Far Eastern University – Manila ACT111 HO No.

OVERVIEW AND CONCEPTS IN ACCOUNTING

Intermediate Accounting 3

1. This is the set of rules, principles, standards, conventions, and underlying assumptions that are used when preparing the
financial statements.
a. International Accounting Standards
b. International Financial Reporting Standards
c. Generally Accepted Accounting Principles
d. Financial Accounting Standards Board

2. It is the set of accounting standards issued by the FRSC and constitutes the generally accepted accounting principles observed
in the Philippines.
a. Philippine Standards on Auditing
b. Internation Accounting Standards
c. Philippine Financial Reporting Standards
d. Interpretation made by the Philippine Interpretations Committee.

3. The government agency tasked by law of implementing and enforcing the regulatory policies of the national government with
respect to the regulation and licensing of the various professions and occupations under its jurisdiction is
a. PRC
b. BOA
c. COA
d. SEC

4. What is the law regulating the practice of accountancy in the Philippines?

a. R.A. No. 9298
b. R.A. No. 9198
c. R.A. No. 9928
d. R.A. No. 9892

5. Which of the following is not one of the specified objectives of the Accountancy Act of 2004?
a. Examination for registration of CPAs.
b. Supervision, control, and regulation of accounting practice.
c. Standardization and regulation of accounting education.
d. Promulgation of accounting and auditing standards.

6. The following are purpose of the Conceptual Framework of Financial Reporting, except:
a. Assist the FRSC to develop PRFS that are based on consistent concepts.
b. Assist preparers to develop consistent accounting principles when no standard applies to a particular transaction or
other event, or when a standard allows a choice of accounting policy.
c. Assist all parties to understand and interpret the standards.
d. All of the above are purposes of the Conceptual Framework

7. It refers to the inclusion of all information, description, and explanations necessary for a user to understand the phenomenon
being depicted.
a. Completeness
b. Free from error
c. Materiality
d. Neutrality

DNF,CPA | 1
Far Eastern University – Manila ACT111 HO No. 1

8. It refers to the capability of information to make a difference in the decisions made by the users.
a. Relevance
b. Faithful representation
c. Fundamental characteristics
d. Enhancing characteristics

9. It refers to not committing any mistakes in both the process used in order to produce the financial information.
a. Completeness
b. Free from error
c. Materiality
d. Neutrality

10. It refers to the absence of bias in the presentation of financial information.

a. Completeness
b. Free from error
c. Materiality
d. Neutrality

11. The following are related to the fundamental qualitative characteristic of faithful representation, except:
a. Completeness
b. Free from error
c. Materiality
d. Neutrality

12. Continuation of an enterprise in the absence of evidence to the contrary is an example of the concept of
a. Accounting entity
b. Consistency
c. Going Concern
d. Substance over form

13. It refers to different observers reaching the same consensus.

a. Verifiability
b. Timeliness
c. Comparability
d. Understandability

14. It refers to information being available when needed by the users.

a. Verifiability
b. Timeliness
c. Comparability
d. Understandability
15. It is the principle that states that the business entity is distinct and separate from its owners.
a. Matching principles
b. Monetary unit assumption
c. Generally Accepted Accounting Principles
d. Economic entity principles

16. Another term for conservatism

a. Materiality
b. Neutrality
c. Prudence
d. Understandability
DNF,CPA | 2
Far Eastern University – Manila ACT111 HO No. 1

17. Which of the following terms best describes the removal of an asset from an entity’s statement of financial position?
a. Derecognition
b. Impairment
c. Write-off
d. Depreciation

18. Which of the following statements is not true?

a. Accounting assumptions are the basic notions or fundamental premises on which the accounting process is
based.
b. Accrual used to be an underlying assumption in the old framework
c. Going concern is the sole underlying assumption in the new framework.
d. The use of historical cost is not supported by going concern assumption.
19. The following statements are true except,
a. General purpose financial statements are based on estimates and judgments rather than exact depictions.
b. General purpose financial reports are not designed to show the value of an entity.
c. The target users of general purpose financial reports are investors, creditors and lenders.
d. General purpose financial reports all the information needed by existing and potential investors, lenders and
other creditors needed.

20. Historical cost

a. The amount of cash or cash equivalent paid or the consideration to acquire an asset.
b. The amount of cash or cash equivalent that would have to be paid of the same or an equivalent asset is
acquired currently.
c. The amount of cash and cash equivalent that could currently be obtained by selling the asset in an orderly
disposal.
d. The discounted value of the future net cash inflow that an asset is expected to generate in the normal course of
business.

21. “Recognition” is defined in the Conceptual Framework as

a. The grouping, into broad classes, of the financial effects of transactions and other events according to
economic characteristics.
b. The process of determining the monetary amounts at which the elements of the financial statements are to be
recognized and carried in the balance sheet and income statement.
c. The removal of a previously recognized asset or liability from an entity’s statement of financial position.
d. The process of incorporation in the balance sheet or income statement an item that meets the definition of an
elements and satisfies the criteria for recognition.

22. Which statements is false concerning users and their information needs?
a. Lenders are interest in information that enables them to determine whether their loans and the interest on these
loans will be paid when due.
b. The providers of risk capital and their advisers are concerned with the risk inherent in return provided by their
investment,
c. Government and its agencies have an interest in information about the continuance of an enterprise especially
when they have long-term involvement or are dependent on the enterprise.
d. Employees and their representative groups are interest in information about the stability and profitability of the
entity.

DNF,CPA | 3
Far Eastern University – Manila ACT111 HO No. 1

23. Which of the following statement(s) regarding the conceptual framework is (are) incorrect?
a. The framework applies to financial statements of business reporting enterprises both in the private sector and in
the public sector.
b. In cases where there is conflict between the framework and PFRS, the requirement of the framework will prevail.
c. Both A and B
d. Neither A nor B

24. What is the basic purpose of accounting?

a. To provide quantitative financial information about economic activities.
b. To provide all information that users need in making economic decisions.
c. To provide qualitative financial information about economic activities intended to be useful in making economic
decisions.
d. To provide quantitative financial information about economic activities intended to be useful in making
economic decisions.
25. Accounting has been given various definition, which of the following is not one of those definitions?
a. Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature,
about economic entities that is intended to be useful in making economic decisions.
b. Accounting is an art of recording, classifying, and summarizing in a significant manner and in terms of money,
transactions and events which are, in part of at least, of a financial character and interpreting the result thereof.
c. Accounting is a systematic process of objectively obtaining and evaluating events to ascertain the degree of
correspondence between these assertions and established criteria and communicating the results to interested
users.
d. Accounting is the process of identifying, measuring, and communicating economic information to permit
informed judgment and decisions by users of information.

26. Which statement is incorrect regarding the Conceptual Framework?

a. The objective of general-purpose financial reporting is the foundation of the Conceptual Framework.
b. The conceptual Framework is useful to auditors by assisting them in forming an opinion as to whether financial
statements conform to PFRSs.
c. The Conceptual Framework may override a specific PFRS.
d. The conceptual framework includes a cost-benefit constraint, which means that the benefits of the information
must be greater than the costs of providing it.

27. It is the body authorized by law to promulgate rules and regulations affecting the practice of accountancy professions in
the Philippines.
a. Board of Accountancy
b. Philippine Institute of Certified Public Accountants
c. Securities and Exchange Commission
d. Financial Reporting Standards Council

28. It is the area of the accountancy profession that encompasses the process of analyzing, classifying, summarizing and
communicating all transactions involving the receipt and disposition of public funds and property and interpreting the results
thereof.
a. Internal auditing
b. External Auditing
c. Private Accounting
d. Government Accounting

--END--
DNF,CPA | 4
Far Eastern University – Manila ACT111 HO No. 1

DNF,CPA | 5