PFRS Recit

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
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CONCEPTUAL FRAMEWORK
Discussion Questions
1. A conceptual framework for financial reporting is:

a. A statement of financial accounting standards that deal with the presentation of financial
statements.
b. An embodiment of generally accepted accounting principles that guide users of financial
statements in assessing the reliability of financial statements.
c. A basic accounting assumption that guides the accountants in the preparation of financial
statements.
d. A theoretical foundation that guides the FRSC, preparers, and users of financial accounting
information in the preparation and presentation of financial statements.
2. The revision of the Conceptual Framework

a. Are no longer expected after the release of the new Conceptual Framework
b. Will not automatically lead to changes to the standard
c. Will automatically lead to changes to the standard
d. Are expected to occur at least every 5 years
3. The IASB issued a Revised Conceptual Framework because the old version is:
a. No longer applicable
b. No longer useful
c. No longer relevant
d. Useful, but needed improvements
4. What is the authoritative status of the Conceptual Framework?

a. The Framework applies when FRSC develops new or revised Standards. An enterprise is
never required to consider the framework.
b. It has the highest level of authority. In case of a conflict between the Framework and s
Standard or Interpretation, the Framework overrides the Standard or Interpretation.
c. If there is a Standard or Interpretation that specifically applies to a transaction, it overrides
the Framework. In the absence of a Standard or an Interpretation that specifically applies,
the Framework should be followed.
d. If there is a Standard or Interpretation that specifically applies to a transaction, management
should consider the applicability of the Framework in developing and applying an
accounting policy which results in information that is relevant and reliable.
5. Which of the following remained unchanged in the 2018 Conceptual Framework?

a. Presentation and disclosure
b. The reporting entity
c. Concepts of capital and capital maintenance
d. Derecognition
6. The underlying theme of the Conceptual Framework is

a. comparability. c. timeliness.
b. decision usefulness. d. understandability.
7. Which of the following is not a benefit associated with the Conceptual Framework?
a. A coherent set of accounting standards and rules should result.
b. Practical problems should be more quickly solvable by reference to an existing conceptual
framework.
c. A conceptual framework should increase financial statement users’ understanding and
confidence in financial reporting.
d. Business entities will need far less assistance from accountants because the financial
reporting process will be quite easy to apply.
1|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Mobile : 0927 283 8234
Telephone : (043) 723 8412
8. What is a major objective of financial reporting?

a. To provide information that excludes claims to the resources.
b. To provide information that clearly portrays nonfinancial transactions.
c. To provide information that is useful to management in making decisions.
d. To provide information that is useful to assess the amounts, timing, and uncertainty of
prospective cash receipts.
9. One element of the objective of financial reporting is to provide information

a. that will attract new investors.
b. about the investors in the entity.
c. that is useful in assessing cash flows prospects.
d. about the liquidation value of the resources held by the entity.
10. Which of the following is an implication of the going concern assumption?

a. The historical cost principle is credible.
b. Depreciation and amortization policies are justifiable and appropriate.
c. The current-noncurrent classification of assets and liabilities is justifiable and significant.
d. All of these are an implication of going concern.
11. Which of the following is a fundamental quality of useful accounting information?

a. Comparability. c. Materiality.
b. Consistency. d. Relevance.
12. To achieve faithful representation, the financial statements

a. must have predictive and confirmatory value.
b. are comparable, understandable, verifiable and timely.
c. must be complete, neutral and reasonably free from error.
d. All of these would achieve faithful representation.
13. To be relevant, the financial statements

a. Must have predictive and confirmatory value.
b. Are complete, neutral and free from bias and error.
c. Are comparable, understandable, verifiable and timely.
d. All of these.
14. Which of the following statements is false concerning the enhancing qualitative characteristics?
a. Verifiability means that different knowledgeable and independent observers could reach
different conclusions
b. Timeliness means having information available to decision-makers in time to be capable of
influencing their decisions
c. Comparability of financial information is not enhanced by making unlike things look alike any
more than it is enhanced by making like things look different.
d. Financial reports are prepared for users who have a reasonable knowledge of business and
economic activities and who review and analyze the information diligently
15. Which statement is incorrect concerning the qualitative characteristic of relevance?

a. The relevance of information is affected by its nature and materiality
b. To be useful, information must be relevant to the decision-making needs of users
c. Information about financial position and past performance is frequently used as basis for
predicting future financial position and performance and other matters such as dividend and
wage payments and ability of the entity to meet its financial commitments as they fall due.
d. The predictive value and confirmatory roles of information are not interrelated
16. The enhancing qualitative characteristics of financial reporting are

a. cost-benefit and materiality.
b. relevance, reliability and faithful representation.
c. completeness, neutrality, and freedom from error.
d. comparability, verifiability, timeliness and understandability.
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17. Where is materiality not used in providing financial information?

a. Determining the level of disclosure.
b. Applying the going concern assumption.
c. Applying the revenue recognition principle.
d. Determining what items to include in the financial statements.
18. Which of the following is true regarding the cost-benefit constraint?

a. Benefits are more difficult to quantify than costs.
b. The IASB seeks inputs on costs and benefits as part of due process.
c. Benefits to preparers may include access to capital at a lower cost.
d. All of the choices are correct.
19. Which of the following is a benefit of providing financial information?

a. Auditing. c. Improved allocation of resources.
b. Disclosure to competition. d. Potential litigation.
20. Liabilities are

a. deferred credits.
b. any accounts with credit balances.
c. obligations to transfer ownership shares to other entities in the future.
d. present obligations arising from past events and result in an outflow of resources.
21. It is defined as increase in economic benefits during the accounting period in the form of inflows
or enhancements of assets or decreases in liabilities that result in increases in equity, other than
those relating to contributions from equity participants.
a. Gain. c. Profit.
b. Income. d. Revenue.
22. Under Philippine Financial Reporting Standards

a. the cash basis of accounting is accepted.
b. events are recorded in the period in which the event occurs.
c. net income will be lower under the cash basis than accrual basis accounting.
d. all of the choices are correct.
23. Under the Conceptual Framework for Financial Reporting which of the following statements is not
a feature of financial information’s “comparability” characteristics?
a. Comparability is uniformity.
b. A comparison requires at least two items.
c. Consistency, although related to comparability, is not the same.
d. Comparability is the goal; consistency helps to achieve that goal.
24. When fair value is used in measuring assets in the financial statements, current GAAP provides
following references as basis of fair value, except
a. Price in active market.
b. Price in recent transaction.
c. Price taken from industry or sector benchmarks.
d. Price based on assessed value of government bodies.
25. According to the IASB Framework for the preparation and presentation of financial statements,
which TWO of the following are examples of expenses?
I. A loss on the disposal of a non-current asset
II. A decrease in equity arising from a distribution to equity participants
III. A decrease in economic benefits during the accounting period
IV. A reduction in income for the accounting period
A. I and II C. II and III

B. I and III D. III and IV
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26. Which of the following best describes the distinction between expenses and losses?
a. Losses are material items whereas expenses are immaterial items
b. Losses are extraordinary charges whereas expenses are ordinary charges
c. Losses are reported net-of-related-tax effect whereas expenses are not reported not-of-tax
d. Losses results from peripheral or incidental transactions whereas expenses result from
ongoing major or central operations of the entity
27. Under the Conceptual Framework of Financial Reporting, users of financial information may be
classified into
a. Heavy users (management) and slight users (public, government).
b. Primary users (existing and potential investors and creditors) and other users.
c. Internal users (employees, customers) and external users (investors, creditors).
d. Main users (existing investors, creditors) and incidental users (potential investors,
creditors)
28. Which of the following is not within the scope of the Conceptual Framework?
a. Objectives of financial statements
b. Nature and definition of the elements of financial statements
c. Qualitative characteristics that make financial statements useful to the users
d. Form of presentation of financial statements
29. Which of the following statements about materiality is not correct?

a. An item must make a difference or it need not be disclosed.
b. Materiality is a matter of absolute size.
c. An item is material if omitting, misstating or obscuring it could reasonably be expected to
influence the economic decision of primary users.
d. Materiality is a sub-quality of relevance.
30. What is meant by comparability when discussing financial accounting information?

a. Information has predictive and feedback value.
b. Information is reasonably free from error.
c. Information is measured and reported in a similar fashion across entities.
d. Information is timely.
31. Which statement is true about a reporting entity?

a. A reporting entity is an entity that is required or chooses to prepare financial statements.
b. A reporting entity can be a single entity or a portion of that entity or can comprise more
than one entity.
c. A reporting entity is not necessarily a legal entity.
d. All of these statements are true about a reporting entity.
32. Which statement is true about financial statements of a reporting entity?

a. If the reporting entity comprises both the parent and its subsidiaries, the financial
statements are referred to as consolidated financial statements.
b. If the reporting entity is the parent alone, the financial statements are referred to as
unconsolidated financial statements.
c. If the reporting entity comprises two or more entities that are not linked by a parent-
subsidiary relationship, the financial statements are referred to as combined financial
statements.
d. All of these statements are true about the financial statements of a reporting entity.
33. Under the Conceptual Framework (2018), recognition of assets, liabilities, equity, Income and
expenses is appropriate if
a. It is both probable and measurable
b. It is probable or measurable, but not both
c. It results in both relevant information and faithful representation of the related item
d. It results in relevant information or faithful representation of the related item, but not both
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34. What is the new definition of an asset under the Revised Conceptual Framework?
a. A resource controlled by the entity as a result of past event and from which future economic
benefit is expected to flow to the entity.
b. A resource controlled by the entity and from which future economic benefit is expected to
flow to the entity.
c. A present economic resource controlled by the entity as a result of past event.
d. A present economic resource controlled by the entity as a result of past event and from
which future economic benefit is expected to flow to the entity.
35. What is the new definition of liability under the Revised Conceptual Framework?
a. A present obligation of the entity arising from past event the settlement of which is
expected to result in an inflow of economic benefit.
b. A present obligation of the entity arising from present event.
c. A present obligation of the entity to transfer an economic resource as a result of past event.
d. An obligation that the entity has practical ability to avoid.
36. Which statement is not true about income and expenses?

a. Income is increase in asset or decrease in liability that results in increase in equity other
than that relating to contribution from equity holders.
b. Expense is decrease in asset or increase in liability that results in decrease in equity other
than that relating to distribution to equity holders.
c. Income and expenses are the elements that relate to financial position.
d. Income encompasses revenue and gain.
37. Under the Revised Conceptual Framework, what is the recognition principle?
a. It is probable that any future economic benefit associated with the item will flow to or from
the entity.
b. The item has a cost or value that can be measured with reliability.
c. It is probable that any future economic benefit will flow to or from the entity and the
element can be measured reliably.
d. Only items that meet the definition of an asset, liability, equity, income and expense are
recognized.
38. Which statement is not true about derecognition?

a. Derecognition is the removal of a recognized asset or liability from the statement of
financial position.
b. Derecognition is the removal of a recognized income or expense from the income
statement.
c. Derecognition for an asset normally occurs when the entity loses control of the recognized
asset.
d. Derecognition for a liability normally occurs when the entity no longer has a present
obligation for the recognized liability.
39. The highest consideration to apply in selecting a measurement base is

a. Usefulness to users
b. Financial Performance
c. Financial position of the reporting entity
d. Professional Judgment of Management
40. Under the Revised Conceptual Framework, the measurement bases include:
a. Historical cost
b. Current value
c. Assessed value
d. Historical cost & current value
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41. Current value includes:

a. Current cost and fair value
b. Value in use and fulfillment value
c. Fair value and value in use
d. Current cost, fair value, value in use & fulfillment value
42. Which statement is true about current value measurement?

a. Fair value of an asset is the price that would be received to sell an asset in an orderly
transaction between market participants at the measurement date.
b. Value in use is the present value of the cash flows expected to be derived from the use and
ultimate disposal of an asset.
c. Fulfillment value is the present value of the cash expected to be transferred for the payment
of liability.
d. All of these statements are true about current value measurement.
43. The term "revenue recognition" conventionally refers to

a. The process of identifying transactions to be recorded as revenue in an accounting period.
b. The process of measuring and relating revenue and expenses of an entity for an accounting
period.
c. The earning process which gives rise to revenue realization.
d. The process of identifying those transactions that result in an inflow of assets from
customers.
44. Financial statements portray the financial effects of the transactions and other events by grouping
them into broad classes according to their economic characteristics. These broad classes are termed
as the:
a. Accounting constraints
b. Elements of financial statements
c. Features of accounting
d. Concepts of capital and capital maintenance
45. Which of the following is not an acceptable basis for the recognition of expense?
a. Systematic and rational allocation
b. Immediate recognition
c. Cause and effect association
d. Profit Maximization
46. Which capital maintenance concept is applied to net income and other comprehensive income?
a. Financial capital
b. Physical capital
c. Financial capital for net income and physical capital for other comprehensive income
d. Physical capital for net income and financial capital for other comprehensive income
47. Financial capital is defined as the

a. Net assets or equity of an entity in monetary terms.
b. Net assets or equity of an equity in terms of physical productive capacity
c. Legal capital
d. Share capital issued and outstanding.
48. What are the two capital concepts included in the scope of the Conceptual Framework?
a. Financial and physical capital
b. Accounting and economic capital
c. Borrowed and invested capital
d. Monetary and non-monetary capital
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49. Which of the following statements is INCORRECT concerning the concept of capital?
a. The selection of the appropriate concept of capital should be based on the needs of the
users of the financial information.
b. A financial capital concept is adopted if the users are primarily concerned with the
maintenance of nominal invested capital or purchasing power of invested capital.
c. A physical capital concept is adopted if the main concern of the users is the operating
capacity of the entity.
d. A physical capital concept is adopted by most entities in preparing their financial
statements.
50. What is not a purpose of the IASB’s Revised Conceptual Framework?

a. To assist the International Accounting Standards Board (Board) to develop IFRS Standards
(Standards) that are based on consistent concepts
b. To assist auditors in forming an opinion as to whether financial statements conform to generally
accepted accounting principles
c. To assist preparers to develop consistent accounting policies when no Standard applies to a
particular transaction or other event, or when a Standard allows a choice of accounting policy
d. To assist all parties to understand and interpret the Standards
Updates in Philippine Financial Reporting Standard 5. Which of the following remained unchanged in the
(REVIEW NOTES) 2018 Conceptual Framework?
a. Presentation and disclosure
Multiple Choice. b. The reporting entity
1. A conceptual framework for financial reporting is: c. Concepts of capital and capital maintenance
a. A statement of financial accounting standards that d. Derecognition
deal with the presentation of financial statements.
b. An embodiment of generally accepted accounting 6. The underlying theme of the Conceptual Framework is
principles that guide user of financial statements in a. comparability.
assessing the reliability of financial statements. b. decision usefulness.
c. A basic accounting assumption that guides the c. Timeliness
accountants in the preparation of financial d. understandability.
statements.
d. A theoretical foundation that guides the FRSC, 7. Which of the following is not a benefit associated with
preparers, and users of financial accounting the Conceptual Framework?
information in the preparation and a. A coherent set of accounting standards and
presentation of financial statements. rules should result.
b. Practical problems should be more quickly solvable
2. The revision of the Conceptual Framework by reference to an existing conceptual framework.
a. Are no longer expected after the release of the new c. A conceptual framework should increase financial
Conceptual Framework statement users’ understanding and confidence in
b. Will not automatically lead to changes to the financial reporting.
standard d. Business entities will need far less assistance from
c. Will automatically lead to changes to the accountants because the financial reporting
standard process will be quite easy to apply.
d. Are expected to occur at least every 5 years
8. What is a major objective of financial reporting?
3. The IASB issued a Revised Conceptual Framework a. To provide information that excludes claims to the
because the old version is: resources.
a. No longer applicable b. To provide information that clearly portrays
b. No longer useful nonfinancial transactions.
c. No longer relevant c. To provide information that is useful to
d. Useful, but needed improvements management in making decisions.
d. To provide information that is useful to assess
4. What is the authoritative status of the Conceptual the amounts, timing, and uncertainty of
Framework? prospective cash receipts.
a. The Framework applies when FRSC develops new
or revised Standards. An enterprise is never 9. One element of the objective of financial reporting is to
required to consider the framework. provide information
b. It has the highest level of authority. In case of a a. that will attract new investors.
conflict between the Framework and Standard or b. about the investors in the entity.
Interpretation, the Framework overrides the c. that is useful in assessing cash flows prospects.
Standard or Interpretation. d. about the liquidation value of the resources held by
c. If there is a Standard or Interpretation that the entity.
specifically applies to a transaction, it overrides
the Framework. In the absence of a Standard or 10. Which of the following is an implication of the going
an Interpretation that specifically applies, the concern assumption?
Framework should be followed. a. The historical cost principle is credible.
d. If there is a Standard or Interpretation that b. Depreciation and amortization policies are
specifically applies to a transaction, management justifiable and appropriate.
should consider the applicability of the Framework c. The current-noncurrent classification of assets and
in developing and applying an accounting policy liabilities is justifiable and significant.
which results in information that is relevant and d. All of these are an implication of going concern.
reliable.
11. Which of the following is a fundamental quality of
useful accounting information?
a. Comparability. b. relevance, reliability and faithful representation.
b. Consistency c. completeness, neutrality, and freedom from error.
c. Materiality d. comparability, verifiability, timeliness and
d. Relevance. understandability.
12. To achieve faithful representation, the financial 17. Where is materiality not used in providing financial
statements information?
a. must have predictive and confirmatory value. a. Determining the level of disclosure.
b. are comparable, understandable, verifiable and b. Applying the going concern assumption.
timely. c. Applying the revenue recognition principle.
c. must be complete, neutral and reasonably free d. Determining what items to include in the financial
from error. statement.
d. All of these would achieve faithful representation.
18. Which of the following is true regarding the cost-benefit
13. To be relevant, the financial statements constraint?
a. Must have predictive and confirmatory value. a. Benefits are more difficult to quantify than costs.
b. Are complete, neutral and free from bias and error. b. The IASB seeks inputs on costs and benefits as part
c. Are comparable, understandable, verifiable and of due process.
timely. c. Benefits to preparers may include access to capital
d. All of these. at a lower cost.
d. All of the choices are correct.
14. Which of the following statements is false concerning
the enhancing qualitative characteristics? 19. Under the Philippine Financial Reporting Standards.
a. Verifiability means that different a. Comparability is uniformity.
knowledgeable and independent observers
could reach different conclusions 20. When far value is used in measuring assets in the
b. Timeliness means having information available to financial statements, current GAAP provides following
decision-makers in time to be capable of references as basis of fair value, except.
influencing their decisions a. Price in active market.
c. Comparability of financial information is not b. Price in recent transaction.
enhanced by making unlike things look alike any c. Price taken from industry or sector benchmarks
more than it is enhanced by making like things look d. Price based on assessed value of government
different. bodies.
d. Financial reports are prepared for users who have
a reasonable knowledge of business and economic 21. According to the IASB Framework for the preparation
activities and who review and analyze the and presentation of financial statements, which TWO of
information diligently the following are examples of expenses?
I. A loss on the disposal of a non-current asset
15. Which statement is incorrect concerning the qualitative II. A decrease in equity arising from a distribution
characteristic of relevance? to equity participants
a. The relevance of information is affected by its III. A decrease in economic benefits during the
nature and materiality accounting period.
b. To be useful, information must be relevant to the IV. A reduction in income for the accounting
decision-making needs of users period.
c. Information about financial position and past
performance is frequently used as basis for a. I and II
predicting future financial position and b. I and III
performance and other matters such as dividend c. II and III
and wage payments and ability of the entity to meet d. III and IV
its financial commitments as they fall due.
d. The predictive value and confirmatory roles of 22. Which of the following best describes the distinction
information are not interrelated between expenses and losses?
a. Losses are material items whereas expenses are
16. The enhancing qualitative characteristics of financial immaterial items.
reporting are b. Losses are extraordinary charges whereas
a. cost-benefit and materiality. expenses are ordinary charges
c. Losses are reported net-of-related-tax effect a. Derecognition is the removal of recognized asset or
whereas expenses are not. liability form the statement of financial position.
d. Losses results from peripheral or incidental b. Derecognition is the removal of a recognized
transactions whereas expenses results from income or expense from the income statement.
ongoing major or central operations of the c. Derecognition for an asset normally occurs when
entity. the entity losses control of the recognized asset.
d. Derecognition for a liability normally occurs when
23. Under the Conceptual Framework of Financial the entity no longer has a present obligation for the
Reporting, users of financial reporting classified into recognized liability.
a.
b. Eto ang sagot hehe 29. The highest consideration to apply in selecting a
c. measurement base is
a. Usefulness to users
24. Which of the following statements about materiality is b. Financial performance
not correct? c. Financial position and reporting entity
a. An item must make a difference or it need not be d. Professional judgment and management
disclosed
b. Materiality is a matter of absolute size 30. Which statement is true about current value
c. An item is material if omitting, misstating or measurement?
obscuring it could reasonably be expected to a. Fair value of an asset is the price that would be
influence the economic decision of primary users. received to sell an asset in an orderly transaction
d. Materiality is a sub-quality of relevance. between market participants at the measurement
date.
25. What is meant by comparability when discussing b. Value in use is the present value of the cash flows
financial accounting information? expected to be derived from the use and ultimate
a. Information has predictive and feedback value disposal of an asset
b. Information is reasonably free from error c. Fulfillment value is the present value of the cash
c. Information is measured and reported in a expected to be transferred for the payment of
similar fashion across entities. liability.
d. Information is timely. d. All of these statements are true about current
value measurement.
26. Which statement is true about a reporting entity?
a. A reporting entity is an entity that is required or 31. The term “revenue recognition” conventionally refers to
chooses to prepare financial statements. a. Process of identifying transactions to be
b. A reporting entity can be a single entity or a portion recorded as revenue in an accounting period
of that entity or can comprise more than one entity. b. The process of measuring and relating revenue and
c. A reporting entity is not necessarily a legal entity. expenses of an entity for an accounting period
d. All of these statements are true about a c. The earning process which gives rise to the revenue
reporting entity realization
d. The process of identifying those transactions that
27. Which statement is true about financial statements of a result in an inflow of chuchuchu customers.
reporting entity?
a. If reporting entity comprises both the parent and
its subsidiaries, the financial statements are 1. Which of the following statements are correct
referred to as consolidated financial statements. concerning fair presentation of financial statements?
b. If the reporting entity is the parent alone, the I. In virtually circumstances, fair presentation is
financial statements are referred to as achieved by compliance with applicable PFRS
unconsolidated financial statements. II. Financial statements shall present fairly the
c. If the reporting entity comprises two or more financial position, performance and cash flows
entities that are not linked by a parent-subsidiary of an enterprise.
relationship, the financial statements are referred III. An enterprise whose financial statements
to as combined financial statements. comply with PFRS shall make an explicit and
d. unreserved statement of such compliance in
notes.
28. Which statement is not true about derecognition?
IV. Inappropriate accounting policies are rectified A. Materiality depends on the size and nature of item
either by disclosure of the accounting policies judged in the circumstances of its omission or
used by note or explanatory material. misstatement.
B. Specific disclosure requirements of an IFRS
Correct – Statement I, II and III must be met even if the resulting information is
2. Answer – Aggregation not material.
C. Items or dissimilar nature of function shall be
3. Which of the following is an example of offsetting? presented separately unless they are immaterial.
a. The allowance for doubtful accounts is deducted D. Information is material if its nondisclosure could
from accounts receivable influence the economic decisions of users taken
b. The accumulated depreciation is deducted from based on the financial statements.
property, plant and equipment
c. The total liabilities are deducted from total assets 7. Which feature is applied when the effects of transaction
to get net assets and other events are recognized when they occur and
d. Gains and losses from disposal of noncurrent they are recorded in the accounting records and
assets are reported by deducting the proceeds reported in the financial statements of the periods to
from the carrying amount of the assets and the which they relate?
related selling cost. A. Going concern
B. Entity Concept
4. Which of the following will result to a fair presentation C. Time Period
of financial information? D. Accrual Basis
I. Selecting and applying accounting policies in
accordance with IFRS 8. Which of the statement is incorrect concerning the line
II. Presenting information including accounting items on the face of the statement of the financial
policies, in a manner that provides relevant position?
and faithfully represented financial A. As a minimum, IAS 1 requires that the face of the
information. statement of financial position shall include certain
III. Providing additional disclosures when specific line items.
requirements of IFRS is insufficient to enable B. Additional line items, heading and subtotals shall
users to understand the impact of transactions be presented on the face of the statement of
on the entity’s financial position and financial financial position when such presentation is
performance. relevant to the understanding of the entity’s
IV. Disclosing inappropriate accounting policies financial position.
used either by notes or explanatory material C. IAS 1 simply provides a list of items that are
without rectification. sufficiently different in nature or function to
warrant separate presentation on the face of the
Correct – Statement I, II and III. statement of financial position.
D. IAS 1 prescribes the order or format in which
5. Which statements are correct concerning general
items are to be presented on the face of the
features in the presentation of financial statements?
statements of financial position.
I. An entity shall prepare its financial statements
9. Which of the following is not a component of complete
except for cash flow information under the
set of financial statements?
accrual basis of accounting.
A. Statement of financial position
II. The presentation and classification of items in
B. Statement of changes in equity
the financial statements shall be retained from
C. Notes, comprising a summary of significant policies
on period to the next
and another explanatory
III. Assets and liabilities, income and expenses,
D. Addition statements such as environmental
shall not be offset unless required or permitted
reports and value-added statements
by another IFRS
10. Which of the following is a limitation of the statement
IV. Comparative information need not be
of financial position?
disclosed in respect to the previous period for
I. Many items that are of financial value are omitted
all numerical information in the financial
II. Judgements and estimates are used
statements.
III. Current fair value if not reported
Correct – Statement I, II and III.
11. Statement I and II
6. Which is incorrect concerning the concept of
materiality and aggregation?
12. The statement of financial position is useful for
analyzing all of the following, except: 18. Which of the following shall not classified as a current
A. Liquidity liability?
B. Solvency A. An obligation expected to be settled in the entity’s
C. Profitability operating cycle
D. Financial flexibility B. An obligation held primarily for the purpose of
being trade.
13. The operating cycle of an entity C. An obligation due to be settled within 12 months
A. Is set by the industry’s trade association usually on after the operating period.
an average length of time for all firms which are D. An obligation for which the entity has an
members of the association. unconditional right to defer settlement for at
B. Is the time between the acquisition of assets for least 12 months after the reporting period.
processing and their realization in cash or cash
equivalents. 19. Which of the following obligations are classified as
C. Is the period of time that normally elapsed from the current liabilities even if they are due to be settled after
time the entity expands cash to the time it converts more than 12 months after the end of the reporting
trade receivables into cash. period?
D. Causes the distinction between current and A. Payable arising from purchase of goods and
noncurrent items to depend on whether they will consumption of services relating to the entity’s
affect cash within one year. conduct of primary operations.
B. Long-term financial liabilities
14. Under IAS 1, when an entity’s normal operating cycle is C. Bank overdrafts
not clearly identifiable, its duration is assumed to be, D. Cash dividends payable
A. 12 months
B. 6 months 20. A long-term debt that is due to be settled within 12
C. 3 months months after the reporting period is classified as
D. 24 months current when
I. An agreement to refinance or rescheduled
15. Which of the following is not a criterion for classifying payment on a long-term basis is completed
an asset as current? after the reporting period and before the
A. It expects to realize the asset, or intends to sell or financial statements are authorized to be
consume it, in its normal operating cycle issued.
B. It holds the asset primarily for the purpose of II. The entity has the discretion to refinance or
trading roll over the obligation for at least 12 months
C. It expects to realize the asset within twelve months after the reporting period under an existing
after the reporting period loan facility.
D. The asset is cash or cash equivalents restricted
from being exchanged or used to settle a 21. For an entity that presents current and non-current
liability for at least twelve months after the classification of assets and liabilities, deferred tax
reporting period assets and liabilities shall be classified on the statement
of financial position as
16. Investment securities held for the purpose of retiring A. Current assets and liabilities
long-term bonds payable should be classified as B. Noncurrent assets and noncurrent liabilities
A. Current assets C. Both current and noncurrent assets and liabilities
B. Non-current assets depending on the period reversal
C. Deferred liability D. Both current and noncurrent assets and liabilities
D. Intangible assets depending if related to a current and noncurrent
asset or liability
17. Which of the following shall not be classified as current
assets? 22. When an entity breaches an undertaking under a long-
A. A receivable from a customer not collectible within term loan agreement on or before the end of the
one year. reporting period with the effect that the liability
B. Current tax assets becomes payable on demand
C. Goodwill arising from business combination I. The liability is classified as current even if the
accounted for as a purchase lender has agreed after the reporting period
D. Noncurrent assets held for sale and before the issuance f the financial
statements not to demand payment as a C. Interest expense
consequence of the breach D. Loss on sale of securities
II. The liability is classified as noncurrent if the
lender agreed before the end of the reporting 29. The best measure of a firm’s ongoing ability to generate
period within which to rectify the breach cash flows in the future is
A. Profit from discontinued operations
Either I and II B. Profit before tax
23. For purposes of SRC Rule 68, large or publicly C. Discontinued operations
accountable entities are those that meet any of the D. Net profit
following criteria, except:
A. Total assets of more than 350 million and total
liabilities of 250 million
B. Are required to file financial statements under Part
II of SRC Rule 68
C. Are in the process of filling their financial
statements for the purpose of issuing any class of
instruments in a public market
D. Are holders of secondary licenses issued by
regulatory agencies.
(Walang sagot kasi super layo na daw sa topic hehe)
24. Which of the following are sources of revenue?

I. Sale of goods
II. Rendering of services
III. Allowing others to use the entity’s resources
IV. Borrowing from banks
Statement I, II and III.
25. Which of the following is not a line item in the face if the
income statement using the function of expense
method?
A. Revenue
B. Finance costs
C. Tax expense
D. Salaries and wages
26. Which of the following line items is normally shown in

income statement presenting expenses by function but
not in an income statement presenting expenses by
nature?
A. Gross profit
B. Income for associates
C. Income from operations
D. Finance cost
27. Which of the following will not appear in the statement

of changes in equity?
A. Changes in depreciation method
B. Correction of prior period
C. Net loss
D. Dividends
28. The operating expenses section of comprehensive

income does not include
A. Selling expenses
B. Administrative expenses

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No. 125 Brgy.

1. A conceptual framework for financial reporting is:

2. The revision of the Conceptual Framework

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

5. Which of the following remained unchanged in the 2018 Conceptual Framework?

6. The underlying theme of the Conceptual Framework is

8. What is a major objective of financial reporting?

9. One element of the objective of financial reporting is to provide information

10. Which of the following is an implication of the going concern assumption?

11. Which of the following is a fundamental quality of useful accounting information?

12. To achieve faithful representation, the financial statements

13. To be relevant, the financial statements

15. Which statement is incorrect concerning the qualitative characteristic of relevance?

16. The enhancing qualitative characteristics of financial reporting are

17. Where is materiality not used in providing financial information?

18. Which of the following is true regarding the cost-benefit constraint?

19. Which of the following is a benefit of providing financial information?

20. Liabilities are

22. Under Philippine Financial Reporting Standards

A. I and II C. II and III

29. Which of the following statements about materiality is not correct?

30. What is meant by comparability when discussing financial accounting information?

31. Which statement is true about a reporting entity?

32. Which statement is true about financial statements of a reporting entity?

36. Which statement is not true about income and expenses?

38. Which statement is not true about derecognition?

39. The highest consideration to apply in selecting a measurement base is

41. Current value includes:

42. Which statement is true about current value measurement?

43. The term "revenue recognition" conventionally refers to

47. Financial capital is defined as the

50. What is not a purpose of the IASB’s Revised Conceptual Framework?

(Walang sagot kasi super layo na daw sa topic hehe)

24. Which of the following are sources of revenue?

Statement I, II and III.

26. Which of the following line items is normally shown in

27. Which of the following will not appear in the statement

28. The operating expenses section of comprehensive

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