CFAS ASSESSMENT

14. One of its recognition criteria is that it is probable that

IDENTIFICATION the future economic events will flow to the enterprise.
1. The standard-setting body who issues the International ASSET
Financial Reporting Standards
15. Under this concept a profit is earned only if the physical
INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) productive capacity (or operating capability) of the entity
(or the resources or funds needed to achieve that capacity)
2. The standard-setting organization who issues the U.S.
at the end of the period exceeds the physical productive
GAAP
capacity at the beginning of the period, after excluding any
FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) distributions to, and contributions from, owners during the
period.
3. The process of identifying, measuring, and
communicating economic information to permit informed PHYSICAL CAPITAL MAINTENANCE
judgment and decision by users of the information.
--------------------------------------------------------------------------------
ACCOUNTING
FILL IN THE BLANKS
4. This was created to issue implementing guidelines on
1. _______________ provide financial reporting information
PFRS.
to a wide variety of users.
PHILIPPINE INTERPRETATION COMMITTEE (PIC)
GENERAL-PURPOSE FINANCIAL STATEMENTS
5. The amount of time that is expected to elapse until an
2. As part of the objective of general-purpose financial
asset is realized or otherwise converted into cash
reporting, an _______________ is adopted. This means that
OPERATING CYCLE/NORMAL OPERATING CYCLE companies are viewed as separate and distinct from their
owners.
6. The financial report that shows the reporting entity’s
economic resources and claims ENTITY PERSPECTIVE

STATEMENT OF FINANCIAL POSITION 3. Accounting standards set out the recognition,

_______________, presentation and _______________
7. The financial report that shows the changes due to events requirements of transactions and events that are important
and transactions other than financial performance such as in financial statements.
the issue of equity instruments and distributions of cash or
other assets to shareholders MEASUREMENT, DISCLOSURE

STATEMENT OF CHANGES IN EQUITY 4. The creation of FRSC in 2004 replaced the

_______________.
8. This is used when assets are recorded at the amount of
cash or cash equivalents or the fair value of the ACCOUNTING STANDARDS COUNCIL (ASC)
consideration given to acquire them at the time of their
5. The objective of the _______________ is to establish
acquisition.
generally accepted accounting principles in the Philippines.
HISTORICAL COST
FINANCIAL REPORTING STANDARDS COUNCIL (FRSC)
9. Refers to the ability of the business to raise cash to meet
6. _______________ sets out the concepts that underlie the
unexpected cash requirements.
preparation and presentation of financial statements for
LIQUIDITY external users.

10. Those responsible for the preparation and presentation CONCEPTUAL FRAMEWORK
of financial statements.
7. If there are any conflict in the framework and IFRS, the
REPORTING ENTITY _______________ prevails.

11. The standard that sets out the requirements for the INTERNATIONAL FINANCIAL REPORTING STANDARDS
presentation of the cash flow statement and related (IFRS)
disclosures.
8. _______________ is a resource controlled by the
INTERNATIONAL ACCOUNTING STANDARD 7 enterprise as a result of past events and from which future
economic events are expected to flow to the enterprise.
12. Portray the financial effects of transactions and other
events by grouping them into broad classes according to ASSET
their economic characteristics.
9. _______________ are decreases in economic benefits
FINANCIAL STATEMENTS during the accounting period in the form of outflows or
 depletions of assets or incurrence of liabilities that result in
13. Result if an asset is sold more than book value. decreases in equity other than those relating to
GAIN / GAIN ON DISPOSAL / GAIN ON SALE distributions to equity participants.
*Income- encompasses both revenue and gain inflow of economic EXPENSES
resources.
Revenue + gain = Income
Revenue- came from normal course of business
Gain- came from incidental or peripheral transaction, not normal
course of business
10. The conceptual framework specifically mentions one 10. Requires consideration of the cost and value of
underlying assumption, namely, _______________. information

GOING CONCERN ASSUMPTION COST EFFECTIVENESS

11. The four sectors of accountancy under PICPA are: 11. The process of admitting information into financial
_______________, _______________, _______________, statements
_______________.
RECOGNITION
PUBLIC PRACTICE, COMMERCE AND INDUSTRY,
12. An entity reports separately both assets and liabilities,
EDUCATION AND GOVERNMENT
and income and expenses
12. One constraint on useful financial reporting is that costs
OFFSETTING
should be justified by the _______________ of the reported
financial information. 13. Information is useful in determining the
BENEFITS PREDICTIVE VALUE
13. Assets that are carried at the amount of cash or cash 14. Effects of transactions on an entity’s economic
equivalents that would have to be paid if the same or an resources and claims are recognized in the periods in which
equivalent asset was acquired currently is measured using those effects occur, even if the resulting cash receipts and
the _______________. payments occur in a different period
CURRENT COST ACCRUAL BASIS FOR ACCOUNTING
14. Under the _______________ approach, investment 15. It requires that users have some knowledge of the
must be recovered before a company can have income. complex economic activities of enterprises, the accounting
process, and the technical terminology in the statements.
CAPITAL RECOVERY / CAPITAL MAINTENANCE / RETURN
ON INITIAL INVESTMENT UNDERSTANDABILITY
15. The objective of PAS 1 is to prescribe the basis for ------------------------------------------------------------------------------
presentation of general-purpose financial statements in
order to ensure _______________. SEQUENCING

COMPARABILITY A. IASB Due Process

-------------------------------------------------------------------------------- 1 Topics are identified and placed on IASB’s agenda.

MATCHING TYPE 2 All comments received on discussion document and

exposure draft are considered.
1. Concerns the relative size of an item and its effect on
3 An exposure draft, which is IASB’s main vehicle for
decisions.
consulting the public, is published for public comment.
MATERIALITY
4 After comments on the first exposure draft have been
2. Information confirms expectations affected, the IASB considers whether to publish its
revised proposals for another round of comments.
FEEDBACK VALUE
5 After the due process is completed, all outstanding
3. Important for making inter-firm comparisons.
issues are resolved, and the IASB members have
COMPARABILITY balloted in favor of publication, the IFRS is issued.

4. Applying the same accounting practices over time. B. FRSC Due Process

CONSISTENCY 1 Consideration of pronouncement of IASB;

5. Implies consensus among different measures. 2 An exposure draft approved by a majority of the FRSC
members for comments (comment period 60 – 30 days)
VERIFIABILITY
3 Consideration of all comments received within the
6. A complete set of financial statements (including
comment period and, when appropriate, preparing a
comparative information) should be presented at least
comment letter to the IASB;
annually
4 Approval of a standard or an interpretation by a majority
FREQUENCY OF REPORTING
of the FRSC members.
7. Information is available prior to the decisions.

TIMELINESS
8. Pertinent to the decision at hand.
RELEVANCE
9. Along with relevance, a fundamental qualitative
characteristic

FAITHFUL REPRESENTATION
TRUE OR FALSE MULTIPLE CHOICE

1. The principal difference between two concepts of capital 1. According to the Preface to International Financial
maintenance is the treatment of the effects of changes in Reporting Standards, which of the following are objectives
the prices of assets and liability of the entity. of the IASB?

TRUE I. To harmonize financial reporting between IFRS and US

GAAP and European – (DAPAT WORLD)
2. The selection of the appropriate concept of capital by an II. To work actively with national standard setters
entity should be based on the needs of the users of its III. To promote the use and strict application of financial
financial statements. accounting standards
TRUE
A. I and II
3. The concept of capital maintenance chosen by an entity B. I and III
shall determine the accounting model used in the C. II and III
preparation of its financial statements. D. I, II and III

FALSE, BOTH MEASUREMENT BASES AND CONCEPT OF 2. Which of the following are parts of the “due process” of
CAPOTAL MAINTENANCE the IASB in issuing a new International Financial Reporting
Standard?
4. The Conceptual Framework serves as a guide in
developing future financial reporting standards and in I. Establishing an advisory committee to give advice
reviewing existing ones. II. Developing and publishing a discussion document for
public comment
TRUE
III. Issuance of an interpretation as authoritative guidance –
5. The Conceptual Framework is a source of guidance for DUE PROCESS OF IFRS INTERPRETATION COMMITTEE
determining an accounting treatment where a standard IV. Reviewing compliance and enforcement procedures
V. Issuance of the final standard with number and title
does not provide specific guidance.

TRUE A. I, II and III only

B. I, II and V only
6. The Conceptual Framework does not in any was assist C. I, II, III & IV only
prepares of financial statements in applying PFRS and in D. I, II, III, IV & V
dealing with topics that have yet to form the subject of
PFRS. 3. Which of the following bodies is responsible for reviewing
accounting issues that are likely to receive divergent or
FALSE unacceptable treatment in the absence of authoritative
7. The Conceptual Framework is not a PFRS, and nothing in guidance, whit a view to reaching consensus as to the
appropriate accounting treatment?
it overrides any specific PFRS, including PFRS that is in some
respect in conflict with the Conceptual Framework.
A. Standards Advisory Council (SAC)
TRUE B. International Accounting Standards Board (IASB)
C. International Financial Reporting Interpretations
8. The GPFS show the results of the stewardship of the Committee (IFRIC)
management for the resources entrusted to it by the capital D. International Accounting Standards Committee
providers. Foundation (IASC Foundation)

TRUE 4. Which of the following statements about international

accounting standards is true?
9. The GPFS are prepared at least annually and are directed
to both the common and specific information needs of a
A. Accounting professionals in the USA consider US GAAP
wide range of statement users.
superior to IAS and has no intention to adopt International
FALSE Accounting Standards. – MAY INTENTION
B. The IASB is able to enforce its standards by prohibiting
10. The GPFS provide information about the financial the listing of companies which do not comply on stock
position, performance and cash flows of an enterprise that exchanges which sell internationally. - ENCOURAGE
is useful to a wide range of users in making economic C. The International Accounting Standards Board (IASB)
decisions. was established with the purpose of narrowing the range
of divergence in accounting standards throughout the
TRUE world.
D. Legal and psychological hurdles to achieving common
reporting standards will be fully overcome by the year 2012,
the time frame set for convergence between IAS and US
GAAP. – CURRENTLY CHANGING, CONTINUOUS PROCESS
5. Which of the following bodies report to the IFRS
Foundation?
A. The IASB and AASB.
B. The IASB and the FASB.
C. The IASB and the IFRS Advisory Council.
D. The IASB, AASB, and the IFRS Advisory Council.
 13. RA 9298 is officially known as
6. Which body appoints the members of International
Accounting Standards Board (IASB) that make the present A. The Revised Accountancy Act.
IFRS? B. The Revised Accountancy Law.
C. The Philippine Accountancy Act of 2004.
A. IFRS Foundation. D. The Accountancy Law of the Philippines, 2007.
B. IFRS Advisory Council.
C. International Accounting Standards Committee. 14. Under Section 5 of RA 9298, who shall appoint the
D. International Financial Reporting Interpretations members of the Professional Regulatory Board of
Committee. Accountancy?

7. Financial accounting standard-setting A. The chairman of the Board of Accountancy.

B. The president of the Republic of the Philippines.
A. is based solely on research and empirical findings. – MAY C. The chairperson of Professional Regulations Commission.
PUBLIC DISCUSSION D. The president of Philippine Institute of Certified Public
B. is a legalistic process based on rules promulgated by Accountants.
governmental agencies. – IFRS FOUNDATION
C. is democratic in the sense that a majority of accountants 15. The following statements relate to the Board of
must agree with a standard before it becomes enforceable.- Accountancy. Select the incorrect statement:
MAJORITY OF IASB MEMBERS
D. can be described as a social process which reflects A. The Board consists of a Chairman and six members.
political actions of various interested user groups as well B. The chairman and members of the Board are appointed
as a product of research and logic. by the President of the Philippines upon recommendation
of the Professional Regulation Commission.
8. The “due process” system in developing financial C. The Professional Regulation Commission may remove
reporting standards from the Board of Accountancy, any member whose
certificate to practice has been revoked or suspended. –
A. is an efficient system for collecting dues from members. ONLY PRESIDENT HAS THE POWER TO REMOVE A MEMBER
B. identifies the accounting issues that are the most D. All sectors of accountancy practice shall as much as
important. possible be equitably represented in the Board.
C. enables interested parties to express their views on
issues under consideration.
D. requires that all accountants must receive a copy of 16. Which of the following is not an economic entity?
financial accounting standards.
A. SM Group of Companies.
9. What is due process in the context of standard-setting at B. Lions Club International, a civic organization.
the IASB? C. ABS-CBN Foundation, a charitable institution.
D. Chris James, a Quezon City resident who owns a chain
A. IASB operates in full view of the public. of beauty salons.
B. Interested parties can make their views known.
C. Public hearings are held on proposed accounting 17. This accounting objective emphasizes the importance of
standards. the Income Statement as it is geared toward proper income
D. All of these. or performance determination of the enterprise.

10. What is the chronological order in the evaluation of a A. Entity theory.

typical standard? B. Fund theory
C. Proprietary theory.
A. Discussion paper, Exposure draft and Standard. D. Residual equity theory.
B. Exposure draft, Discussion paper and Standard.
C. Exposure draft, Standard and Discussion paper. 18. Which of the following is not a description or a function
D. Standard, Discussion paper, and Exposure draft. of the Financial Reporting Standards Council (FRSC)?

11. The IASB declared that the merits of proposed standards A. It establishes generally accepted accounting principles in
are assessed the Philippines.
B. It receives financial support principally from the
A. from a position of neutrality. Professional Regulations Commission (PRC).
B. from a position of materiality. C. It is the successor of Accounting Standards Council (ASC)
C. based on arguments of lobbyist. and the creator of Philippine Interpretations Committee
D. based on possible impact on behavior. (PIC).
D. It assists the Professional Regulatory Board of
12. Under Philippine Financial Reporting Standards Accountancy (BOA) in carrying out its power and function to
promulgate accounting standards in the Philippines.
A. the cash basis of accounting is accepted. – ACCRUAL
BASIS OF ACCOUNTING
B. events are recorded in the period in which the event