Conceptual Framework

Multiple Choice: Select the best possible answer for each of the following questions and write only
one answer for each item.

1. 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

2. 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 Accountant
c. Securities and Exchange Commission
d. Financial Reporting Standards Council

3. What are the three main areas in the practice of the accountancy profession?
a. Public accounting, private accounting and managerial accounting
b. Auditing, taxation and managerial accounting
c. Financial accounting, managerial accounting and corporate accounting
d. Public accounting, private accounting and government accounting

4. What is the primary service of CPAs in public practice?

a. Auditing
b. Taxation
c. Managerial accounting
d. Controllership

5. Accountants employed in entities in various capacity as accounting staff, chief accountant or

controller are said to be engaged in
a. Public accounting
b. Private accounting
c. Government accounting
d. Financial Accounting

6. 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 government funds and property and interpreting the results thereof,
a. Internal auditing
b. External auditing
c. Private accounting
d. Government accounting
7. The continuing Professional Development is required for
a. Renewal of CPA license
b. Accreditation to practice the accountancy profession
c. Both renewal of CPA license and accreditation to practice the accountancy profession
d. Neither renewal of CPA license nor accreditation to practice the accountancy profession.

8. Which is the accounting standard setting body in the Philippines at the present time?
a. Accounting Standard Council
b. Auditing and Assurance Standard Council
c. Philippine Accounting Standards Board
d. Financial Reporting Standards Council

9. The Philippine Financial Reporting Standards collectively include

a. PFRS corresponding to IFRS
b. PAS corresponding to IAS
c. Philippine Interpretations corresponding to IFRIC and SIC Interpretations and Interpretations
developed by PIC
d. All of these are included in Philippine Financial Reposting Standards.

10. The International Accounting Standards Board was formed

a. To enforce IFRS in foreign countries
b. To develop a single set of high quality IFRS
c. To establish accounting standards for multinational entities
d. To develop accounting standards for countries that do not have their own standard setting
bodies.

11. The Philippine Financial Reporting Standards collectively include

a. PFRS corresponding to IFRS
b. PAS corresponding to IAS
c. Philippine Interpretations corresponding To IFRIC and SIC Interpretations and
Interpretations develop by PIC.
d. All of these are included in Philippine Financial Reporting Standards.

12. The IASB declared that the merits of proposed standards are assessed
a. From a position of neutrality
b. Based on possible impact on behavior
c. Based on arguments of lobbyist
d. From a position of materiality

13. What is the chronological order in the valuation of a typical standard?

a. Exposure draft, Standard and Discussion paper
b. Exposure draft, Discussion paper and Standard
c. Standard, Discussion paper and Exposure draft
d. Discussion paper, Exposure draft and Standard

14. The IASB publishes standards called

a. International Accounting Standard
b. Financial Reporting Standards
 c. International Financial Reporting Standards
d. Statement of Financial Accounting Standards

15. IFRIC Interpretations issued by IASB

a. Are considered authoritative and must be followed.
b. Cover newly identified financial reporting issues not specifically addressed.
c. Cover issues with conflicting interpretations
d. All of these are true about IFRIC Interpretations

16. Financial accounting emphasizes reporting to

a. Management
b. Regulatory bodies
c. Internal auditors
d. Creditors and investors

17. Managerial accounting emphasizes

a. Reporting financial information to external users
b. Reporting to the Securities and Exchange Commission
c. Combining accounting with data processing
d. Developing accounting information for use within an entity

18. Generally accepted accounting principles

a. Are accounting principles based on law.
b. Derive their credibility and authority from law
c. Derive their authority from regulatory authority.
d. Derive their credibility and authority from recognition and acceptance by the accounting
profession.

19. Proper application of accounting principles is most dependent upon

a. Existence of specific guidelines
b. Oversight of regulatory bodies
c. External audit function
d. Professional judgement of the accountant

20. Once an accounting standard has been established

a. The standard is continually reviewed to see if modification is necessary.
b. The standard is not reviewed
c. The task of reviewing the standard is given to a national organization of CPAs
d. No revisions should be made to the standard.

21. In the Conceptual Framework of 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
 22. The underlying theme of the Conceptual Framework is
a. Decision usefulness
b. Understandability
c. Timeliness
d. Comparability

23. All of the following are represented in FRSC, except

a. Board of Accountancy
b. Securities and Exchange Commission
c. Commission on Audit
d. Department of Budget and Management

24. The IASB declared that the merits of proposed standards are assessed
a. From a position of neutrality
b. From a position of materiality
c. Based on possible impact on behavior
d. Based on arguments of lobbyist

25. The IASB publishes standards called

a. International Accounting Standards
b. Financial Reporting Standards
c. International Financial Reporting Standards
d. Statement of Financial Accounting Standard

26. Financial accounting emphasizes reporting to

a. Management
b. Regulatory bodies
c. Internal auditors
d. Creditors and investors

27. Management accounting emphasizes reporting to

a. Reporting financial information to external users
b. Reporting to the Securities and Exchange Commission
c. Combining accounting with data processing
d. Developing accounting information for use within an entity

28. The primary focus of financial reporting has been on meeting the needs of which of the following
groups?

a. Management

b. Existing and potential investors, lenders and other creditors

c. National and local taxing authorities

d. Independent CPAs
29. The overall objective of financial reporting is to provide information

a. That is useful for decision making

b. About assets, liabilities and owners' equity

c. About financial performance during a period

d. That allows owners to assess management

performance

30. Which is an objective of financial reporting?

a. To provide information that is useful to those making investing and credit decisions.

b. To provide information that is useful to management.

c. To provide information about prospective investors.

d. To provide information about ways to solve internal and external conflicts about the entity.

31. Which is an objective of financial reporting?

a. To provide information that is useful to management in making decisions.

b. To provide information that clearly portrays nonfinancial transactions.

c. To provide information that is useful to assess the amount, timing, and uncertainty of prospective
cash receipts.

d. To provide information that excludes claims against the resources.

32. An objective of financial reporting is to provide

a. Information about the investors in the entity.

b. Information about the liquidation value of the resources held by the entity.

C. Information that is useful in assessing cash flow prospects.

d. Information that will attract new investors.

33. "Assessing cash flow prospects" as an objective of financial reporting is interpreted to mean

a. Cash basis accounting is preferred over accrual basis accounting.

b. Information about the financial effects of cash receipts and cash payments is generally considered the
best indicator of present and continuing ability to generate favorable cash flows.

C. Over the long run, trends in revenue and expenses are generally more meaningful than trends in cash
receipts and disbursements.

d. All of the choices are correct regarding "assessing cash flow prospects".

34. The objectives of financial reporting are based on

a. The need for conservatism

b. Reporting on management stewardship

c. Generally accepted accounting principles

d. The needs of the users of the information

35. Financial reporting pertains to

a. Individual business entities, rather than to industries or an economy as a whole or to members of

society as consumers

b. Individual business entities and an economy as a whole or to members of society as consumers

c. Individual business entities and an economy as a whole, rather than to industries or to members of
society as consumers

d. Individual business entities, industries and an economy as a whole, rather than to members of society
'as consumers

36. During a period when an entity is under the direction of a particular management, financial reporting
will directly provide information about
a. Both entity performance and management performance

b. Management performance but not entity performance

c. Entity performance but not management performance

d. Neither entity performance nor management performance.

37. Which of the following is not listed as an objective of financial reporting?

a. Financial reporting shall provide information about entity resources, claims against those resources
and changes in them.

b. Financial reporting shall provide information useful in evaluating management stewardship.

c. Financial reporting shall provide information useful in investment, credit and similar decisions.

d. Financial reporting shall provide information useful in assessing cash flow prospects.

38. The IASB declared that the merits of proposed standards are assessed
a. From a position of neutrality
b. From a position of materiality
c. Based on possible impact on behavior
d. Based on arguments of lobbyist

39. The IASB publishes standards called

a. International Accounting Standards
b. Financial Reporting Standards
c. International Financial Reporting Standards
d. Statement of Financial Accounting Standard

40. "Assessing cash flow prospects" as an objective of financial reporting is interpreted to mean

a. Cash basis accounting is preferred over accrual basis accounting.

b. Information about the financial effects of cash receipts and cash payments is generally considered the
best indicator of present and continuing ability to generate favorable cash flows.

C. Over the long run, trends in revenue and expenses are generally more meaningful than trends in cash
receipts and disbursements.

d. All of the choices are correct regarding "assessing cash flow prospects".

46. Which is not an objective of financial reporting?

a. To provide information about assets and claims against those assets

b. To provide information that is useful in assessing sources and uses of cash

c. To provide information that is useful in lending and investing decisions

d. To provide information about liquidation value of an entity