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ACC 1 1 Check
ACC 1 1 Check
ACCOUNTING 1
Introduction to Accounting
Conceptual Framework
Qualitative Characteristics
4. It is the body authorized by law to promulgate rules and regulations affecting the
practice of the accountancy profession in the Philippines.
A. Board of Accountancy
B. Philippine Institute of Certified Public Accountants
C. Securities and Exchange Commission
D. Financial Reporting Standards Council
5. It is the accounting standard setting body in the Philippines at the present time.
A. Accounting Standards Council
B. Auditing and Assurance Standards Council
C. Philippine Accounting Standards Board
D. Financial Reporting Standards Council
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B. Private accounting
C. Government accounting
D. Financial accounting
11. Which of the following statements best describes generally accepted accounting
principles?
A. They have been formulated in the public sector.
B. They have been developed on the basis of such factors as usage and practical
necessity.
C. They are the same as laws within our legal system.
D. They do not apply to small entities.
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16. What is the only underlying assumption mentioned in the Conceptual Framework
for Financial Reporting?
A. Going concern
B. Accounting entity
C. Time period
D. Monetary unit
17. The financial statements that are prepared for the business are separate and distinct
from the financial statements of the owners.
A. Going concern assumption
B. Matching principle
C. Economic entity assumption
D. Accounting period assumption
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19. Which of the following is not an important characteristic of the financial statements
that accountants currently prepare?
A. The information in financial statements is expressed in units of money adjusted
for changing purchasing power.
B. Financial statements articulate with one another because measuring financial
position is related to measuring changes in financial position.
C. The information in financial statements is summarized and classified to help
meet users' needs.
D. Financial statements can be justified only if the benefits they provide exceed the
costs.
21. The valuation of a promise to receive cash in the future at present value is valid
because of the accounting concept of
A. Entity
B. Time period
C. Going concern
D. Monetary unit
25. Which of the following statements is true concerning the Conceptual Framework?
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26. In the Conceptual Framework for Financial Reporting, what provides the "why" of
accounting?
A. Measurement and recognition concept
B. Qualitative characteristic of accounting information
C. Element of financial statement
D. Objective of financial reporting
27. Which of the following is not true concerning the Conceptual Framework? :
I. The Conceptual Framework should be a basis for standard setting.
II. The Conceptual Framework should allow practical problems to be solved
more quickly.
III. The Conceptual Framework should be based on fundamental truths that
are derived from the laws of nature.
A. II only
B. III only
C. II and III only
D. I and II only
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30. These users are interested in information about the profitability and stability of an
entity in order to assess the ability of the entity to provide remuneration, retirement
benefits and employment opportunities.
A. Customers
B. The public
C. Governments and their agencies
D. Employees
31. These users are interested in information about the continuance of an entity when
they have a long-term involvement with or are dependent on the entity.
A. Customers
B. Employees
C. Trade unions
D. Suppliers
32. These users need information on trends and recent developments where an entity
makes a substantial contribution to the local economy providing employment and
using local suppliers.
A. Customers
B. The public
C. Governments and their agencies
D. Employees
34. The equation. "assets minus liabilities minus preference equity equals ordinary
equity" is
A. Fund
B. Entity
C. Proprietary
D. Residual equity
35. The primary accounting objective is fair presentation of the financial performance of
the entity.
A. Entity
B. Proprietary
C. Residual equity
D. Fund
36. Which of the following statements best describes the term “financial position”?
A. The net income and expenses of an entity.
B. The net of financial assets less liabilities of an entity.
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C. The potential to contribute to the flow of cash and cash equivalents to the entity.
D. The assets, liabilities, and equity of an entity.
38. The four phases of accounting are recording, classifying, summarizing and
interpreting. The phase whereby the liquidity, solvency and profitability of an entity
are significantly portrayed is known as
A. Summarizing
B. Classifying
C. Recording
D. Interpreting
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43. What is the quality of information that gives assurance that it is reasonably free
from error and bias?
A. Relevance
B. Faithful representation
C. Verifiability
D. Neutrality
45. In the event of conflict between the economic substance of a transaction and the
legal form, the economic substance shall prevail. This concept is known as
A. Form over substance
B. Substance over form
C. Faithful representation
D. Completeness
46. The financial accounting information is directed toward the common needs of users
and is independent of presumptions about particular needs and desires of specific
users.
A. Relevance
B. Verifiability
C. Neutrality
D. Completeness
49. The characteristic that is demonstrated when a high degree of consensus can be
secured among independent measurers using the same measurement method is
A. Relevance
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B. Understandability
C. Verifiability
D. Neutrality
50. An entity issuing the annual financial reports within one month at the end of
reporting period is an example of which enhancing quality of accounting
information?
A. Neutrality
B. Timeliness
C. Predictive value
D. Representational faithfulness
51. Which of the following statements is true in relation to the enhancing qualitative
characteristic of understandability of financial information?
A. Users have a reasonable knowledge of business and economic activities and
review the information with reasonable diligence.
B. Users are expected to have significant business knowledge.
C. Financial statements shall exclude complex matters.
D. Financial statements shall be free from material error.
52. Which of the following terms best describes information that influences the
economic decision of users?
A. Reliable
B. Prospective
C. Relevant
D. Understandable
53. Which of the following terms best describes information in financial statements that
is neutral?
A. Understandable
B. Comparable
C. Relevant
D. Unbiased
55. An item would be considered material and therefore would be disclosed in the
financial statements if
A. The expected benefits of disclosure exceed the additional costs.
B. The impact on earnings is greater than 10%.
C. The standard definition of materiality is met.
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59. Which of the following accounting concepts states that an accounting transaction
shall be supported by sufficient evidence to allow two or more qualified individuals
to arrive at essentially similar conclusions?
A. Conservatism
B. Objectivity
C. Periodicity
D. Stable monetary unit
61. Which of the following relates to both relevance and faithful representation?
A. Consistency
B. Feedback value
C. Verifiability
D. Timeliness
62. Which of the following situations violates the concept of faithful representation?
A. Financial statements were issued nine months late.
B. Data on segments having the same expected risks and growth rates are reported
to analysts estimating future profits.
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64. Classifying, characterizing and presenting information clearly and concisely makes
the information
A. Understandable
B. Comparable
C. Verifiable
D. Timely
65. If there is undue delay in the reporting of information, it may lose its
A. Relevance
B. Relevance and faithful representation
C. Usefulness
D. Faithful representation
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B. General purpose financial reports are designed to show the value of the
reporting entity.
C. General purpose financial reports are intended to provide common information
to users.
D. Financial reports are largely based on estimate and judgment rather than exact
depiction.
~End~
“If you can’t figure out your purpose, figure out your passion. For your passion will lead you right into
your purpose.”
~ Bishop T.D. Jakes
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Suggested Key
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1. D 36. D
2. D 37. A
3. A 38. D
4. A 39. A
5. D 40. A
6. B 41. B
7. A 42. A
8. D 43. B
9. D 44. C
10. D 45. B
11. B 46. C
12. A 47. D
13. C 48. C
14. C 49. C
15. A 50. B
16. A 51. A
17. C 52. C
18. A 53. D
19. A 54. B
20. D 55. D
21. C 56. C
22. B 57. A
23. A 58. A
24. C 59. B
25. A 60. D
26. D 61. A
27. B 62. C
28. B 63. B
29. A 64. A
30. D 65. A
31. A 66. A
32. B 67. C
33. A 68. B
34. D 69. D
35. A 70. D
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