Chapter #1

Development of Financial Reporting Framework

TRUE OR FALSE QUESTIONS

1. The Philippine Accountancy Act of 2004 repealed Presidential Decree No. 692 also known as The
Revised Accountancy Law. True
2. Under Section 5 of RA 9298, the president of PICPA shall appoint the members of the Professional
Regulatory Board of Accountancy. False
3. Accounting theory has developed primarily in response to government regulations. False
4. A representative from the Department of Trade and Industry (DTI) is not part of the Accounting
Standards Council (ASC) but was later on included in the Financial Reporting Standards Council
(FRSC). False
5. The International Accounting Standards are principles-based rather than rulesbased. True
6. The term IAS generally covers IFRS when referred collectively. False
7. Accounting concepts are human-made. True
8. The Securities and Exchange Commission (SEC) can register any corporation organized for the
practice of public accounting. False
9. The main function of the FRSC is to establish and improve accounting standards that will be generally
accepted in the Philippines. True
10. The Norwalk Agreement is the memorandum made between the IASB and the FASB (US) with the
goal of achieving comparability in financial reporting standards by eliminating or minimizing
differences between IFRS and US GAAP. True
11. The approved statements of the FRSC are collectively known as Philippine Financial Reporting
Standards (PFRSs). True
12. FINEX stands for Financial Executives Institute of the Philippines. True
13. GAAP stands for Generally Accepted Auditing Principles. False
14. The approved statements of the IASC are known as International Accounting Standards (IAS). True
15. CPAs are licensed by the national government. True
16. The PFRSs are numbered the same as their counterpart in IFRSs. True
17. The IASB declared that the merits of proposed standards are assessed from a position of neutrality.
True
18. The Financial Reporting Standards Council is the body authorized by law to promulgate rules and
regulations affecting the practice of the accountancy profession in the Philippines. False
19. The FRSC Chairman and members shall have a term of 3 years renewable for another term. True
20. The composition of the FRSC includes two members each from ACPAPP, ACPACI, GACPA and
NACPAE. True

MULTIPLE CHOICE QUESTIONS

1. Which of the following is not one of the sectors of the accountancy profession?
A. Government
B. Commerce and Industry
C. International Practice
D. Academe

2. Under the IFRS Foundation Constitution, the IASB has complete responsibility for all technical
matters of the IFRS Foundation including (Choose the incorrect one)

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 A. full discretion in developing and pursuing its technical agenda, subject to certain
consultation requirements with the Trustees and the public
B. the preparation and issuing of IFRSs (other than Interpretations) and exposure drafts,
following the due process stipulated in the Constitution
C. the approval and issuing of Interpretations developed by the IFRS Interpretations
Committee.
D. All statements are correct

3. Which of the following is not part of Philippine Financial Reporting Standards?

A. Philippine Accounting Standards (PAS)
B. Philippine Financial Reporting Standards (PFRS)
C. Philippine Standards on Auditing (PSA)
D. Interpretations (PIC)

4. The Financial Reporting Standards Council (FRSC) replaced the

A. Accounting Standards Council
B. PFRS Foundation
C. Philippine Interpretations Committee
D. Securities and Exchange Commission

5. It is the Accredited Professional Organization (APO) of CPAs by the Professional Regulation

Commission (PRC).

A. Association of CPAs in Public Practice (ACPAPP)

B. Association of CPAs in Commerce and Industry (ACPACI)
C. Government Association of CPAs (GACPA)
D. Philippine Institute of Certified Public Accountants (PICPA)

6. The FRSC has I member from the following organizations, except

A. Accredited Professional Organization of CPAs
B. Commission on Audit
C. Board of Accountancy
D. Bureau of Internal Revenue

7. Which of the following is not directly involved in the accounting standard setting due process in the
Philippines?
A. Board of Accountancy
B. Financial Reporting Standards Council
C. Bureau of Internal Revenue
D. Professional Regulation Commission

8. It is the law regulating the practice of accountancy in the Philippines?

A. Republic Act No. 9892
B. Republic Act No. 8929
C. Republic Act No. 9298
D. Republic Act No. 8929

9. Which of the following qualifications of the members of the BOA is correct?

A. Must be a citizen and a resident of the Philippines.
B. Must be a duly registered Certified Public Accountant with at least fifteen (15) years of work
experience in any scope of practice of accountancy

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 C. Must be of good moral character and must not have been convicted of crimes involving
moral turpitude
D. Must have any pecuniary interest, directly or indirectly, in any school, college, university or
institution conferring an academic degree necessary for admission to the practice of
accountancy.

10. The process of establishing financial accounting standards

A. is a legislative process based on rules promulgated by government agencies.
B. be is based solely on economic analysis of the effect each standard will have if it is
implemented.
C. is a democratic process in that a majority of practicing accountants must agree with a
standard before it is implemented.
D. is a social process which incorporates political actions of various interested user groups as
well as professional research and logic.
11. Which of the following was replaced by the IASB in 2001?
A. International Accounting Standards Committee
B. International Financial Reporting Interpretations Committee
C. International Accounting Standards Foundation
D. International Accounting Standards Council

12. To ensure a broad international diversity, the IASB constitution requires:

A. four (4) members from Africa
B. two (2) members from Europe
C. four (4) members from the Americas
D. five (5) members from the Asia/Oceania region

13. IFRSs are applicable to which of the following entities?

A. Not-for-profit entities
B. Government activities
C. Government business enterprises
D. Public sector non-profit organizations

14. Under the Philippine Accountancy Act of 2004, the PRBOA shall be composed of
A. Chairman and six members to be appointed by PRC.
B. Chairman and six members to be appointed by PICPA.
C. Chairman and six members to be appointed by the Philippine President.
D. Chairman, Vice Chairman and six members to be appointed by the Philippine President.

15. The following relates to the evaluation of a standard

l. Exposure draft is issued for comment
ll. Final standard is issued
Ill. Discussion paper

Which of the following is the correct chronological sequence?

A. I-II-III
B. II-I-III
C. III-II-I
D. I-III-II

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16. Which of the following is true regarding the term of office of the chairman and members of the
PRBOA?

A. No person who has served two successive terms shall be eligible for reappointment until the
lapse of one year.
B. Any vacancy occurring within the term of a member shall be filled up for the unexpired
portion of the term only.
C. The Chairman and members of BOA shall hold office for a term of three years.
D. All of the statements are true.

17. Which of the following is not of one of the objectives of PICPA?

A. To develop and improve accountancy education
B. To encourage cordial relations among accountants.
C. To promote and maintain high professional and ethical standards among accountants.
D. To issue the Certificate of Certified Public Accountant granted by the Republic of the
Philippines.

18. The PICPA is a nonprofit corporation duly registered with the

A. PRBOA
B. PRC
C. SEC
D. FRSC

19. The following are the four geographical groupings of the PICPA, except
A. Luzon
B. Cebu
C. Mindanao
D. Metro Manila

20. Which of the following about the IFRS Foundation is incorrect?

A. It was formed on February 6, 2001.
B. The IFRS Foundation's predecessor body Was called the International Accounting Standards
Foundation (IASF).
C. The primary objective is to develop globally accepted International Financial Reporting
Standards (IFRS Standards).
D. IFRS Standards are set by the IFRS Foundation's standard-setting body, the International
Accounting Standards Committee.

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