CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

Exercise 1

1. Which among the following is an indirect user of accounting information?

A. management of the enterprise
B. taxing authority
C. regulatory agency
D. lenders of the enterprise

2. Financial Accounting is concerned with

A. recording financial transactions
B. summarizing and presenting financial information on financial reports
C. analyzing the financial reports
D. all of these

3. Which of the following is an internal user of a company’s financial

information?
A. Board of Directors
B. Long-term creditors of an enterprise
C. Shareholders of the company
D. Regulatory agencies

4. Which of the following is considered a direct user of accounting information?

A. A regulatory agency
B. Trade association
C. Taxing authority
D. Labor unions

5. As used in the definition of accounting, an economic entity may be

A. a business enterprise
B. an individual
C. a division within a business enterprise
D. any of these

6. The objectives of financial reporting for business enterprise are based on:
A. generally accepted accounting principles
B. reporting on management’s stewardship
C. the need for profit maximization
D. the needs of the users of the information

7. What is the branch of accounting that makes financial information about an

entity accessible to the external users?
A. Auditing
B. Financial accounting
C. Government accounting
D. Management accounting
8. What is the branch of accounting that serves the information needs of
internal users?
A. cost accounting
B. financial accounting
C. government accounting
D. management accounting

9. Which of the following users of accounting information are both an external

user and a direct user?
A. management
B. labor unions
C. creditors
D. regulatory bodies

10. Which of the following are represented in the Financial Reporting Standards
Council?

I. Securities and Exchange Commission

II. Department of Trade and Industry
III. Board of Accountancy
IV. PICPA
V. BIR
VI. SSS

A. I, II, III, IV, V and VI

B. I, II, III, V, and VI
C. II, IV, V, and VI
D. I, III, IV, and V

11. The body authorized by law to promulgate rules and regulations affecting the
practice of accountancy in the Philippines is
A. Accounting Standards Council
B. PICPA
C. BOA
D. Auditing Standards and Practices Council

12. Which of the following are parts of the due process applied by the Financial
Reporting Standards Council in developing a financial reporting standard?

I. Formation of a task force to address the issue.

II. Publication of the exposure draft in the official gazette or newspaper
of general circulation
III. Consideration of comments on the exposure draft.
IV. Approval vote by a majority members of the FRSC members.
 A. I, II, III, and IV
B. I, III, and IV
C. II, III, and IV
D. I, II, and IV

13. The process of establishing financial reporting standards is

A. a democratic process in that a majority of practicing CPAs must vote in
favor of a proposed standard.
B. A legislative process based on set of laws promulgated by the House
of Representatives
C. A social process which incorporates political actions of various interested
user groups as well as professional research and logic
D. Based solely on economic analysis of the effects each standard will have if
it is implemented.

14. The body that authors the IFRS is the

A. ASC
B. FRSC
C. IASB
D. IASC

15. An independent, not-for-profit private sector organization that governs the

activities of the IASB is the
A. IASC
B. IFRS Foundation
C. IFRIC
D. Standards Advisory Council

16. As part of the due process of developing an accounting standard, the FRSC
issued exposure draft fro comment within a period of 60 days, unless a
shorter period is considered appropriate. How long is this shorter period?
A. not less than 50 days
B. not less than 45 days
C. not less than 30 days
D. it depends on the issue being resolved.

17. Based on RA 9298, the FRSC is composed of:

A. 13 members
B. 14 members
C. 15 members
D. 16 members

18. RA 9298 is otherwise known as

A. Revised Accountancy Law
B. Revised Accountancy Act
C. Philippine Accountancy Act of 2004
 D. Code of Professional Ethics for CPAs

19. This is the body created by the BOA in 2006 to assist the Board in carrying
out its power and function to promulgate accounting standards in the
Philippines.
A. PICPA
B. IASC
C. Auditing and Assurance Standards Council
D. FRSC

20. The PFRS consist of

I. Specific PFRS which are adopted from the IFRS
II. PAS, which are adopted from the IAS
III. Philippine interpretations, which are adopted from the
interpretations of the IFRIC and SIC
IV. Interpretations of the PIC

A. I, II, III, and IV

B. I, II, and III only
C. I and II only
D. I only

21.