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Financial Accounting and Reporting-Theoretical The Conceptual Framework

The Conceptual Framework is considered a Philippine Financial Reporting Standard that provides guidance in developing, applying, and interpreting PFRS. It sets out the concepts that underlie the preparation and presentation of financial statements for internal users. The objectives of the Conceptual Framework are to provide useful financial information to existing and potential investors, lenders, and other creditors. General-purpose financial reports are intended to provide this information and are based on estimates and judgment rather than an exact depiction. The two fundamental qualitative characteristics of accounting information are relevance and reliable representation.

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80 views2 pages

Financial Accounting and Reporting-Theoretical The Conceptual Framework

The Conceptual Framework is considered a Philippine Financial Reporting Standard that provides guidance in developing, applying, and interpreting PFRS. It sets out the concepts that underlie the preparation and presentation of financial statements for internal users. The objectives of the Conceptual Framework are to provide useful financial information to existing and potential investors, lenders, and other creditors. General-purpose financial reports are intended to provide this information and are based on estimates and judgment rather than an exact depiction. The two fundamental qualitative characteristics of accounting information are relevance and reliable representation.

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ROB101512
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FINANCIAL ACCOUNTING AND REPORTING- Theoretical

The Conceptual Framework

1. The Conceptual Framework


a. is considered a Philippine Financial Reporting Standard
b. shall prevail over the provisions of PFRS in case of rare conflict
c. is used as a guide in developing, applying and interpreting PFRS
d. sets out the concepts that underlie the preparation and presentation of financial statement for internal users.

2. Which is not a basic function of the Conceptual Framework for Financial Reporting?
a. To provide a basis for the use of judgment in resolving accounting issues
b. To facilitate the consistent and logical formulation of Philippine Financial Reporting Standards
c. To address the concepts underlying the information presented in general-purpose financial statements
d. To set out recognition, measurement, presentation and disclosure requirements dealing with transactions and
other events and conditions that are important in general-purpose financial statements.

3. Which is not included in the scope of the FRSC Conceptual Framework?


a. Objective of financial statements
b. Generally accepted accounting principles
c. Concepts of capital and capital maintenance
d. Definition, recognition and measurement of the elements of financial statements

4. Under the PFRS Conceptual Framework (2010), which item is added in the scope of the Conceptual Framework
but is still a work-in-progress?
a. The Reporting Entity c. Mergers and Acquisitions
b. The Government Entity d. Consolidated and Separate FS

5. The objectives of Conceptual Framework for Financial Reporting, the objective of general-purpose financial
reporting is to provide financial information about the reporting entity that is useful to
a. Existing and potential investors
b. Existing investors, lenders and other creditors
c. Potential investors, lenders and other creditors
d. Existing and potential investors, lenders and other creditors

6. General-purpose financial reports


a. Are designed to show the value of the reporting entity
b. Can provide all the information that primary users need
c. Are intended to provide information to a specific group of users
d. Are largely based on estimates and judgment rather than exact depiction

7. The Conceptual Framework is applicable to all of the following, except


a. General-purpose financial reports c. Public and state-owned enterprise
b. Special-purpose financial reports d. Commercial and industrial enterprise

8. What are the two fundamental qualitative characteristics of accounting information?


a. Relevance and prudence c. Reliability and understandability
b. Reliability and conservatism d. Relevance and faithful representation

9. Accounting information is considered relevant when it


a. Is verifiable and neutral
b. Is able to present complete information
c. Is capable of making difference in a decision
d. Is understandable by reasonably informed users of accounting information

10. Under the Conceptual Framework, what are the three ingredients of ‘faithful representation’ characteristics?
a. Completeness, prudence and substance over form
b. Neutrality, conservatism and completeness
c. Prudence, substance over form and neutrality
d. Completeness, neutrality and freedom from error

11. Which of the following terms best describes information in financial statements that is neutral?
a. Understandable c. Relevant
b. Reliable d. Unbiased

12. Under the Conceptual Framework what are the enhancing qualitative characteristics of accounting information?
a. Relevance, reliability, comparability and understandability
b. Comparability, verifiability, timeliness and understandability
c. Relevance, faithful representation, prudence and comparability
d. consistency, going concern, materiality and faithful representation

13. The financial information must be comprehensive or intelligible if it is to be useful and that users must have
reasonable knowledge of business and economic activities.
a. Relevance c. Understandability
b. Reliability d. Comparability
1|Summit Professional Review Center FAR
14. The usefulness of providing information in the financial statements is subject to the constraint of
a. Cost
b. Reliability
c. Consistency
d. Representation faithfulness

15. Determine the true statement regarding the concepts of revenue, gains and income.
a. Gains cover both income and revenues
b. Revenues cover both income and gains
c. Income covers both revenues and gains
d. Income, revenues and gains are one and the same

16. What are the measurement bases used in preparing the financial statements?
a. Historical cost and realizable value
b. Historical cost, current cost and realizable value
c. Historical cost, realizable value and present value
d. Historical cost, current cost, realizable value and present value

17. What are the two capital concepts included in the scope of the Conceptual Framework?
a. Financial and physical capital
b. Borrowed and invested capital
c. Accounting and economic capital
d. Monetary and non-monetary capital

18. Which of the following statements best describes the going concern assumption?
a. The expenses of an entity exceeds its income
b. When current liabilities of an entity exceed current assets
c. The ability of the entity to continue in operation for the foreseeable future
d. The potential to contribute to the flow of cash and cash equivalents to the entity

19. The accounting basis used in measuring financial performance where an income (expense) is recognized as
earned (incurred), regardless whether or not cash is received (paid).
a. Cash Basis
b. Accrual Basis
c. Modified Accrual Basis
d. Modified Cash Basis

20. Conservatism is best described as selecting an accounting information that


a. Overstates liabilities and expenses
b. Understates assets and net income
c. Has the least favorable impact on owners' equity
d. Is least likely to misled users of accounting information

-END-

2|Summit Professional Review Center FAR

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