HTU CPA In-House Review (HCIR)

Financial Accounting and Reporting

THE ACCOUNTANCY PROFESSION April G.

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 Accountants
c. Securities and Exchange Commission
d. Financial Reporting Standards Council
3. The qualifications of the members of the Board of Accountancy include all of the following,
except
a. Must be a natural-born citizen and a resident of the Philippines.
b. Must be duly registered CPA with at least ten years of work experience in any scope
of practice of accountancy.
c. Must be of good moral character and must not have been convicted of crime
involving moral turpitude.
d. Must have any pecuniary interest, directly or indirectly, in any school conferring an
academic degree necessary for admission to the practice of accountancy.
4. 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
5. What is the primary service of CPAs in public practices?
a. Auditing
b. Taxation
c. Managerial accounting
d. Financial accounting
6. 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
7. It is the area of the accountancy profession that encompasses the process of analyzing,
classifying, summarizing and communicating all transactions involving the receipt and
deposition of government funds and property and interpreting the results thereof.
a. Internal auditing
b. External auditing
c. Private accounting
d. Government accounting
8. The continuing Professional Development is required for
a. Renewal of CPA
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.

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9. Which statement is true regarding exemptions from CPD requirements?
a. A CPA shall be permanently exempted from CPD requirement for renewal of CPA
license at the age of 65 years but not for the accreditation to practice the
accountancy profession.
b. A CPA who is working or practicing the profession abroad shall be temporarily
exempted from CPD requirement during the period of stay abroad provided the CPA
has been out of the country for at least two years prior to the date of renewal.
c. A CPA who is furthering studies abroad shall be temporarily exempted from CPD
requirement during the period of stay abroad provided the CPA has been out of the
country for at least two years prior to date of renewal.
d. All of the statements are true.
10. Which statement is incorrect in relation to the practice of public accounting?
a. Single practitioners for the practice of public accounting shall be registered CPAs in
the Philippines.
b. Partners of partnership formed for the practice of public accounting shall be
registered CPAs in the Philippines.
c. The Securities and Exchange Commission can register any corporation organized for
the practice of public accounting.
d. The Professional Regulation Commission upon favorable recommendation of the
Board of Accountancy shall issue certificate of accreditation to CPAs in public
practice provided the registrant has acquired a minimum of three years of meaningful
experience in public practice.
11. Which is the accounting standard setting body in the Philippines at the present time?
a. Accounting Standards Council
b. Auditing and Assurance Standards Council
c. Philippine Accounting Standards Council
d. Financial Reporting Standards Council
12. Which statement is true regarding the FRSC?
a. The FRSC is created by Professional Regulation Commission upon recommendation
of the Board of Accountancy in carrying out its powers and functions under R.A.
9298.
b. The FRSC shall be composed of 15 with a Chairman and 14 representatives.
c. The Chairman and members of FRSC are appointed by Professional Regulation
Commission upon recommendation of the Board of Accountancy and shall have a
term of three years renewable for another term.
d. All of the statements are true.
13. 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
14. 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 Reporting Standards.
15. 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
16. The IASB declared that the merits of proposed standards are assessed
a. From a position of neutrality
b. From a position of materiality

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 c. Based on possible impact on behavior
d. Based on arguments of lobbyist
17. What is the chronological order in the evaluation 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
18. The IASB publishes standards called
a. International Accounting Standards
b. Financial Reporting Standards
c. International Financial Reporting Standards
d. Statement of Financial Accounting Standards
19. The IASB employs a “due process” system which
a. Is an efficient system for collecting dues from members.
b. Enables interested parties to express their views on issues under consideration.
c. Identifies the most important accounting issues.
d. Requires that all CPAs must receive a copy of IFRS.
20. What is “due process” in the standard-setting by IASB?
a. IASB operates in full view of the public.
b. Public hearings are held on proposed standards.
c. Interested parties can make their views known.
d. All of these are parties can make their views known.
e. All of these are part of due process in standard setting.
21. What is the possible danger if politics plays too big a role in developing IFRS?
a. Accounting standards are not truly generally accepted.
b. Individuals may influence the standards.
c. User groups become active.
d. The IASB delegates its authority to elected officials.
22. Financial accounting standard-setting
a. Can be described as a social process which reflects political actions of various
interested user groups as well as a product of research and logic.
b. Is based solely on research and empirical findings.
c. Is a legalistic process.
d. Is democratic in the sense that a majority of accountants must agree with a standard.
23. 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.
24. Financial accounting can be broadly defined as the area of accounting that prepares
a. General purpose financial statements to be used by parties internal to the entity.
b. Financial statements to be used by investors.
c. General purpose financial statements to be used by parties both internal and
external to the entity.
d. Financial statements to be used primarily by management.
25. Financial accounting emphasizes reporting to
a. Management
b. Regulatory bodies
c. Internal auditors
d. Creditors and investors
26. 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
27. Which statement is true regarding managerial accounting and financial accounting?
a. Managerial accounting is generally more precise.

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 b. Managerial accounting need not follow generally accepted accounting principles
while financial accounting must follow GAAP.
c. Managerial accounting has a future focus.
d. The emphasis on managerial accounting is relevance and the emphasis on
managerial accounting is relevance and the emphasis on financial accounting is
timeliness.
28. 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
accountancy profession.
29. Which statement best describes generally accepted accounting principles?
a. The accounting principles have been formulated in the public sector.
b. The accounting principles have been developed on the basis of such factors as
usage and practical necessity.
c. The accounting principles are the same as laws.
d. The accounting principles do not apply to SMEs.
30. 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 judgment of the accountant
31. 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 standard.

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