FAR FUNDAMENTALS

Conceptual Framework
1. The concept of accounting entity is applicable
a. Only in the legal aspects of business organizations
b. Only to the economic aspects of business organizations
c. Only to business organizations
d. Whenever accounting is involved
2. The financial statements of an entity are separate and distinct from financial statements
of the owners according to
a. Going concern b. Matching c. Economic entity d. Accounting period
3. Which underlying assumption serves as the basis for preparing financial statements at
regular artificial points in time?
a. Accounting entity b. Going concern c. Stable monetary unit d. Accounting period
4. Which basic accounting assumption is threatened by the existence of severe inflation in
the economy?
a. Monetary unit b. Periodicity c. Going concern d. Economic entity
5. The valuation of a promise to receive cash in the future at present value is valid because
of what accounting comcept?
a. Entity b. Time period c. Going concern
d. Monetary unit
6. The accounting concept justifies the usage of accruals and deferrals.
a. Going concern b. Materiality c. Concistency
d. Stable monetary unit
7. Which of the following is an internal user of financial information?
a. Board of Directors b. Shareholder c. Bondholder d. Creditor with long-term contract
8. These users are interested in information about the continuance of an entity, especially
when they have a long term involvement with or are dependent on the entity?
a. Customers b. Employees c. Trade unions d. Suppliers
9.The primary focus of financial reporting has been the needs of which of the ff. groups?
a. Managers of an entity b. National and local authorities c. Existing and potential investors,
lenders, and other creditors d. Independent CPAs
10. The overall objective of financial reporting is to provide information
a. About the entity's assets, liabilities, and equity
b. About an entity's financial performance during a period
c. That allows owners to assess management performance
d. That is useful for decision making

ANSWERS:
1. D
2. C
3. D
4. A
5. D
6. C
7. A
8. B
9. C
10.D