c. Transportation to customers
d. Electricity to light office building
The writeoff of a worthless patent is an example of which of the following principles?
a. Associating cause and effect
b. Immediate recognition
c. Systematic and rational allocation
d. Objectivity
What is an example of cost that cannot be directly related to particular revenue but incurred to obtain benefits that are exhausted in the period when the cost is incurred?
a. Sales commissions
b. Sales salaries
c. Freight in
d. Prepaid insurance
The matching principle is best demonstrated by
a. Not recognizing any expense unless some revenue is realized
b. Associating effort with accomplishment
c. Recognizing prepaid rent received as revenue
d. Establishing an appropriation for contingency
Bad debt expense is recognized according to which expense recognition principle?
a. Direct matching
b. Immediate recognition
c. Systematic and rational allocation
d. Critical event recognition
What is the general approach as to when product costs are recognized as expenses?
a. In the period when the expenses are paid.
b. In the period when the expenses are incurred.
c. In the period when the vendor invoice is received.
d. In the period when the related revenue is recognized.
When should an expenditure be recorded as an asset rather than an expense?
a. Never
b. Always
c. If the amount is material
d. When there is a right that has the potential to produce economic benefit
Which accounting principle is being observed when an accountant charges to expense a cost that contributed to revenue during a period?
a. Revenue realization
b. Matching
c. Monetary unit
d. Conservatism
Which of the following is not an acceptable basis for the recognition of expense?
a. Systematic and rational allocation
b. Direct matching
c. Immediate recognition
d. Cash disbursement
A cause and effect relationship is implicit in the
a. Realization principle
b. Historical cost principle
c. Matching principle
d. Going concern assumption
An example of direct matching of an expense with revenue would be
a. Depreciation expense
b. Office salaries expense
C. Direct labor costs incurred to produce inventory sold during a period
d. Advertising expense
Which category of expenses is subject to immediate recognition in the income statement?
a. Utilities expense for the production line of a manufacturer
b. Repairs and maintenance expense incurred on production equipment of a manufacturer
c. The salary of the production foreman
d. The salary of the entity president officer's salary
Which principle best describes the rationale for matching distribution costs and administrative expenses with revenue of the current period?
a. Direct matching
b. Systematic and rational allocation
c. Immediate recognition
d. Partial recognition
Which statement is not true about current value?
a. Fair value of an asset is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.
b. Value in use is the present value of the cash flows expected to be derived from the use and ultimate disposal of an asset.
c. Fulfillment value is the present value of the cash expected for the payment of liability.
d. Current cost of an asset is the fair value of an equivalent asset at measurement date, comprising consideration paid & transaction cost.
The measurement bases include
a. Historical cost
b. Current value
c. Assessed value
d. Historical cost and current value
Current value includes
a. Fair value and present value
b. Fair value and current cost
c. Current cost and present value
d. Fair value, present value and current cost
Which measurement attribute is not currently used in practice?
a. Present value
b. Fair value
c. Current cost
d. Inflation adjusted cost
It is the amount of cash or cash equivalent that would have to be paid if the same or an equivalent asset was acquired currently.
a. Historical cost
b. Current cost
c. Realizable value
d. Present value
Asset measurements in financial statements
a. Are confined to historical cost
b. Are confined to historical cost and current cost
c. Reflect several financial attributes
d. Do not reflect exit value
Which of the following should be considered a current value measure?
a. Replacement cost and exit value
b. Replacement cost and discounted cash flow
c. Exit value and discounted cash flow
d. Replacement cost, exit value and discounted cash flow
The primary measurement basis is
a. Historical cost
b. Fair value
c. Value in use
d. Current cost
Which measurement basis is currently used in financial statements?
a. Present value
b. Present value and settlement value
c. Settlement value and fair value
d. Present value, settlement value and fair value
Which measurement attribute is the most relevant?
a. Present value
b. Exit value
c. Current cost
d. Historical cost
