Exercise 1.

History, Development, and

Functions of the Standard-Setting
Bodies
You have until October 15 to answer this Exercise.
Points:
57/60
1.Student NumberRequired to answer. Single line text.
Kindly enter your complete student number. Otherwise, the system may not capture your grade. e.g.,
2015-12787-MN-0

2.Which of the following is considered as the language of business. Single choice.

(1/1 Point)
Accounting
Production
Marketing
Administration
3.Which of the following is true? I. Accounting is a service activity intended to
fulfill a useful information in society; II. Accounting involves the art of art of
recording, classifying and summarizing transaction and events, and interpreting
the results thereof; III. Accounting is an art but not a science; IV. Accounting
provides quantitative financial information intended to be useful in making
economic decisions.. Single choice.
(1/1 Point)
I, II, IV
I, II, III, IV
I, II, III
II, III, IV
4.Accounting is an art because. Single choice.
(1/1 Point)
of the existence of a body knowledge governing accounting practice
 of accounting standards
of accounting theory
the necessity of applying creative skill and ability
5.The information provided by financial reporting pertains to. Single choice.
(1/1 Point)
an economy as a whole and to members of society as consumers, rather than to individual
enterprises or industries.
individual business enterprises, rather than to industries or an economy as a whole or to
members of society as consumers.
individual business enterprises, industries, and an economy as a whole, rather than to members
of society as consumers.
business industries, rather than to individual enterprises or an economy as a whole or to
members of society as consumers.
6.As used in the definition of accounting, an economic entity may be. Single
choice.
(1/1 Point)
A division within a business enterprise
An individual
Any of these
A business enterprise
7.One objective of financial reporting is to provide. Single choice.
(0/1 Point)
information about the liquidation values of the resources held by the enterprise.
information that will attract new investors.
information that is useful in assessing cash flow prospects.
information about the investors in the business entity.
8.What is the branch of accounting that makes financial information about an
entity accessible to the creditors and investors?. Single choice.
(1/1 Point)
Government accounting
Auditing
Financial accounting
Management accounting
9.Financial Accounting can be broadly defined as the area of accounting that
prepares. Single choice.
(1/1 Point)
Financial statements to be used primarily by management
General purpose financial statements to be used by parties both internal and external to the
entity
General purpose financial statement to be used by parties internal to the entity
Financial statements to be used by investors
10.Financial accounting is the branch of accounting that focuses on. Single
choice.
(1/1 Point)
the various need of statement users
financial statements
general purpose reports of financial position and results of operations
special purpose reports of financial position and results of operations
11.General-purpose financial statements are the product of. Single choice.
(1/1 Point)
financial accounting.
managerial accounting.
both financial and managerial accounting
neither financial nor managerial accounting.
12.General-purpose information is. Single choice.
(0/1 Point)
not intended to satisfy the common needs of individual users.
intended to satisfy the specialized needs of individual users
Provided by managerial accounting.
not intended to satisfy the specialized needs of individual users.
13.Special-purpose financial statements are. Single choice.
(1/1 Point)
useful to present and potential equity investors
prepared in accordance with Philippine Financial Reporting Framework
prepared for the annual stockholders’ meeting
prepared in accordance with special-purpose financial reporting framework
14.Financial Accounting is concerned with. Single choice.
(1/1 Point)
Recording financial transactions
Summarizing and presenting financial information on financial reports
Analyzing the financial reports
All of these
15.Financial accounting emphasizes reporting to. Single choice.
(1/1 Point)
Creditors and investors
Regulatory bodies
Management
Internal auditors
16.Which of the following is not true?. Single choice.
(1/1 Point)
Accounting is concerned primarily with quantitative information used by persons who must
make economic decisions among alternative actions.
The branch of accounting concerned with the presentation of financial information to assist
management in planning and controlling operations is called managerial accounting.
Governmental accounting is also known as municipal or fund accounting
Financial accounting emphasizes special purpose information based on presumption that
significant numbers of users need similar information.
17.What is the branch of accounting that serves the information needs of internal
users?. Single choice.
(1/1 Point)
Cost accounting
Government accounting
Management accounting
Financial accounting
18.The process of identifying, measuring, analyzing, and communicating financial
information needed by management to plan, evaluate, and control an
organization’s operations is called. Single choice.
(1/1 Point)
tax accounting.
financial accounting.
 auditing.
managerial accounting.
19.Managerial Accounting emphasizes. Single choice.
(1/1 Point)
Reporting financial information to external users
Developing accounting information for use within an entity
Reporting to the Securities and Exchange Commission
Combining accounting with data processing
20.Which statement is true regarding managerial accounting and financial
accounting?. Single choice.
(1/1 Point)
The emphasis on managerial accounting is relevance and the emphasis on financial accounting
is timeliness
Managerial accounting has a future focus
Managerial accounting is generally more precise
Managerial accounting need not follow generally accepted accounting principles while financial
accounting must follow GAAP
21.This branch of accounting deals with collection, allocation and control of the
cost of producing specific goods and services.. Single choice.
(1/1 Point)
Accounting Education
Cost Accounting
Tax Accounting
Government Accounting
22.When Polytechnic University of the Philippines records its transaction and
prepares financial reports, such recording and preparation of reports fall under
what branch of accounting?. Single choice.
(1/1 Point)
Government accounting
Cost accounting
Accounting education
Management accounting
23.In 2020, Alfonso established his online Face2Face business selling facemasks
and face shield. When he hears that even an online seller needs to register, he
heeds the call of the BIR. When he is about to file his Q1 Income Tax Return, his
friend, Di Carpio, advises him that he could opt to use 8% optional gross income
tax if his gross sales during the year do not exceed P3 million pesos. In order to
manage properly his income tax payments and to determine whether Alfonso is
qualified to use the 8% tax rate, which branch of accounting will help him make
an informed decision,. Single choice.
(1/1 Point)
Management Accounting
Tax Accounting
Government Accounting
Financial Accounting
24.This branch of accounting deals with the examination of whether the financial
statements are prepared in accordance with the Philippine Financial Reporting
Standards.. Single choice.
(1/1 Point)
Accounting Education
Cost Accounting
Auditing
Financial Accounting
25.Which among the following is an indirect user of accounting information?.
Single choice.
(1/1 Point)
Regulatory agency
Lenders of the enterprise
Management of the enterprise
Taxing Authority
26.Which of the following is an internal user of a company’s financial
information?. Single choice.
(1/1 Point)
Regulatory agencies
Long-term creditors of an enterprise
Shareholders of the company
Board of directors
27.Which of the is considered a direct user of accounting information?. Single
choice.
(1/1 Point)
A regulatory agency
Trade association
Taxing authority
Labor unions
28.Which of the following users of accounting information are both an external
user and a direct user?. Single choice.
(1/1 Point)
Management
Labor unions
Creditors
Regulatory bodies
29.The objectives of financial reporting for business enterprises are based on.
Single choice.
(0/1 Point)
The need for profit maximization
The needs of the users of the information
Generally accepted accounting principles
Reporting on management’s stewardship
30.What would be the advantage of having all countries adopt and follow the
same accounting standards?. Single choice.
(1/1 Point)
Consistency.
Lower preparation costs.
Comparability.
Comparability and lower preparation costs
31.Which of the following would not be considered an internal user of accounting
data for the XYZ Company?. Single choice.
(1/1 Point)
Merchandise inventory clerk
President of the employees' labor union
 Production manager
President of the company
32.Which of the following would not be considered an external user of
accounting data for the XYZ Company?. Single choice.
(1/1 Point)
Management
Creditors
Internal Revenue Service Agent
Customers
33.Which of the following would not be considered internal users of accounting
data for a company?. Single choice.
(1/1 Point)
Creditors of a company
The controller of a company
The president of a company
Salesmen of the company
34.Which of the following is an external user of accounting information?. Single
choice.
(1/1 Point)
Managers
Finance directors
Labor unions
Company officers
35.Which one of the following is not an external user of accounting information?.
Single choice.
(1/1 Point)
Regulatory agencies
Customers
Investors
All of these are external users
36.Financial accounting provides economic and financial information for all of the
following except. Single choice.
(1/1 Point)
 investors.
other external users.
managers.
creditors.
37.Which combination of user and type of decision that user will make with the
information is correct?. Single choice.
(1/1 Point)
Investor; Is the company operating within prescribed guidelines?
Bureau of Internal Revenue; Is the company complying with tax laws?
Creditor; Is the company a good investment?
Regulatory Agency; Is the company able to pay its debts?
38.What is the information that lenders need from financial statements of
borrowers?. Single choice.
(1/1 Point)
information on the borrowers’ willingness to pay the loan and interest
information on the borrowers’ stability and profitability
information on the borrowers’ ability to pay the loan and interest
information that will enable them to regulate the activities of borrowers
39.An independent, not-for-profit private sector organization that governs the
activities of the International Accounting Standards Board is the. Single choice.
(1/1 Point)
International Accounting Standard Committee
IFRS Foundation
Standards Advisory Council
International Financial Reporting Interpretations Committee
40.The body that authors the International Financial Reporting Standards is the.
Single choice.
(1/1 Point)
International Accounting Standards Board
Accounting Standards Council
Financial Reporting Standards Council
International Accounting Standards Committee
41.The International Accounting Standards Board was formed. Single choice.
(1/1 Point)
To enforce IFRS in foreign countries
To develop a single set of high quality IFRS
To establish accounting standards for multinational entities
To develop accounting standards for countries that do not have their own standard-setting
bodies
42.The IASB declared that the merits of proposed standards are assessed. Single
choice.
(1/1 Point)
Based on arguments of lobbyist
Based on possible impact on behavior
From a position of materiality
From a position of neutrality
43.The IASB publishes standards called. Single choice.
(1/1 Point)
International Accounting Standards
Statement of Financial Accounting Standards
International Financial Reporting Standards
Financial Reporting Standards
44.What is the chronological order in the evaluation of a typical standard?. Single
choice.
(1/1 Point)
Exposure draft, Standard, and Discussion paper
Exposure draft, Discussion paper, and Standard
Discussion paper, Exposure draft, and Standard
Standard, Discussion paper, and Exposure draft
45.The IASB employs due process system which. Single choice.
(1/1 Point)
Is an efficient system for collecting dues from members
Identifies the most important issues
Requires that all CPAs must receive a copy of IFRS
Enables interested parties to express their views on issues under consideration
46.What is due process in the standard-setting by IASB?. Single choice.
(1/1 Point)
Interested parties can make their views known
Public hearings are held on proposed standards
IASB operates in full view of the public
All of these are part of due process in standard-setting
47.The Financial Accounting Standards Board employs a "due process" system
which. Single choice.
(1/1 Point)
identifies the accounting issues that are the most important.
is an efficient system for collecting dues from members.
enables interested parties to express their views on issues under consideration.
requires that all accountants must receive a copy of financial standards
48.What is a possible danger if politics plays too big a role in developing IFRS?.
Single choice.
(1/1 Point)
Accounting standards are not truly generally accepted
Individuals may influence the standards
User groups become active
The IASB delegates its authority to elected officials
49.Financial accounting standard-setting. Single choice.
(1/1 Point)
Is based solely on research and empirical findings
Is a legalistic process
Can be described as a social process which reflects political actions of various interested user
group as well as a product of research and logic
Is democratic in the sense that a majority of accountants must agree with a standard
50.IFRIC Interpretations issued by IASB. Single choice.
(1/1 Point)
All of these are true about IFRIC Interpretations.
Cover newly identified financial reporting issues not specifically addressed
Are considered authoritative and must be followed
Cover issues with conflicting interpretations
51.Which is the accounting standard setting body in the Philippines at the
present time?. Single choice.
(1/1 Point)
Financial Reporting Standards Council
Auditing and Assurance Standards Council
Philippine Institute of Certified Public Accountants
International Accounting Standards Committee
52.Which statement is true regarding FRSC?. Single choice.
(1/1 Point)
The FRSC shall be composed of 15 with a Chairman and 14 representatives
The Chairman and members of FRSC are appointed by Professional Regulation Commission
upon recommendation of the Board of Accountancy and shall have a term of three years renewable
for another term.
The FRSC is created by Professional Regulation Commission upon recommendation of the Board
of Accountancy in carrying out its powers and functions under R.A. 9298.
All of the statements are true.
53.Based on the Republic Act 9298, the Financial Reporting Standards Council is
composed of. Single choice.
(1/1 Point)
13 members
15 members
16 members
14 members
54.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. Single
choice.
(1/1 Point)
I, II, III, V, and VI
I, II, III, IV, V and VI
II, IV, V, and VI
I, III, IV, and V
55.All of the following are represented in FRSC, except. Single choice.
(1/1 Point)
Department of Budget and Management
Board of Accountancy
Securities and Exchange Commission
Commission on Audit
56.The PFRS consist of I. Specific Philippine Financial Reporting Standards (PFRS),
which are adopted from the IFRSs II. Philippine Accounting Standards (PAS),
which are adopted from the IASs III. Philippine Interpretations, which are adopted
from the interpretations of the IFRIC and the SIC IV. Interpretations of the PIC.
Single choice.
(1/1 Point)
I, II, and III
I and II
I, II, III, and IV
I only
57. Which of the following are parts of the due process applied by the Financial
Reporting Standards Council in developing the financial reporting standard? 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 majority members of the
FRSC members. Single choice.
(1/1 Point)
II, III, and IV
I, III, and IV
I, II and IV
I, II, III, and IV
58.The process of establishing financial reporting standards is. Single choice.
(1/1 Point)
A social process, which incorporates political actions of various interest user groups as well as
professional research and logic
A democratic process in that a majority of practicing certified public accountants mut vote of a
proposed standard
A legislative process based on set of laws promulgated by the House of Representatives
Based solely on economic analysis of the effects each standard will have if it is implemented
59.As part of the due process of developing an accounting standard, the Financial
Reporting Standards Council issues exposures draft for comment within a period
of 60 days, unless a shorter period is considered appropriate. How long is this
shorter period?. Single choice.
(1/1 Point)
Not less than 45 days
Not less than 50 days
It depends on the issue being resolved
Not less than 30 days
60.Once an accounting standard has been established. Single choice.
(1/1 Point)
The standard is continually reviewed to see if modification is necessary
The standard is not reviewed
The task of reviewing the standard is giving to a national organization of CPAs
No revisions should be made to the standard
61.Generally accepted accounting principles. Single choice.
(1/1 Point)
Derive their credibility and authority from recognition and acceptance by the accountancy
profession
Are accounting principles based on law
Derive their authority from regulatory authority
Derive their credibility and authority from law
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