PEREZ 2TAY2122 BATHEOAX QUIZ 1

General Instructions: Choose the letter which corresponds to the best answer.
1. Under the Conceptual Framework, the classification of users of financial statements is:
a. Heavy users (management) and slight users (public & government)
b. Primary users (existing & potential investors and creditors) and other users
c. Main users (existing investors & creditors) and incidental users (potential investors &
creditors)
d. Internal Users (employees and customers) and external users (investors & creditors)

2. All of the following statements are true about consistency and comparability. Which of the
following is not true?
a. Comparability is not uniformity; allowing alternative accounting methods for the
same economic phenomenon does not in any way reduce comparability.
b. Consistency refers to the use of the same methods for the same items, either from period
to period within a reporting entity or in a single period across entities.
c. Consistency, although related to comparability, is not the same; comparability is the
goal while consistency helps to achieve such goal.
d. Comparability is the qualitative characteristic that enables users to identify and
understand similarities and differences among items.

3. Which capital concept requires the use of current cost basis of accounting?
a. Physical capital concept
b. Financial capital concept
c. Both financial and physical capital concept
d. Neither financial and physical concept

4. In which of the following is the continuity or going concern assumption best exemplified?
a. Treasury stocks are not reported in the balance sheet as an asset.
b. Cost of operating assets are allocated to expense systematically over their useful
lives.
c. Income statement should not include gains and losses that are both unusual and
infrequent.
d. Cost of installing a machine should not be included in the recorded cost of the machine
but rather expensed immediately.

5. Which of these qualitative characteristics are related?

a. Relevance and materiality
b. Understandability and comparability
c. Relevance and understandability
d. Reliability and comparability

6. This body serves as the study or support group of the Financial Reporting Standards Council
(FRSC) and is responsible for reviewing accounting issues with divergent and unacceptable
treatments in the absence of an authoritative guidance is:
a. Education Technical Committee
b. Accounting Principles Committee
c. Philippine Interpretations Committee
d. Accounting Standards Interpretations Committee
7. One of the following best describes the Generally Accepted Accounting Principles (GAAP).
Which among is it?
a. Fundamental truths and axioms derived from the laws of nature.
b. Derive authority from legal court proceedings.
c. Derive credibility and authority from general recognition and acceptance by the
accounting profession.
d. They are specified in detail from the conceptual framework alone.

8. Standards issued by the former International Accounting Standards Council (IASC) are called
(1)______ while standards issued by the current International Accounting Standards Board
(IASB) are called (2)________.
a. International Accounting Standards (IAS) ; International Generally Accepted
Accounting Principles (IGAAP)
b. International Generally Accepted Accounting Principles (IGAAP) ; International
Financial Accounting Interpretations (IFAI)
c. International Financial Reporting Standards (IFRS) ; International Accounting
Standards (IAS)
d. International Accounting Standards (IAS) ; International Financial Reporting
Standards (IFRS)

9. Which of the following best states the objective of general-purpose financial statements?
a. To determine compliance with tax laws
b. To help users make decisions
c. To identify shareholders
d. To disclose the market value of the firm

10. Which among the following is not directly involved in the accounting standard-setting “due
process” in the Philippines?
a. Financial Reporting Standards Council
b. Board of Accountancy
c. Bureau of Internal Revenue
d. Professional Regulation Commission

11. What are the three main areas in the practice of the accountancy profession?
a. Public accounting, private accounting, and government accounting
b. Auditing, taxation, and managerial accounting
c. Financial accounting, managerial accounting, and corporate accounting
d. Public accounting, private accounting, and managerial accounting

12. Continuing Professional Development (CPD) is required for:

a. Renewal of CPA license only
b. Accreditation to practice public accountancy
c. Both renewal of CPA license and practice public accountancy
d. Neither renewal of CPA license and practice of public accountancy

13. The Philippine Financial Reporting Standards collectively include:

a. PFRS corresponds to IFRS
b. PAS corresponds to IAS
c. Philippine Interpretations corresponding to IFRIC and SIC Interpretations and
Interpretations developed by PIC
d. All of these are included in PFRS
14. 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

15. All of the following statements are correct except one. Which is the incorrect option?
a. Single practitioners for practice of public accounting shall be registered CPAs in the
Philippines.
b. The Securities and Exchange Commission can register any corporation organized
for the practice of public accounting.
c. 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.
d. Partners of partnership formed for the practice of public accounting shall be registered
CPAs in the Philippines

16. This is the only accredited professional organization (APO) of CPAs by the PRC.
a. Philippine Institute of Certified Public Accountants (PICPA)
b. Association of Certified Public Accountants in Public Practice (ACPAPP)
c. Government Association of Certified Public Accountants (GACPA)
d. National Association of Certified Public Accountants in Education (nACPAE)

17. It is the body authorized by law to promulgate rules and regulations affecting the practice of
the accountancy profession in the Philippines.
a. BOA
b. PICPA
c. SEC
d. FRSC

18. What is the underlying theme of the Conceptual Framework?

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

19. Enhancing qualitative characteristics of financial information are:

a. Comparability, verifiability, and relevance
b. Comparability, understandability, verifiability, and timeliness
c. Comparability, understandability, and verifiability
d. Relevance, faithful representation, verifiability and timeliness

20. The quality of information that gives assurance that it is reasonably free from error and bias?
a. Relevance
b. Faithful representation
c. Verifiability
d. Neutrality

21. All of the following compose a complete set of financial statements, except:
 a. Statement of financial position, statement of comprehensive income, and statement of
cash flows
b. Statement of changes in equity
c. Notes, comprising a summary of significant accounting policies and other explanatory
information
d. Reports and statements such as environmental reports and value-added
statements

22. When should an element in the Conceptual Framework be recognized?

a. When the entity obtains control of the rights or obligations associated with the item
b. When the element has a cost or value that can be measured reliably
c. When it is probable the any future economic benefit associated with the item will
flow to or from the entity and the item has a cost or value that can be measured
reliably
d. When it is probable the any future economic benefit associated with the item will flow
to or from the entity

23. In what instance is a third statement of financial position as at the beginning of the earliest
comparative period required?
a. When an entity applies an accounting policy prospectively
b. When an entity makes a retrospective restatement of items in the financial
statements
c. When an entity does not reclassify an item in the financial statement
d. All of the above

24. Which of the following statements is incorrect concerning fair presentation of financial
statements?
a. An entity whose financial statements comply with PFRS shall make an explicit and
unreserved statement of such compliance in the notes.
b. In all circumstances, fair presentation is achieved by compliance with applicable PFRS.
c. Fair presentation requires the faithful representation of the effects of transactions and
events
d. Financial statements shall present perfectly the financial position, financial
performance, and cash flows of an entity

25. In presenting the Statement of Financial position, the entity shall:

a. Must choose either current or noncurrent or the liquidity presentation, meaning free
choice of presentation
b. Must make the current and noncurrent presentation, except when a presentation
based on liquidity provides information that is reliable and more relevant
c. Must present assets and liabilities in order of liquidity
d. Must make the current and noncurrent presentation

26. The following statements are provided to you:

Statement 1: A liability is classified as current if the entity does not have an unconditional right
to defer the settlement of the liability for at least twelve months after the reporting period.
Statement 2: The statement of financial position is useful in analyzing the cash inflows and
outflows for the period.
a. Statement 1 is true ; Statement 2 is false.
 b. Statement 1 is false ; Statement 2 is true.
c. Both statements are true.
d. Both statement are false.

27. In relation to financial statements, the following statements are provided to you:
Statement 1: The cross-reference between each line item in the financial statements and any
related information disclosed in the notes to financial statements is mandatory.
Statement 2: Significant policies may not be presented in the financial statement disclosure.
a. Statement 1 is true ; Statement 2 is false.
b. Statement 1 is false ; Statement 2 is true.
c. Both statements are true.
d. Both statement are false.

28. How are extraordinary items presented in the income statement under PFRS?
a. Has not changed in current PFRS.
b. Has been eliminated.
c. Has been eliminated for computation of EPS only.
d. Shall be presented as one-line item, net of tax

29. An entity can present an analysis of expenses using a classification based on:
a. The function of expenses
b. The nature of expenses
c. Either the nature or function of expenses, whichever provides information that is
reliable and more relevant
d. Either the nature or function of expenses, whichever BIR prefers the entity to present

30. Which among the following is a requirement for the presentation of Total Comprehensive
Income?
a. Showing separately profit or loss and the total of other comprehensive income
b. Showing the analysis of expenses by nature only
c. Showing separately the total amount attributable to owners of the parent and the
non-controlling interest
d. Showing the analysis of expenses by both function and nature

31. Which among the following usually appears first in the Statement of Changes in Equity?
a. Cash dividend
b. Prior period error
c. Net income
d. Share dividend

32. All of the items appear in the Statement of Retained Earnings except one. Which is the
exception?
a. Net loss
b. Preference share dividend
c. Prior period errors
d. Other comprehensive income

33. In cases of hyperinflationary economies, which of the following accounting assumptions is

severely compromised?
 a. Periodicity assumption
b. Economic entity assumption
c. Going concern assumption
d. Monetary unit assumption

34. Which among the following best depicts the Going concern principle?
a. Ability of the entity to continue in operation for the foreseeable future
b. Operating expenses shall always exceed revenues
c. Potential to contribute to the entity’s cash flows for a lifetime
d. The current liabilities of the entity exceeding current assets

35. The number of CPD units required for renewal of CPA license is (1) _______ while the number
of CPD units required for accreditation to practice public accountancy is (2) _______.
a. 15 units ; 15 units
b. 120 units ; 15 units
c. 120 units ; 120 units
d. 15 units ; 120 units

36. Which accounting process is the recognition or non-recognition of business activities as

accountable events?
a. Communicating
b. Recording
c. Identifying
d. Measuring

37. One of the following items shall be presented under Cash Flows from Investing Activities?
a. Revaluation of PPE
b. Development costs capitalized in the period
c. Redemption of debentures
d. Employee costs

38. The main purpose of the Statement of Cash Flows is to provide information about:
a. Cash receipts and disbursements of the entity during the period
b. Differences between net income and associated cash receipts and disbursements
c. Entity’s ability to meet cash operating needs
d. Entity’s ability to generate positive net cash flows

39. The sale of treasury shares falls into the following classification for the cash flow statement:
a. Transfer activity
b. Investing activity
c. Operating activity
d. Financing activity

40. An entity repaid its long-term loan. How should the entity the principal and interest paid on its
Statement of Cash Flows?
a. Principal: investing activity ; Interest paid: operating or investing activity
b. Principal: financing activity ; Interest paid: operating or financing activity
c. Principal: investing activity : Interest paid: operating or financing activity
d. Principal: financing activity ; Interest paid: operating or investing activity