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Exercises Module 2 Answers

This document contains a true/false quiz with multiple choice and fill-in-the-blank questions about accounting concepts and terminology. It tests knowledge of topics like the conceptual framework, general purpose financial statements, capital maintenance concepts, and definitions of terms like the IASB, FASB, accounting, liquidity, and assets. The questions cover the standard-setting bodies, purposes of key financial reports, recognition criteria, and the physical concept of capital.

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Maria Kathreena Andrea Adeva
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© © All Rights Reserved
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60 views

Exercises Module 2 Answers

This document contains a true/false quiz with multiple choice and fill-in-the-blank questions about accounting concepts and terminology. It tests knowledge of topics like the conceptual framework, general purpose financial statements, capital maintenance concepts, and definitions of terms like the IASB, FASB, accounting, liquidity, and assets. The questions cover the standard-setting bodies, purposes of key financial reports, recognition criteria, and the physical concept of capital.

Uploaded by

Maria Kathreena Andrea Adeva
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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ADEVA, Maria Kathreena Andrea H.

BSA 2-11

True or False - Write A if the statement is correct or B if incorrect. UNDERLINE the word or group of words
that make the statements incorrect.

1. A The principal difference between two concepts of capital maintenance is


the treatment of the effects of changes in the prices of assets and liability of
the entity.
2. A The selection of the appropriate concept of capital by an entity should be
based on the needs of the users of its financial statements.
3. B The concept of capital maintenance chosen by an entity shall determine
the accounting model used in the preparation of its financial statements.
4. A The Conceptual Framework serves as a guide in developing future
financial reporting standards and in reviewing existing ones.
5. A The Conceptual Framework is a source of guidance for determining an
accounting treatment where a standard does not provide specific guidance.
6. B The Conceptual Framework does not in any way assist preparers of
financial statements in applying PFRS and in dealing with topics that have yet to
form the subject of PFRS.
7. A The Conceptual Framework is not a PFRS, and nothing in it overrides any
specific PFRS, including PFRS that is in some respect in conflict with the
Conceptual Framework.
8. A The GPFS show the results of the stewardship of the management for the
resources entrusted to it by the capital providers.
9. B The GPFS are prepared at least annually and are directed to both the
common and specific information needs of a wide range of statement users.
10. A The GPFS provide information about the financial position, performance
and cash flows of an enterprise that is useful to a wide range of users in making
economic decisions.

A. Identification - Write the word(s) best described by the statements below:

International Accounting 1. The standard-setting body who issues the


Standards Board International Financial Reporting Standards.

Financial Accounting Standards 2. The standard-setting organization who issues


Board the U.S. GAAP.
Accounting 3. The process of identifying, measuring and
communicating economic information to permit
informed judgment and decision by users of the
information.

Philippine Interpretations 4. This was created to issue implementing


Committee guidelines on PFRS.

Liquidity 5. The amount of time that is expected to elapse


until an asset is realized or otherwise converted
into cash.

Statement of Financial Position 6. The financial report that shows the reporting
entity’s economic resources and claims.

Statement of Changes in 7. The financial report that shows the changes


Owner’s Equity due to events and transactions other than financial
performance such as the issue of equity
instruments and distributions of cash or other
assets to shareholders.

Historical Cost 8. This is used when assets are recorded at the


amount of cash or cash equivalents or the fair
value of the consideration given to acquire them at
the time of their acquisition.

Solvency 9. Refers to the ability of the business to raise


cash to meet unexpected cash requirements.

Accountant 10. Those responsible for the preparation and


presentation of financial statements.

International Accounting
Standard 11. The standard that sets out the requirements
for the presentation of the cash flow statement
and related disclosures.

Financial Statements 12. Portray the financial effects of transactions and


other events by grouping them into broad classes
according to their economic characteristics.

Gain on Sale 13. Result if an asset is sold more than book value.
Assets 14. One of its recognition criteria is that it is
probable that the future economic events will flow
to the enterprise.

Physical Concept of Capital 15. Under this concept a profit is earned only if the
physical productive capacity (or operating
capability) of the entity (or the resources or funds
needed to achieve that capacity) at the end of the
period exceeds the physical productive capacity at
the beginning of the period, after excluding any
distributions to, and contributions from, owners
during the period.

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