Course Assessment

A. Identification - Write the word(s) best described by the statements below:

International Accounting Standards Board (IASB) 1. The standard-setting body who issues the
International Financial Reporting Standards

Financial Accounting Standards Board (FASB) 2. The standard-setting organization who issues the U.S.
GAAP

Accounting 3. The process of identifying, measuring and communicating economic information to

permit informed judgment and decision by users of the information.

Philippine Interpretations Committee (PIC) 4. This was created to issue implementing guidelines on
PFRS.

Normal Operating Cycle 5. The amount of time that is expected to elapse until an asset is realized or
otherwise converted into cash.

Statement of Financial Position 6. The financial report that shows the reporting entity’s economic
resources and claims

Statement of Changes in Equity 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

Historical Cost/History Costs 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.

Liquidity 9. Refers to the ability of the business to raise cash to meet unexpected cash requirements.

Reporting Entity/Management 10. Those responsible for the preparation and presentation of financial
statements.

IAS 7 11. The standard that sets out the requirements for the presentation of the cash flow statement
and related disclosures.

Financial Statements 12. Portray the financial effects of transactions and other events by grouping them
into broad classes according to their economic characteristics.

Gain on Sale 13. Result if an asset is sold more than book value.

Asset 14. One of its recognition criteria is that it is probable that the future economic events will flow to
the enterprise.

Physical Capital Maintenance Concept 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.
B. Fill in the Blanks - Write the word(s) to make the statements complete and correct.

1. Financial Accounting provide financial reporting information to a wide variety of users.

2. As part of the objective of general-purpose financial reporting, an entity perspective is adopted. This
means that companies are viewed as separate and distinct from their owners.

3. Accounting standards set out the recognition, measurement, presentation and disclosure
requirements of transactions and events that are important in financial statements.

4. The creation of FRSC in 2006 replaced the Accounting Standards Council (ASC).

5. The objective of the FRSC is to establish generally accepted accounting principles in the Philippines.

6. Conceptual Framework sets out the concepts that underlie the preparation and presentation of
financial statements for external users.

7. If there are any conflict in the framework and IFRS, the IFRS prevails.

8. Assets is a resource controlled by the enterprise as a result of past events and from which future
economic events are expected to flow to the enterprise.

9. Expense are decreases in economic benefits during the accounting period in the form of outflows or
depletions of assets or incurrence of liabilities that result in decreases in equity other than those relating
to distributions to equity participants.

10. The conceptual framework specifically mentions one underlying assumption, namely, Going
Concern.

11. The four sectors of accountancy under PICPA are: EDUCATION, GOVERNMENT, PUBLIC, & PRIVATE
PRACTICE

12. One constraint on useful financial reporting is that costs should be justified by the Benefit of the
reported financial information.

13. Assets that are carried at the amount of cash or cash equivalents that would have to be paid if the
same or an equivalent asset was acquired currently is measured using the Current Costs.

14. Under the Financial Capital approach, investment must be recovered before a company can have
income.

15. The objective of PAS 1 is to prescribe the basis for presentation of general-purpose financial
statements in order to ensure Comparability.
C. Matching – Write the letter of the term under List B that corresponds to the statement indicated
under List A.

LIST A LIST B
1. I Concerns the relative size of an item and its a. Predictive value
effect on decisions.
2. E Information confirms expectations. b. Relevance

3. J Important for making inter-firm comparisons. c. Timeliness

4. M Applying the same accounting practices over d. Accrual basis of
time. accounting
5. O Implies consensus among different measures. e. Feedback value
6. F A complete set of financial statements (including f. Frequency of reporting
comparative information) should be presented
at least annually.
7. C Information is available prior to the decisions. g. Faithful representation
8. B Pertinent to the decision at hand. h. Understandability
9. G Along with relevance, a fundamental qualitative i. Materiality
characteristic.
10. N Requires consideration of the cost and value of j. Comparability
information.
11. L The process of admitting information into k. Offsetting
financial statements.
12. K An entity reports separately both assets and l. Recognition
liabilities, and income and expenses.
13. A Information is useful in determining the future m. Consistency
14. D Effects of transactions on an entity’s economic n. Cost effectiveness
resources and claims are recognized in the
periods in which those effects occur, even if the
resulting cash receipts and payments occur in a
different period.
15. H It requires that users have some knowledge of O. Verifiability
the complex economic activities of enterprises,
the accounting process and the technical
terminology in the statements.
p. Prudence
q. Substance over form
D. Sequencing - Arrange the following according to the correct sequence.

A. IASB Due Process

3 1. An exposure draft, which is IASB’s main vehicle for consulting the public, is published for public
comment.
2 2. All comments received on discussion document and exposure draft are considered.
1 3. Topics are identified and placed on IASB’s agenda.
5 4. After the due process is completed, all outstanding issues are resolved, and the IASB members have
balloted in favor of publication, the IFRS is issued.
4 5. After comments on the first exposure draft have been affected, the IASB considers whether to
publish its revised proposals for another round of comments.
B. FRSC Due Process

4 1. Approval of a standard or an interpretation by a majority of the FRSC members.

1 2. Consideration of pronouncement of IASB.
3 3. Consideration of all comments received within the comment period and, when appropriate,
preparing a comment letter to the IASB.
2 4. An exposure draft approved by a majority of the FRSC members for comments (comment period 60
– 30 days)