Conceptual Frameworks and Accounting Standards:

1. Proper applications of accounting principles is most dependent upon the

- Professional judgement of the accountant

2. The purpose of the International Financial Reporting Standards (IFRS) is to

- Promote uniform accounting standards among the countries of the world

3. Determine the true statement regarding IFRS when referred collectively

- The term “IFRS” generally covers “IAS”

4. It is a memorandum of agreement made between IASB and FASB (US) and signed in
Norwalk Connecticut, USA with the goal of achieving comparability in financial
reporting standards by eliminating or minimizing differences between IFRS and US
GAAP
- The Norwalk Agreement

5. Which is not required to be presented in the FRSC?

- Department of Budget and Management

6. It is the body authorized by law to promulgate rules and regulations affecting

the practice of the accountancy profession in the Philippines
- Board of Accountancy

7. As independent or external auditor , CPA are primarily responsible for

- Expressing an opinion as to the fairness of financial statement

8. The singularly unique functions performed by Certified Public Accountant is

- The attest functions

9. Are the following statements true or false?

Statement 1: The Norwalk Agreement outlines the commitment of the IASB and FASB
towards harmonisation of International and US Accounting Standards.

Statement 2: IOSCO requires mandatory preparation of financial statements in

accordance with IFRS

- True, False

10. Once accounting standard is established

- The standard is continually reviewed to see if modification is necessary

11. The International Accounting Standards (IAS) are

- Principles-based rather than rules-based

12. What is the law regulating the practice of accountancy in the Philippines ?
- R.A. No. 9298

13. The international accounting standard board was formed to

- Develop word wide accounting standard

14. Are the following statements about the Norwalk Agreement true or false?

Statement 1: The Norwalk Agreement requires the consolidated financial statements

of all listed United States companies, starting after 1 January 2005, to be
prepared in accordance with International Accounting Standards.
Statement 2: The Norwalk Agreement was an agreement for short-term financial
reporting convergence between the European Commission and the United States
government

- False, False

15. Many accountant are employed in entities in various capacity as accounting

staff ,chief accountant or controller . These accountant are said to be engage in
- Private Accounting

16. Its is the accounting standard setting body created by PRC upon recommendations
of the Board of Accountancy to assist the Board in accountancy to carrying out its
powers and functions under R.A. No. 9298
- Financial Reporting Standard Council

17. Which of the following statement best describe generally accepted accounting
principles?
- They have been develop on the basis of such factor as usage and practical
necessity

18. Which statements is (are) correct regarding Philippine Financial Reporting

Standards (PFRSs)?
- PFRSs sets out recognition, measurement, presentation and disclosure
requirements dealing with transactions and events that are important in general
purpose financial statements

19. Which is (are) correct concerning the FRSC?

I. The FRSC replaces the ASC as the standard setting body in the
Philippines.

II. The FRSC is composed of 15 members with a Chairman and 14

representatives from various sectors

III. The chairman and members of the FRSC shall have a term of 2
years renewable for another term

Any member of the ASC shall be disqualified from being appointed to the FRSC

- I and II only

20. Generally accepted accounting principles

- Derive their credibility and authority from general recognitions and
acceptance by the accountancy profession

21. Which ONE of the following bodies is responsible for reviewing accounting
issues that are likely to receive divergent or unacceptable treatment in the
absence of authoritative guidance, with a view to reaching consensus as to the
appropriate accounting treatment?
- International Financial Reporting Interpretations Committee (IFRIC)

22. Generally accepted accounting principles

- Define accounting practice at a point in time

23. The underlying theme of the Conceptual Framework is?

- Decision usefulness

24. Which of the following is not a function of the Conceptual Framework?

- To set out recognition, measurement, presentation and disclosure
requirements dealing with transactions and other events and conditions that are
important in general purpose financial statements

25. The Conceptual Framework deals with?

- Concepts of capital and capital maintenance

26. The objective of financial reporting in the International Accounting Standards

Board’s (IASB’s) Conceptual Framework
- Is the foundation for the Framework

27. These users needs information on trends and recent developments where an entity
makes a substantial contributions to the local economy providing employment and
using local suppliers
- The public

28. What is the authoritative status of the Conceptual Framework?

- Supplementary information

29. 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 remunerations
retirement benefits and employment opportunities.
- Employees

30. Which of the following are not true concerning a conceptual framework in
accounting?
- It should be based on fundamental truths that are derived from the laws of
nature.

31. Which of the following is not a benefit associated with the FASB Conceptual
Framework Project?
- Business entities will need far less assistance from accountants because
the financial reporting process will be quite easy to apply.

32. Which of the following is an internal user of an entity financial information ?

- Board of director

33. A soundly developed conceptual framework of concepts and objectives should?

- All of these

34. These users require information on risk and return on investment and hence an
entity ability to pay dividend.
- Investor

35. These users are interested in information that enables them to determine
whether amounts owing to them will be paid when due.
- Suppliers and trade creditors

36. The conceptual framework is intended to assist

- All of these

37. These users are interested in information in order to regulate the activities
of an entity , determined taxation policies and provide a basis for national
statistic.
- Government and their agencies

38. Which statement is correct regarding information needs?

I. All information needs of users cannot be met by financial

statement
II. An investor are provider of risk capital to the entity the
provision of financial statement that meet their needs will also met most of the
needs of other users that financial statement can satisfy .
- Both I and II

39. Under the Conceptual Framework of Financial Reporting, users of financial

information may be classified into?
- Primary users (existing and potential investors and creditors) and other
users.

40. The second level in the International Accounting Standards Board’s (IASB’s)
Conceptual Framework
- Provides the elements of financial statement

41. What is a purpose of having a conceptual framework?

I. To enable the profession to more quickly solve emerging practical

problems.

II. To provide a foundation from which to build more useful standards.

- Both I and II

42. Which of the following statements is not an objective of financial reporting?

- Provide information on the liquidation value of an enterprise

43. A primary objective of financial reporting is to assist

- Investors in predicting prospective cash flows

44. The International Accounting Standards Board’s (IASB’s) Conceptual Framework

includes all of the following except:
- Supplementary information

45. Which of the following is not a purpose of the IASB’s Conceptual Framework?
- To assist auditors in the task of forming audit opinions

46. Which of the following is(are) not covered in the other aspects of the
Conceptual Framework?

1. the qualitative characteristics of useful financial information

2. the cost constraint on useful financial information

3. economic phenomena

4. a reporting entity concept

5. elements of financial statements

6. recognition and derecognition of financial elements

7. forward-looking information

8. measurement of financial elements

9. presentation and disclosure

- 3 and 7
47. According to the Board, information derives from accrual accounting method
about a reporting entity’s economic resources and claims and changes in its
economic resources and claims during a period provides a better basis for assessing
the entity’s past and future performance than information solely about cash
receipts and payments during that period.
- True

48. Identify the following statements as true or false:

Statement 1: The management of a reporting entity is also interested in

financial information about the entity. Therefore, management relies on general
purpose financial reports because it is able to obtain the financial information it
needs internally.

Statement 2: Other parties, such as regulators and members of the public other
than investors, lenders and other creditors, may also find general purpose
financial reports useful. However, those reports are not primarily directed to
these other groups.
- False, True

49. Examples of management’s responsibilities to use the entity’s economic

resources include, except:
- Ensuring that employee benefits are paid in accordance with the applicable
laws.

50. The objective of general purpose financial statements, according to the

Conceptual Framework, shall be to provide financial information about the reporting
entity that is useful to all of the following, except:
- Prospective customers

51. What is the quality of information that enables users to better forecast future
operations?
- Relevance

52. The two fundamental qualities that make accounting information useful for
decision making are?
- Relevance and faithful representation

53. In the International Accounting Standards Board’s (IASB’s) Conceptual

Framework, qualitative characteristics
- All of the choices are correct

54. Decision makers vary widely in the types of decisions they make, the methods of
decision making they employ, the information they already possess or can obtain
from other sources, and their ability to process information. Consequently, for
information to be useful there must be a linkage between these users and the
decisions they make. This link is?
- understandability

55. What is the quality of information that enables users to better forecast future
operations?
- Relevance

56. Company A issuing its annual financial reports within one month of the end of
the year is an example of which enhancing quality of accounting information?
- Timeliness

57. In the International Accounting Standards Board’s (IASB’s) Conceptual

Framework, an ingredient of a fundamental qualitative characteristic is?
 - Neutrality

58. Under the Conceptual Framework, it is the ability through consensus among
independent observers to ensure that financial information represents what it
purports to represent.
- Verifiability

59. Which of the following is an ingredient of relevance?

- Predictive value

60. Freedom from error” relates to which qualitative characteristics of the

Conceptual Framework?
- Faithful representation

61. Additional information on top of those provided in the financial reports bear
costs to be shouldered by
- Users of financial information

62. When information about two different enterprises has been prepared and
presented in a similar manner, the information exhibits the characteristic of?
- none of these

63. Applying the fundamental qualitative characteristics would usually be impacted

by the following:

1. cost constraint

2. enhancing qualitative characteristics

3. compliance to management policies

- only two are correct

64. Comparing similar information from one entity to another belonging in different
industries is called as
- Industry inter-comparability

65. Verification can be direct or indirect. An example of an indirect verification

is, except:
- Cash count

66. All of the following statements pertaining to neutrality are correct, except:
- Neutral information does not mean information with purpose or no influence
on behaviour.

67. The measurement technique of reasonable estimate is used when the measurement
uncertainty is
- Low and high

68. Which statement is incorrect with regard to complete depiction?

- A complete depiction represents all information what it purports to
represent.

69. Comparing similar information from one period to another involving the same
entity is referred to as
- Intra-comparability

70.