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. 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. 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. The concept of capital maintenance chosen by an entity shall determine the
accounting model used in the preparation of its financial statements.  
4. The Conceptual Framework serves as a guide in developing future financial
reporting standards and in reviewing existing ones.  
5. The Conceptual Framework is a source of guidance for determining an
accounting treatment where a standard does not provide specific guidance.  
6. 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. 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. The GPFS show the results of the stewardship of the management for the
resources entrusted to it by the capital providers.  
9. 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. 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:  

 
1. The standard-setting body who issues the
International Financial Reporting Standards.  
  
2. The standard-setting organization who issues
the U.S. GAAP. 
  
3. The process of identifying, measuring and
communicating economic information to permit
informed judgment and decision by users of the
information. 
     
4. This was created to issue implementing
 guidelines on PFRS. 
  
5. The amount of time that is expected to elapse
until an asset is realized or otherwise converted
into cash. 
  
6. The financial report that shows the reporting
entity’s economic resources and claims. 
  
7. The financial report that shows the changes 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. 
     
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. 
  
9. Refers to the ability of the business to raise
cash to meet unexpected cash requirements.  
  
10. Those responsible for the preparation and
presentation of financial statements. 
  
  
11. The standard that sets out the requirements for
the presentation of the cash flow statement and
related disclosures.  
  
     
12. Portray the financial effects of transactions and
other events by grouping them into broad classes
according to their economic characteristics. 
  
13. Result if an asset is sold more than book value. 
  
14. One of its recognition criteria is that it is
probable that the future economic events will flow
to the enterprise. 
     
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.