QUIZZER 4 CONCEPTUAL FRAMEWORK LEVELS 1 and 2

The IASB, FASB, FRSC AND “DUE PROCESS”

1. The IASB conceptual framework is intended to establish
a. Generally accepted accounting principles in financial reporting by business enterprises
b. The meaning of “present fairly in accordance with generally accepted accounting principles”
c. The objectives and concepts for use in developing standards of financial accounting and reporting
d. The hierarchy of sources of generally accepted accounting principles.

2. The purpose of the International Accounting Standards Board is to

a. Issue enforceable standards which regulate the financial accounting and reporting of multinational companies
b. Develop a uniform currency in which the financial transactions of companies throughout the world would be
measured
c. Develop a single set of high quality IFRS.
d. Arbitrate accounting disputes between auditors and international companies

3. Which of these statements regarding the IFRS and US GAAP is correct?

a. US GAAP is considered to be “principles-based” and more detailed than IFRS
b. US GAAP is considered to be “rules-based” and less detailed than IFRS
c. IFRS is considered to be “principles-based” and less detailed than US GAAP
d. Both US GAAP and IFRS are considered “rules-based”, but US GAAP tends to be more complex
4. Which of the following is not included in the scope of the IASB’s conceptual framework?
a. Qualitative characteristics of useful financial accounting information
b. Definition, recognition & measurement of the elements
c. Concepts of capital and capital maintenance
d. Generally accepted accounting principles
 5. What is due process in the context of standard setting at the IASB?
a. IASB and FASB operates in full view of the public
b. Public hearings are held on proposed accounting standards
c. Interested parties can make their views known
d. All of these

6. The following published documents are part of the “due process” system used by the IASB in the evolution of a typical IASB
Standard
1. Exposure Draft
2. IASB Standard
3. Discussion Paper
The chronological order in which these items are released is as follows:
a. 1, 2, 3 b. 1, 3, 2 c. 2, 3, 1 d. 3, 1, 2

7. 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 a consensus as to the appropriate
accounting treatment?
a. International Financial Reporting Interpretations Committee (IFRIC)
b. Standards Advisory Council (SAC)
c. International Accounting Standards Board (IASB)
d. International Accounting Standards Committee Foundation (IASCF)

8. Which of the following are parts of the “due process” of the IASB in issuing a new International Financial Reporting
Standard?
(1) Establishing an advisory committee to give advice
(2) Reviewing compliance and enforcement procedures
(3) Issuing an interpretation as authoritative interim guidance
(4) Developing and publishing a discussion document for public comment
a. (1) and (4) b. (2) and (3) c. (2) and (4) d. ( 1) and (3)

The Financial Reporting Standards Council

9. The main function of this body is to establish and improve accounting standards that will be generally accepted in the
Philippines
a. Board of Accountancy c. Professional Regulation Commission
b. Philippine Institute of CPAS d. Financial Reporting Standards Council

10. You are given the following statements relating to the FRSC and standard setting process in the Philippines. Which of these
is (are) true?
I. All members of the FRSC should be CPAs.
II. The Financial Reporting Standards Council (FRSC) Board of Accountancy (BOA) and Professional Regulation
Commission (PRC) are all involved in the standard setting process, with PRC as the final approving authority.
a. Only I is true c. I and II are true
b. Only II is true d. I and II are false

11. Which of the following is a characteristic of the Financial Reporting Standards Council (FRSC)?
a. FRSC members must come from CPA firms
b. FRSC members are required to render service on full-time basis
c. All four sectors of the Accountancy profession are represented in the FRSC
d. All members should be CPAs

12. Which of the following are parts of the “due process” of the IASB in issuing a new International Financial Reporting
Standard?
(1) Establishing an advisory committee to give advice
(2) Reviewing compliance and enforcement procedures
(3) Issuing an interpretation as authoritative interim guidance
(4) Developing and publishing a discussion document for public comment
a. (1) and (4) b. (2) and (3) c. (2) and (4) ( 1) and (3)

13. Which of the following is (are) part of the financial reporting standard setting process in the Philippines?
I. Consideration of pronouncements of the IASB;
II. Creation of a task force by the standard setting body to study the proposed accounting standard
III. Distribution of the exposure draft for comment to CPA professionals and other interested parties.
IV. Approval by the Financial Reporting Standards Council and eventually by the Professional Regulation Commission
V. Publication in the Official Gazette and in a newspaper of general circulation
a. I and IV only c. I, II, III and IV only
b. II, III and V only d. I, II, III, IV and V

14. Once the FRSC has established an accounting standard

a. The standards are continually reviewed to see if modifications or amendments are necessary
 b. The standards are not reviewed unless the SEC makes a complaint
c. The task of reviewing the standard to see if modification is necessary is given to PICPA
d. The standard should never be modified to conform with the principle of consistency

15. As an assistance to the FRSC, Philippine Accountancy profession and the public it serves, which of the following should the
Philippine Interpretations Committee (PIC) consider issuing an interpretation?
I. Newly identified financial reporting issues in the Philippines not specifically Addressed in PFRSs
II. Narrow industry-specific issues arising in the international business scene
III. Philippine accounting and reporting issues when unsatisfactory or conflicting interpretations have developed or seem
likely to develop
a. I and II only c. II and III only
b. I and III only d. I, II and III

Nature/Purpose/Scope
16. A conceptual framework is
a. An International Financial Reporting Standard
b. An underlying accounting assumption
c. A theoretical foundation which guides the accounting standard-setters, the prepares and users of financial accounting
information in the preparation and presentation of financial statements
d. A financial statement

17. Which is not a basic purpose of a conceptual framework?

a. Assist preparers of financial statements in applying FRSC accounting standards
b. Assist accounting standard-setting body in reviewing and adopting International Accounting Standards
c. Assist accounting standard setting body in developing accounting standards
d. A assist the Board of Accountancy in promulgating rules and regulations affecting the practice of accountancy in the
Philippines

18. A soundly developed conceptual framework of concepts and objectives should

a. Increase financial statement users’ understanding of and confidence in financial reporting
b. Enhance comparability among companies’
c. Allow new and emerging practical problems to be more quickly solved
d. All of these

19. In the conceptual framework for financial reporting, what provides the “why” – the goals and purposes of accounting?
a. Measurement and recognition concepts such as assumptions principles and constraints
b. Qualitative characteristics of accounting information
c. Elements of financial accounting
d. Objective of financial reporting

20. The underlying theme of the conceptual framework is

a. Decision usefulness c. Reliability
b. Understandability d. Comparability

21. The accounting standard setting body in the Philippines is currently known as
a. The Accounting Standards Council
b. The Financial Reporting Standards Council
c. The Auditing Standards and Practices Council of the Philippines
d. The Auditing and Assurance Standards Council

22. The conceptual framework applies to all financial statements of reporting enterprises described as
a. Industrial enterprise c. Business enterprise
b. Commercial enterprise d. All of these

23. Which of the following statements regarding the Conceptual Framework of accounting is (are) correct?
I. The Framework deals with the qualitative characteristics of financial statements
II. The Framework normally prevails over International Accounting Standards where there is a conflict between the two
III. The Framework deals with the objectives of financial statements and the users of financial information
a. Only I is true c. I and III are true
b. I and II are true d. All statements are true

Users of Financial Information

24. Which users need financial information to enable them to assess the ability of the enterprise to pay dividends?
a. Employees c. Suppliers
b. Lenders d. Investors
25. Which users need financial information to assess trends and recent developments in the prosperity of an enterprise?
a. Customers
b. Public in general
c. Government & their agencies
d. Employees