Scribd
Upload
355 views3 pages

Conceptual Framework For Financial Reporting: Quiz

The document appears to be a quiz on concepts from the Conceptual Framework for Financial Reporting. It contains 20 multiple choice questions testing understanding of key terms and principles from the framework, including objectives of financial reporting, qualitative characteristics like relevance and reliability, and definitions of concepts like materiality, assets, liabilities and equity.

Uploaded by

Nicholee Garcia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
355 views3 pages

Conceptual Framework For Financial Reporting: Quiz

The document appears to be a quiz on concepts from the Conceptual Framework for Financial Reporting. It contains 20 multiple choice questions testing understanding of key terms and principles from the framework, including objectives of financial reporting, qualitative characteristics like relevance and reliability, and definitions of concepts like materiality, assets, liabilities and equity.

Uploaded by

Nicholee Garcia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Page |1

Conceptual Framework for Financial Reporting


QUIZ:
1. A soundly developed conceptual framework of concepts and objectives should
a. increase financial statement users' understanding of and confidence in financial reporting.
b. enhance comparability among companies' financial statements.
c. allow new and emerging practical problems to be more quickly soluble.
d. all of these.

2. The overall objective of financial reporting is to provide information


a. about an entity's assets, liabilities, and owners' equity.
b. about an entity's financial performance during a period.
c. that is useful in making economic decisions.
d. that allows owners to assess management's performance.

3. The two primary qualities that make accounting information useful for decision making are
a. comparability and consistency.
b. materiality and timeliness.
c. relevance and reliability.
d. faithful representation and relevance.

4. Late information lacks this qualitative characteristic.


a. Tardiness c. Timeliness
b. Verifiability d. Comparability

5. Which of the following is considered a qualitative factor in making materiality judgments?


a. the context of an item in relation to the current economic state of the environment where the
entity operates.
b. 10% of profit or loss, in absolute terms
c. 5% of total revenues
d. 1% of total assets

6. Which of the following statements about materiality is not correct?


a. An item must make a difference; otherwise, it need not be reported.
b. Materiality is affected by an item’s relative size and/or importance.
c. An item is material if its inclusion or omission would influence or change the judgment of a
reasonable person.
d. All of these are correct statements about materiality.

7. Which of the following does not provide evidence of future economic benefits from a resource?
a. The resource cannot be used in the entity’s operations but has a resale value.
b. The resource has no use for the entity but it can be swapped for other resources.
c. The entity does not intend to sell or use the resource but instead distribute it to the owners as
dividends.
d. The resource is expected to be used only in the current period and that’s it.

8. Which of the following would most likely result to the recognition of a liability?
a. Customers become entitled to rebates for their past purchases.
b. Intention to acquire inventories in a future period.
c. Entering into a purchase contract for future delivery.
d. Agreeing on an irrevocable future commitment that is not burdensome at present.
Page |2

9. The adage “Aanhin mo pa and kabayo pag patay na ang damo” relates to which of the following
qualitative characteristics?
a. Relevance
b. Timeliness
c. Faithful representation
d. Comparability

10. The Conceptual Framework classifies gains and losses based on whether they are related to an
entity's major ongoing or central operations. These gains or losses may be classified as
Non-operating Operating
a. Yes No
b. Yes Yes
c. No Yes
d. No No

11. Which of the following is considered a pervasive constraint by the Conceptual Framework?
a. Cost-benefit relationship
b. Timeliness
c. Conservatism
d. Materiality

12. According to the Conceptual Framework, predictive value relates to


Relevance Faithful representation
a. Yes Yes
b. No Yes
c. Yes No
d. No No

13. Information is neutral if it


a. provides benefits which are at least equal to the costs of its preparation.
b. can be compared with similar information.
c. has no impact on a decision maker.
d. is free from bias toward a predetermined result.

14. Decision makers vary widely in the types of decisions they make, the methods of decision
making they employ, the information they already possess or can obtain from other sources, and
their ability to process information. Consequently, for information to be useful there must be a
linkage between these users and the decisions they make. This link is
a. relevance.
b. reliability.
c. understandability.
d. materiality.

15. Accounting information is considered to be 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.

16. The quality of information that gives assurance that it is reasonably free of error and bias and
provides a true, correct and complete depiction of what it purports to represent is
a. relevance.
b. faithful representation.
c. verifiability.
Page |3

d. neutrality.

17. When information about two different entities has been prepared and presented in a similar
manner, the information exhibits the characteristic of
a. relevance.
b. reliability.
c. consistency.
d. comparability.

18. A decrease in net assets arising from peripheral or incidental transactions is called a(n)
a. capital expenditure.
b. cost.
c. loss.
d. expense.

19. Which of the following is not an element that is directly related to the measurement of an
entity’s financial position?
a. assets
b. liabilities
c. equity
d. income

20. According to the Conceptual Framework, physical count of inventory is an example of


a. direct verification.
b. indirect verification.
c. timeliness.
d. relevance.

“Do not be wise in your own eyes; fear the LORD and shun evil. “
(Proverbs 3:7)

- END –

You might also like