CFAS MIDTERM.docx - Overview of Accounting and Conceptual Framework Information that is capable of making a difference in the decisions made by users

CFAS MIDTERM.docx - Overview of Accounting and Conceptual...

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Overview of Accounting and Conceptual Framework Information that is capable of making a difference in the decisions made by users has this qualitative characteristic. Answer: Relevance Under the stable monetary unit assumption, the owners of the business and the business are viewed as a single reporting entity. Therefore, the personal transactions of the owners are recorded in the books of accounts. Answer: False Free from bias toward a predetermined result is Answer: Neutrality Which of the following is considered a pervasive constraint by the Conceptual Framework? Answer: cost constraint Financial reporting standards continuously change primarily in response to Answer: users' needs Which of the following events is considered as an internal event? Answer: conversion of raw materials into finished goods The cost of inventory is recognized as expense Answer: using the matching concept Accountable events are those that have an effect in an entity's assets, liabilities, equity, income or expenses. Answer: True The primary objective of financial reporting is to provide Answer: all of these An item is derecognized if it ceases to meet the definition of an asset or a liability. Answer: True According to the revised Conceptual Framework, an item is recognized if Answer: a and b The practice of accountancy in the Philippines is regulated under R.A. 9892. Answer: False
Which of the following is not one of the decisions that primary users make? Answer: deciding on how to run the day-to-day operations of the entity “I say red; you say green.” The information lacks which of the following qualitative characteristics? Answer: Relevance The bottom part of each of Entity A’s financial statements states the following “This statement should be read in conjunction with the accompanying notes.” This is most likely an application of which of the following accounting concepts? Answer: Articulation Which of the following statements is incorrect regarding the basic accounting concepts? Answer: The time period concept means that financial statements are prepared only at the end of the life of a business. Refers to the professional regulatory board created to supervise the registration, licensure and practice of accountancy in the Philippines (full word). Answer: Board of Accountancy The accounting standards used in the Philippines are adapted from the standards issued by the Answer: International Accounting Standards Board (IASB). It is the official accounting standard setting body in the Philippines. It is composed of a chairperson and 14 members. Answer: Financial Reporting Standards Council (FRSC) All events and transactions of an entity are recognized in the books of accounts. Answer: False The proper application of accounting principles is most dependent upon the Answer: Accountant The measurement bases described under the Conceptual Framework are least applicable to the measurement of Answer: Equity These are users of financial information who are not in a position to require a reporting entity to prepare reports tailored to their particular information needs.

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