Actg 216 Reviwer Part 2 Without Answer

1. Which of the following is an indirect user of accounting information?
a. Management of the enterprise

b. Taxing authority
c. Regulatory agency
d. Lenders of the enterprise
2. Financial accounting is concerned with

a. Recording financial transactions
b. Summarizing and presenting financial information on financial reports
c. Analyzing the financial reports.
d. All of these.
3. Which of the following is considered a direct user of accounting information?

a. A regulatory agency.
b. Trade association
c. Taxing authority
d. Labor unions.
4. Which of the following is an internal user of a company’s financial information”

a. Board of directors
b. Long-term creditors of an enterprise
c. Shareholders of the company
d. Regulatory agencies
5. The objectives of financial reporting for business enterprises are based on

a. Generally accepted accounting principles.
b. Reporting on management’s stewardship.
c. The need for profit maximization.
d. The needs of the users of the information.
6. Adequate disclosure in financial statements to meet the needs and purposes of their users is a
means of attaining the quality of
a. Verifiability
b. Faithful representation
c. Understandability
d. Neutrality
7. What is the underlying concept that supports the immediate recognition of a loss?
a. Matching
b. Substance over form
c. Prudence
d. consistency
8. What is the branch of accounting that makes financial information about an entity accessible to
the external users?
a. Auditing
b. Financial accounting.
c. Government accounting.
d. Management accounting.
9. What is the branch of accounting that serves the information needs of internal users?
a. Cost accounting
b. Financial accounting
c. Government accounting.
d. Management accounting
10. Which of the following users of accounting information are both an external user and a direct
user?
a. Management
b. Labor unions
c. Creditors
d. Regulatory bodies
11. Which of the following are represented in the Financial Reporting Standards Council?
I. Securities and Exchange Commission
II. Department of Trade and Industry
III. Board of Accountancy
IV. Philippine Institute of Certified Public Accountants
V. Bureau of Internal Revenue
VI. Social Security System
a. I, II, III, IV, V, and VI
b. I, II, III, V, and VI
c. II, IV, V, and VI
d. I, III, IV, and V
12. What is the body authorized by law to promulgate rules and regulations affecting the practice of
Accountancy in the Philippines?
a. Accounting Standard Council
b. Philippine Institute of Certified Public Accountants
c. Board of Accountancy
d. Auditing Standards and Practices Council
13. Which of the following are parts of the due process applied by the Financial Reporting Standards
Council in developing a financial reporting standards?
I. Formation of a task force to address the issue
II. Publication of the exposure draft in the official gazette or newspaper of general
circulation.
III. Consideration of comments on the exposure draft.
IV. Approval vote by as majority members of the FRSC members.
a. I, II, III, and IV
b. I, III, and IV
c. II, III, and IV
d. I, II, and IV
14. The process of establishing financial reporting standards is

a. A democratic process in that a majority of practicing certified public accountants must
vote in favor of a proposed standard.
b. A legislative process based on set of laws promulgated by the House of Representatives.
c. A social process, which incorporates political actions of various interested user groups as
well as professional research and logic.
d. Based solely on economic analysis of the effects each standard will have if it is
implemented.
15. The body that authors the International Financial Reporting Standards is the
a. Accounting Standards Council
b. Financial Reporting Standards Council
c. International Accounting Standards Board
d. International Accounting Standards Committee
16. As part of the due process of developing an accounting standard, the Financial Reporting
Standards Council issues exposure draft for comment within a period of 60 days, unless a
shorter period is considered appropriate. How long is this shorter period?
a. Not less than 50 days
b. Not less than 45 days
c. Not less than 30 days
d. It depends on the issue being resolved.
17. Based on the Republic Act 9298, the Financial Reporting Standard Council is composed of
a. 13 members
b. 14 members
c. 15 members
d. 16 members
18. Republic Act 9298 is otherwise known as

a. Revised Accountancy Law
b. Revised Accountancy Act
c. Philippine Accountancy Act of 2004
d. Code of Professional Ethics for CPAs.
19. This is the body created by the Board of Accountancy in 2006 to assists the Board in carrying out
its power and functions to promulgate accounting standards in the Philippines.
a. Philippine Institute of Certified Public Accountants
b. International Accounting Standards Committee
c. Auditing and Assurance Standards Council
d. Financial Reporting Standards Council
20. The PFRS consist of
I. Specific Philippine Financial Reporting Standards (PFRS), which are adopted from the
IFRS.
II. Philippine Accounting Standards (PAS). Which are adopted from IASs
III. Philippine Interpretations, which are adopted from the interpretations of IFRIC
IV. Interpretations of the PIC which are adopted from the SIC
a. I, II, III, and IV
b. I, II, and III only
c. I and II only
d. I only
21. Which of the following information is provided by general purpose financial statements?
I. An enterprise’s financial position as of a given date.
II. An enterprise’s performance for as specified period of time.
III. An enterprise’s cash flows for a specific period of time.
IV. An enterprise’s economic decisions made during a specified period of time.
a. I and II
b. II and III
c. I, II, and III
d. I, II, III, and IV
22. This basic feature supports the presentation of each material item separately in the financial
statements. Likewise, immaterial amounts of similar nature are grouped and reported as a
single item in the financial statements.
a. Materiality and aggregation
b. Offsetting
c. Consistency of presentation
d. Fair presentation
23. When an entity changes the presentation of financial statements or reclassifies items in the
financial statements of the current period, it shall restate prior period financial statements to
achieve the feature of
a. Comparability
b. Compliance with IFRS
c. Consistency of presentation
d. Fair presentation
24. Financial statements should be prepared at least

a. Annually
b. Semiannually
c. Quarterly
d. Monthly
25. Offsetting assets and liabilities is

a. Allowed, unless not permitted by PFRS
b. Allowed in all cases.
c. Not allowed, unless permitted or required by PFRS
d. Not allowed in all cases.
26. An analysis of an enterprise’s financial position is useful in assessing an firm’s solvency, which is
the ability to
a. Short term obligations.
b. Meet all obligations as they come due.
c. Maintain IAS levels of preference and ordinary dividends
d. Survive a major economic downturn.
27. The statement of financial position is useful for analyzing all of the following except
a. Liquidity
b. Profitability
c. Solvency
d. Financial flexibility
28. Which of the following is applied when small amounts of expenses of varied nature are grouped
and reported as one-line item “miscellaneous expense” in the statement of comprehensive
income?
a. Consistency of presentation
b. Comparative information
c. Cost constraint
d. Materiality and aggregation
29. Which financial statement, when used with other financial information, helps users to assess the
ability of the enterprise to generate cash and other resources that is likely to control in the
future?
a. Statement of comprehensive income
b. Statement of changes in equity
c. Statement of cash flows
d. Statement of financial position.
30. What is the main purpose of the Securities and Exchange Commission?
a. To promulgate rules and laws governing the practice of accounting profession in the
Philippines.
b. To protect investors ensuring that they have adequate information.
c. To develop financial and accounting standards in the Philippines.
d. To unite the practicing CPAs in the Philippines and develop them into world-class
professionals.

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1. Which of the following is an indirect user of accounting information?

a. Management of the enterprise

2. Financial accounting is concerned with

3. Which of the following is considered a direct user of accounting information?

4. Which of the following is an internal user of a company’s financial information”

5. The objectives of financial reporting for business enterprises are based on

14. The process of establishing financial reporting standards is

18. Republic Act 9298 is otherwise known as

24. Financial statements should be prepared at least

25. Offsetting assets and liabilities is

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