1.

       The Philippine Financial Reporting Standards collectively include

I.     PFRS corresponding to IFRS

II.    PAS corresponding to IAS

III.   Philippine Interpretations corresponding to IFRIC and SIC Interpretations and

Interpretations developed by PIC
*
1/1

a. I only
b. I and II only
c. I and III only
d. I, II, and III
 
 
2.       In the development of accounting standards, the FRSC stated a “due process”
system which
*
1/1

a. Is efficient for collecting dues from members

b. Enables interested parties to express their views on accounting issues under consideration
 
c. Identifies the accounting issues that are the most important
d. Requires that all CPAs must receive a copy of PFRS

 
3.       Financial accounting can be broadly defined as the area of accounting that
prepares
*
0/1

a. General purpose financial statements to be used by parties internal to the entity only
 
b. Financial statements to be used by investors only
c. General purpose financial statements to be used by parties both internal and external to the
entity
d. Financial statements to be used primarily by management

Correct answer
c. General purpose financial statements to be used by parties both internal and external to the
entity

 
4.       Financial accounting is the area of accounting that emphasizes reporting to
*
1/1

a. Management
b. Regulatory bodies
c. Internal auditors
d. Creditors and investors
 
 
5.       One of the basic features of financial accounting is
*
1/1

a. Direct measurement of economic resources and obligations and changes in them in terms on
money and sociological and psychological impact
b. Direct measurement of economic resources and obligations and changes in them in terms
money
 
c. Direct measurement of economic resources and obligations and changes in them in terms of
money and sociological impact
d. Direct measurement of economic resources and obligations and changes in them in terms of
money and psychological impact

 
6.       Proper application of accounting principles is most dependent upon
*
1/1

a. Existence of specific guidelines

b. Oversight of regulatory bodies
c. External audit function
d. Professional judgement of the accountant
 
 
7.       Which of the following statements best describes generally accept accounting
principles?
*
0/1

a. They have been formulated in the public sector

 
b. They have been developed on the basis of such factors as usage and practical necessity
c. They are the same as laws within our legal system
d. They do not apply to small entities

Correct answer
b. They have been developed on the basis of such factors as usage and practical necessity

 
8.       As independent or external auditors, CPAs are primarily responsible for
*
1/1

a. Preparing financial statements in the conformity of GAAP

b. Certifying the accuracy of financial statements
c. Expressing an opinion as to the fairness of financial statements
 
d. Filing financial statements with the SEC

 
9.       Once the accounting standard has been established
*
1/1

a. The standard is continually reviewed to see if the modification is necessary

 
b. The standard is not reviewed unless SEC makes a complaint
c. The task of reviewing the standard to see if modification is necessary is given to the PICPA
d. The principle of consistency requires that no revisions ever be made to the standard

 
10.       The international Accounting Standard board was formed to
*
0/1
a. Enforce IFRS in foreign countries
b. Develop a single set of high quality IFRS
c. Establish accounting standards for multinational companies
d. Develop accounting standards for countries that do not have a standard setting body
 
Correct answer
b. Develop a single set of high quality IFRS

 
11.       The restively stable economic, political and social environment supports
*
1/1

a. Conservatism
b. Materiality
c. Timeliness
d. Going concern
 
 
12.       Which basic assumption may not be followed when an entity in bankruptcy
reports financial reports?
*
1/1

a. Economic entity assumption

b. Going concern assumption
 
c. Periodicity assumption
d. Monetary unit assumption

 
13.       Which basic accounting assumption is threatened by the existence of severe
inflation in an economy?
*
1/1

a. Monetary unit assumption

 
b. Periodicity assumption
c. Going concern assumption
d. Economic entity assumption

 
14.       The financial statements that are prepared for the business are separate and
distinct from the financial statements of the owners
*
1/1

a. Going concern assumption

b. Matching principle
c. Economic entity assumption
 
d. Accounting period assumption

 
15.       During the lifetime of an entity, accountants produce financial statements at
arbitrary points in time in accordance with what basic assumption concept?
*
1/1

a. Accrual
b. Periodicity
 
c. Unit of measure
d. Continuity

 
16.       This is a complete, comprehensive and single document promulgated by IASB
establishing the concepts that underlie financial reporting
*
1/1

a. Conceptual Framework for Financial Reporting

 
b. Conceptual Framework for Financial Statements
c. Conceptual Framework for Business Entities
d. Conceptual Framework

 
17.       The concept of Conceptual Framework is intended to establish
*
1/1
a. Generally accepted accounting principles in financial reporting by entities
b. The meaning of “present fairly in accordance with GAAP”
c. The objectives and concepts for use in developing standards and financial accounting and
reporting
 
d. The hierarchy of sources of GAAP

 
18.       The underlying theme of the Conceptual Framework is
*
1/1

a. Decision usefulness
 
b. Understandability
c. Timeliness
d. Comparability

 
19.       A conceptual framework is a coherent system of concepts that flow from an
objective
*
1/1

a. True
 
b. False

 
20.       Which of the following is an internal user of financial information?
*
1/1

a. Board of directors
 
b. Shareholders in the entity
c. Holder of the entity’s bonds
d. Creditor with the long-term contract with the entity

 
21.       These users need information on trends and recent developments where an
entity makes a substantial contribution to the local economy proving employment and
using local suppliers
*
1/1

a. The public
 
b. Governments and their agencies
c. Finance entities
d. Private entities

 
22.       Fiduciary accounting is an application of
*
0/1

a. Entity theory
 
b. Proprietary theory
c. Residual equity theory
d. Fund theory

Correct answer
d. Fund theory

 
23.       The primary focus of financial reporting has been meeting the needs of which of
the following groups?
*
1/1

a. Managers of an entity
b. Existing and potential investors, lenders and other creditors
 
c. National and local tax authorities
d. Independent CPAs

 
24.       The overall objective of financial reporting is to provide information
*
1/1

a. That is useful for decision making

 
b. About an entity’s assets, liabilities and owners’ equity
c. About an entity’s financial performance during a period
d. That allows owners to assess management’s performance

 
25.       The objectives of financial reporting are based on
*
1/1

a. The need for conservatism

b. Reporting on management’s stewardship
c. Generally Accepted Accounting Principles
d. The needs of the users of the information
 
 
26.       External events include all of the following, except
*
0/1

a. Sale of merchandise
b. Borrowing from bank
 
c. Donation received from shareholders
d. Casualty loss caused by flood, earthquake or other natural disasters

Correct answer
d. Casualty loss caused by flood, earthquake or other natural disasters

 
27.       Qualitative characteristics 
*
1/1

a. Are considered either fundamental or enhancing

b. Contribute to the decision-usefulness of financial reporting information
c. Distinguish better information form inferior information for decision-making purposes
d. All of the choices are correct
 
 
28.       The financial accounting information is directed towards the common needs of
users and is independent of presumptions about particular needs and desires of specific
user
*
1/1

a. Relevance
b. Verifiability
c. Neutrality
 
d. Completeness

 
29.       Materiality is one of the basic assumptions of accounting used by the IASB
*
0/1

a. True
 
b. False

Correct answer
b. False

 
30.       Which of the following is the best description of faithful representation in relation
to information in financial statements?*
1/1

a. Influence on the economic decision of users

b. Inclusion of a degree of caution
c. Freedom from material error
 
d. Comprehensibility to users