NAME:
SECTION:
SCHEDULE:
NO ERASURES. Write your letter of
your answer before the number.
1. The purpose of the Conceptual
Framework is:
A. To assist the International
Accounting Standards Board to develop
IFRS Standards.
B. To assist preparers of IFRS financial
statements to develop consistent
accounting policies when no IFRS
Standard applies to a particular
transaction or other event, or when a
Standard allows a choice of accounting
policy.
C. To assist all parties to understand and
interpret IFRS Standards.
D. All of the above
2. The Conceptual Framework can
override requirements in a Standard.
A. True
B. False
3.Revision of the Conceptual
Framework will automatically lead to
changes in Standards that are
inconsistent with the revised concepts.
A. True
B. False
4. When developing requirements for
IFRS Standards, can the International
Accounting Standards Board depart
from the Conceptual Framework?
A. No
B. Yes, the Board is not required to use
the Conceptual Framework when
developing Standards
C. Yes, but only from aspects of the
Conceptual Framework and only if
doing so is needed to meet the objective
of financial reporting
5. If an IFRS Standard sets out
requirements that are inconsistent with
the Conceptual Framework, preparers
have to apply the Conceptual
Framework for affected transactions.
A. True
B. False
6. Entities have to apply the revised
Conceptual Framework:
A. Immediately after it is issued
B. For annual reporting periods
beginning on or after 1 January 2020,
with early application permitted.
C. Never - the Conceptual Framework is
only used by the International
Accounting Standards Board
7. The objective of general purpose
financial reporting as described in the
Conceptual Framework is to:
A. Provide information to regulators
B. Support the entity's tax return
C. Meet the information needs of an
entity's stakeholders.
D. Provide financial information about
the reporting entity that is useful to
existing and potential investors, lenders
and other creditors in making decisions
relating to providing resources to the
entity.
8. Which of the following does the
Conceptual Framework identify as the
primary users of general purpose
financial reports?
A. Employees, investors and trade union
representatives
B. Existing and potential investors,
lenders and other creditors
C. Lenders and other creditors and
customers
D. Existing and potential investors,
government agencies and the general
public
9. Information needed to assess
management's stewardship is always
different from information needed to
assess the prospects for future net cash
inflows to the entity.
A. True
B. False
10. How does the Conceptual
Framework explain the role of
stewardship?
A. Providing information needed to
assess management's stewardship is
identified as an additional objective of
financial reporting, equal in prominence
to providing financial information useful
to users in making decisions relating to
providing resources to the entity
B. Decisions relating to providing
resources to the entity depend on users'
assessment of the amount, timing and
uncertainty of the prospects for future
net cash inflows to the entity and on
their assessment of management's
stewardship
C. Providing information needed to
assess stewardship is more important
than providing information needed to
assess the prospects for future cash
inflows to the entity
D. Financial reports are not intended to
provide information needed to assess
stewardship
11. The fundamental qualitative
characteristics of useful financial
information are:
A. Comparability and relevance
B. Relevance and reliability
C. Relevance, reliability and
comparability
D. Relevance and faithful representation
E. Comparability, relevance and faithful
representation
12. For information to be relevant, it has
to possess:
A. Only predictive value
B. Only confirmatory value
C. Both predictive and confirmatory
value
D. Either predictive or confirmatory
value, or both
13. A trade-off between the fundamental
qualitative characteristics of relevance
and faithful representation may need to
be made in order to meet the objective
of financial reporting.
A. True
B. False
14. Consolidated financial statements
provide information about the assets,
liabilities, equity, income and expenses
of both the parent and its subsidiaries as:
A. Separate reporting entities
B. A partnership
C. A single reporting entity
D. A legal entity
15. When a reporting entity is not a legal
entity and does not comprise only legal
entities all linked by a parent-subsidiary
relationship, the boundary of the
reporting entity can contain an
incomplete set of economic activities if
that entity provides a description of how
the boundary was determined.
A. True
B. False
16. The Conceptual Framework defines
a liability as:
A. A present obligation of the entity to
transfer an economic resource as a result
of past events
B. A present obligation of the entity
arising from past events, the settlement
of which is expected to result in an
outflow from the entity of resources
embodyiong economic benefits
C. An amount the entity may have to
pay after the end of the reporting period
D. None of the above
17. For a right to meet the definition of
an asset, it needs to be likely that the
right will produce economic benefits for
the entity.
A. True
B. False
18. In explaining the meaning of the
term ‘obligation’ in the definition of a
liability, the Conceptual Framework
states:
A. That an obligation is a duty or
responsibility that an entity has no
practical ability to avoid
B. That an obligation can arise from a
duty or responsibility conditional on a
future action that the entity itself may
take, if the entity has no practical ability
to avoid taking that action
C. That an obligation can arise from an
entity’s customary practices, published
policies or specific statements, if the
entity has no practical ability to avoid
those practices, policies or statements
D. All of the above
E. None of the above
19. The residual interest in the assets of
an entity after deducting all its liabilities
is:
A. Income
B. Profit or loss
C. Equity
D. Other comprehensive income
20. Recognition is the process of:
A. Capturing, for inclusion in the
statement of financial position or the
statement(s) of financial performance,
an item that meets the definition of one
of the elements of the financial
statements—an asset, a liability, equity,
income or expenses
B. Determining where an item should be
presented in the financial statements
C. Sorting assets, liabilities, equity,
income or expenses on the basis of
shared characteristics
D. Adding together of assets, liabilities,
equity, income or expenses that have
shared characteristics
21. Some items that do NOT meet the
definition of an asset, a liability or
equity may be recognized in the
statement of financial position.
A. True
B. False
22. Which factors may indicate that
recognition of an item meeting the
definition of an asset or a liability may
not provide relevant information?
A. Uncertainty about whether an asset or
liability exists
B. Low probability of an inflow or
outflow of economic benefits
C. Other factors
D. All of the above
E. None of the above
23. What does the Conceptual
Framework state about derecognition?
A. For an asset, derecognition normally
occurs when the entity loses control of
all or part of the recognized asset
B. For a liability, derecognition
normally occurs when the entity no
longer has a present obligation for all or
part of the recognized liability
C. Derecognition is the removal of all or
part of a recognized asset or liability
from an entity's statement of financial
position
D. All of the above
24. Financial reports need to provide
information useful in making decisions
relating to providing resources to the
entity. Those decisions include
decisions about exercising rights to vote
on, or otherwise influence,
management’s actions that affect the use
of the entity’s economic resources.
A. True
B. False
25. The Conceptual Framework
describes prudence as:
A. The exercise of caution when making
judgments under conditions of
uncertainty
B. A bias towards understating assets or
income and towards overstating
liabilities or expenses
C. A preference towards the earlier
recognition of expenses and liabilities
than of income and assets
D. A mechanism for smoothing profits expressed “assets = liabilities + equity”
over time (understate profits in good is the
years and overstate profits in bad years) A. Entity theory
E. A form of accounting conservatism B. Fund theory
C. Proprietary theory
26. The concept of accounting entity is D. Residual equity theory
applicable
A. Only to the legal aspects of business 32. What theory of ownership equity is
organization enumerated by the following equation
B. Only to the economic aspects of “assets minus liabilities preference share
business organization equity equals ordinary share equity”
C. Only to business organization A. Fund
D. Whenever accounting is involved. B. Entity
C. Proprietary
27. When a parent and subsidiary D. Residual equity
relationship exists, consolidated
financial statements are prepared in 33. Classifying preference dividend as
recognition of. an expense is an application of what
A. Legal entity concept?
B. Economic Entity A. Entity
C. Stable monetary unit B. Proprietary
D. Time period C. Fund
D. Residual equity
28. The valuation of a promise to 34. The primary accounting objective is
receive cash in the future at present fair presentation of the financial
value is valid because of the accounting performance of the entity
concept of A. Entity
A. Entity B. Proprietary
B. Time period C. Residual equity
C. Going concern D. Fund
D. Monetary unit
35. Fiduciary accounting is an
29. The accounting concept justifies the application of what theory
usage of accrual and deferrals A. Entity
A. Going concern B. Proprietary
B. Materiality C. Residual equity
C. Consistency D. fund
D. Stable monetary unit
36. Accounting information is
30. During the lifetime of an entity, considered relevant when
accountants produce financial statements A. Can be depended on to represent the
at arbitrary points in time in accordance economic conditions that is intended to
with what basic accounting concept? represent
A. Accrual B. Is capable of making a difference in a
B. Periodicity decision
C. Unit of measure C. Is understandable by reasonably
D. Continuity informed users of accounting
information
31. The theory of accounting which best D. Is verifiable and neutral
describes the accounting equation
37. The conceptual framework includes 43. The cost of assets consumed or
which constraint services used is also known as
A. Prudence a. a revenue.
B. Conservatism b. an expense.
C. Cost c. a liability.
D. All of the above are constraint d. an asset.

38. Which means the process of 44. Which financial statement reports
converting non cash resources into cash the adjustments for foreign currency
or claims to cash? translation?
A. Allocation A. Statement Of Cash Flows
B. Collection B. Statement Of Comprehensive Income
C. Recognition C. Statement of Financial Position
D. Realization D. Statement of Owner’s Equity

39. Which of the following is not an 45. What is usually presented first in the
enhancing qualitative characteristic? notes to the financial statements?
A. Understandability A. Accumulated Other Comprehensive
B. Comparability B. Income Commitments And
C. Liquidity Contingencies
D. Timeliness B. Significant Accounting Policies

40. Which of the following is not true 46. Which accounting method will result
concerning the conceptual framework? in financial statements that report a more
A. The conceptual framework should be complete picture of a corporation’s
a basis for standard setting financial position and a better measure
B. The conceptual framework should of profitability during a recent
allow practical problems to be solved accounting year?
more quickly. A. Cash Method
C. In cases of conflict, the conceptual B. Accrual Method
framework prevails over the relevant C. Current Method
PFRS. D. Other Method
D. The conceptual framework should
increase users understanding. 47. Which type of journal entries are
made at the end of each accounting
41. The liability created by a business period so that the financial statements
when it purchases coffee beans and better reflect the accrual method of
coffee cups on credit from accounting?
suppliers is termed a(n) A. Adjusting
a. account payable. B. Closing
b. account receivable. C. Reversing
c. revenue. D. Entrying
d. expense.
48. Which of the following is not one of
42. The right to receive money in the the three forms of business
future is called a(n) organization?
a. account payable. a. Corporations
b. account receivable. b. Partnerships
c. liability. c. Proprietorships
d. revenue. d. Investors

48. The elements directly related to the
measurement of financial position are
A. Assets, Liabilities, equity, income
and expenses
B. Assets, liabilities and equity
C. Income and expenses
D. Assets and liabilities
49. The elements directly related to the
measurement of financial performance
are
A.Assets, Liabilities, equity, income and
expenses
B.Assets, liabilities and equity
C.Income and expenses
D.Assets and liabilities
50. It is the residual interest in the assets
of the entity after deducting all of its
liabilities
A. Income
B. Expense
C. Net income
D. Equity
51. The first step in the accounting cycle
is to
A. Record the transactions in a journal
B. Analyze transactions from source
documents
C. Post journal entries to general ledger
accounts
D. Adjust the general journal accounts
52. The last step in the accounting cycle
is to
A. prepare a post closing trial balance
B. Journalize and post closing entries
C. Prepare financial statement
D. Journalize and post adjusting entries
53. The manner in which the accounting
records are organized and employed
within a business is referred to as
A. Accounting system
B. Business document
C. Voucher system
D. Special journals
54. Which of the following would
typically be considered a source
document?
A. Chart of accounts
B. General ledger
C. General journal
D. Invoice received from seller
55. Which of the following accounts
would be increased by a debit?
A. Share capital
B. Notes payable
C. Accounts payable
D. Dividends
56. Which of the following is not
considered a book of original entry?
A. General journal
B. General ledger
C. Sales journal
D. Purchase journal
57. A simple journal entry
A. Consists of one debit and credit
B. Consists of two debits and one credit
C. Consists of two debit and two credit
D. Is a memorandum entry only
58. A journal entry that contains more
than two accounts
A. a posted journal entry
B. An adjusting journal entry
C. An erroneous journal entry
D. A compound journal entry
59. What function do accounting
journals serve in the accounting process?
A. Recording
B. Classifying
C. Summarizing
D. Reporting
60. A chart of accounts is
A. a flowchart of all transaction
B. An accounting procedure manual
C. A journal
D. A lists of all accounting titles
IDENTIFICATION
1. It involves the activities of
identifying, measuring, and
communicating information that is
useful in making economic decisions.
________
2. It refers to the process of
incorporating the effects of an
accountable event in the financial
statements through a journal entry.
3. Are those who do not have the
authority to demand financial reports
tailored to their specific needs.
4. Financial reporting standards
continuously change primarily in
response to what?
5. ________is not a PFRS. In case of
conflict between these two, the PFRS
prevails.
6. Is a resource controlled by the entity
as a result of past event.
7. Is a pervasive constraint on the
entity’s ability to provide useful
information.
8. Is an obligation that results from a
contract, legislation, or other operation
of law.
9. An obligation that results from an
entity’s actions that create a valid
expectation from others that the entity
will accept and discharge certain
responsibilities.
10. Are amounts reclassified from OCI
to profit or loss.
11. Are those statements that cater to the
common needs of wide range of
primary (external) users.
12. Refers to the comparability of
financial statements of the same entity
but from one period to another.
13. Refers to the comparability of
financial statements between different
entities.
14. Are the structured representation of
an entity’s financial position and results
of its operations.
15. Who is the father of accounting?