CFAS - CHAPTER 1 Flashcards by Frances Joanne Arado

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

a R.A. No. 9298

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What 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

a. Board of Accountancy

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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.

d. Public accounting, private accounting and government accounting.

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Which statement is correct in relation to the practice of public accountancy?

a. Single practitioners for the practice of public accountancy shall be registered CPAs in the Philippines.

b. Partners of partnerships formed for the practice of public accountancy shall be registered CPAs in the Philippines.

c. The Securities and Exchange Commission shall not register any corporation organized for the practice of public accountancy.

d. All of these statements are correct about the practice of public accountancy.

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CPAs are licensed by

a. The PICPA
b. The SEC
c. The city government
d. State government

d. State government

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What are the events that affect the entity and in which other entities participate?

a. Internal events
b. External events
c. Current events
d. Obligating events

b. External events

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This accounting process is the recognition or nonrecognition of business activities as accountable events.

a. Identifying
b. Measuring
c. Communicating
d. Reporting

a. Identifying

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The important points made in the definition of accounting include all of the following, except

a. Accounting information is quantitative.
b. Accounting information is qualitative.
c. Accounting information is financial in nature.
d. Accounting information is useful in decision making.

b. Accounting information is qualitative.

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All of the following describe accounting, except

a. A service activity
b. An information system
c. A universal language of business
d. An exact science rather than an art

d. An exact science rather than an art

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Accounting is a service activity and the function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision. This accounting definition is given by

a. Accounting Standards Council
b. AICPA Committee on Accounting Terminology
c. American Accounting Association
d. Board of Accountancy

a. Accounting Standards Council

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What is the overall objective of accounting?

a. To provide the information that the managers of an economic entity need to control the operations.
b. To provide information that the creditors can use in deciding whether to grant loans to an entity.
c. To measure the periodic income of the economic entity.
d. To provide quantitative financial information about an entity useful in making economic decision.

d. To provide quantitative financial information about an entity useful in making economic decision.

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The communicating process of accounting includes all of the following, except

a. Recording
b. Classifying
c. Summarizing
d. Interpreting

d. Interpreting

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The most common financial attribute used in measuring financial information is

a. Historical cost
b. Current cost
c. Fair value
d. Value in use

a. Historical cost

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What is the measuring component in the definition of accounting?

a. The recognition or nonrecognition of business activities as accountable events.
b. The assigning of peso amounts to the accountable events.
c. The preparation and distribution of accounting reports to users of accounting information.
d. The preparation of audit report by CPAs.

b. The assigning of peso amounts to the accountable events.

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Which is incorrect in relation to an accountable event?

a. An event is accountable when it has an effect on asset, liability or equity.
b. The subject matter of accounting is the measurement of economic resources and obligations.
c. Only economic activities are emphasized and recognized in accounting.
d. Sociological and psychological matters are quantifiable.

d. Sociological and psychological matters are quantifiable.

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What is the standard-setting body in the Philippines at the present time?

a. Accounting Standards Council
b. Auditing and Assurance Standards Council
c. Philippine Accounting Standards Board
d. Financial Reporting Standards Council

d. Financial Reporting Standards Council

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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

d. Department of Budget and Management

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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

d. All of these are included in Philippine Financial Reporting Standards

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Accounting standard-setting has been characterized as

a. A political process
b. Using the scientific method
c. Pure deductive reasoning
d. A legal process

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a. A political process

GAAP is an abbreviation for

a. Generally authorized accounting procedures
b. Generally applied accounting procedures
c. Generally accepted auditing practices
d. Generally accepted accounting principles

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d. Generally accepted accounting principles

What is the primary service of CPAs in public practice?

a. Auditing
b. Taxation
c. Managerial accounting
d. Controllership

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a. Auditing

Accountants employed in entities in various capacity as accounting staff, chief accountant or controller are said t be engaged in

a. Public accounting
b. Private accounting
c. Government accounting
d. Financial accounting

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b. Private accounting

It is the area of the accountancy profession that encompasses the process of analyzing, classifying. summarizing and communcating all transactions involving the receipt and disposition of government funds and property and interpreting the results thereof.

a. In ternal auditing
b. External auditing
c. Private accounting
d. Government accounting

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d. Government accounting

The Continuing Professional Development is required for

a. Renewal of CPA license
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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c. Both renewal of CPA license and accreditation to practice the accountancy profession

**A CPA shall be permanently exempted from renewal of CPA license** a. At the age of 65 years b. When working abroad c. When practicing the profession abroad d. When studying abroad

a. At the age of 65 years

**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

b. To develop a single set of high quality IFRS

**The International Accounting Standards Board** a. Was the predecessor to the IASC. b. Can overrule the USA GAAP when their policies disagree. c. Promotes the use of high-quality and understandable global accounting standards. d. Has its headquarters in Geneva

c. Promotes the use of high-quality and understandable global accounting standards.

**The IASB declared that the merits of proposed standards are assessed** a. From a position of neutrality b. From a position of materiality c. Based on possible impact on behavior d. Based on arguments of lobbyist

a. From a position of neutrality

**The standard-setting process includes in the correct order** a. Exposure draft, research, discussion paper and accounting standard b. Research, exposure draft, discussion paper and accounting standard c. Research, discussion paper, exposure draft and accounting standard d. Discussion paper, research, exposure draft and accounting standard

c. Research, discussion paper, exposure draft and accounting standard

**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 accounting issues that are the most important. d. Requires that all CPAs must receive a copy of IFRS.

b. Enables interested parties to express their views on issues under consideration.

**What is due process in 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 part of due process in standard-setting

d. All of these are part of due process in standard-setting

**The standards published by IASB are called** a. International Accounting Standards b. Financial Reporting Standards c. International Financial Reporting Standards d. Statement of Financial Accounting Standards

c. International Financial Reporting Standards

**What is a possible danger if politics plays too big a role in developing IFRS?** a. Financial reporting 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

d. The IASB delegates its authority to elected officials

**Accounting standard-setting** a. Can be described as a political 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 before it becomes enforceable.

a. Can be described as a political process which reflects political actions of various interested user groups as well as a product of research and logic.

**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 where unsatisfactory or conflicting interpretations have developed. d. All of these are true about IFRIC Interpretations.

d. All of these are true about IFRIC Interpretations.

**Financial accounting is concerned with** a. General purpose reports on financial position and financial performance. b. Special reports for inventory management. c. Special reports for income tax computation. d. General purpose reports on changes in share prices.

a. General purpose reports on financial position and financial performance.

**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.

c. General purpose financial statements to be used by parties both internal and external to the entity.

**Financial accounting emphasizes reporting to** a. Management b. Regulatory bodies c. Internal auditors d. Creditors and investors

d. Creditors and investors

**Managerial accounting emphasizes** a. Reporting financial information to external users b. Reporting to the SEC c. Expertise in data processing d. Developing accounting information for use within an entity

d. Developing accounting information for use within an entity

**Which statement is true regarding managerial and financial accounting?** a. Managerial accounting is generally more precise. 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 financial accounting is timeliness.

b. Managerial accounting need not follow generally accepted accounting principles while financial accounting must follow GAAP.

**Generally accepted accounting principles** a. Are accounting adaptations based on law. b. Derive their credibility and authority from legal rulings and court precedents. c. Derive their credibility and authority from government regulatory authority. d. Derive their credibility and authority from general recognition and acceptance by the accountancy profession.

d. Derive their credibility and authority from general recognition and acceptance by the accountancy profession.

**Which statement best describes GAAP?** 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 small and medium-sized entities.

b. The accounting principles have been developed on the basis of such factors as usage and practical necessity.

**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

d. Professional judgment of the accountant

**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 unless a regulatory authority makes a complaint. c. The task of reviewing the standard is given to the national accounting organization. d. The principle of consistency requires that no revisions ever be made to the standard.

a. The standard is continually reviewed to see if modification is necessary.

**The primary responsibility for properly applying GAAP lies with** a. External auditor b. Internal auditor c. Management d. National accounting organization

c. Management

CFAS - CHAPTER 1 Flashcards

(45 cards)