Conceptual Framework

Question 1

Encompass the conventions, rules and procedures necessary to define what is accepted accounting practice.

Answer 1

Generally Accepted Accounting Principles

Question 2

Serve as the foundation of accounting in order to enhance the understanding and usefulness of financial statements.

Answer 2

Accounting Assumptions

Question 3

Under this basis, the effects of transactions and other events are recognized when they occur (and not as cash or its equivalent is received, or paid and they are recorded in the accounting records and reported in the financial statements of the period to which they relate.

Answer 3

Accrual Basis

Question 4

It is assumed that the entity has neither the intention nor the need to liquidate or curtail materially the scale of its operations. If such an intention or need exists, the financial statements may have to be prepared on a different basis, and if so, the basis is disclosed.

Answer 4

Going Concern

Question 5

It is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

Answer 5

Asset

Question 6

It is 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 embodying economic benefits.

Answer 6

Liability

Question 7

It is the residual interest in the assets of the entity after deducting all its liabilities.

Answer 7

Equity

Question 8

The process of incorporating in the balance sheet or income statements an item that meets the definition of an element and satisfies the criteria for recognition set out in the framework.

Answer 8

Recognition

Question 9

It is increasing in economic benefits during the accounting period in the form of inflows or enhancement of assets or decreases of liabilities that result in an increase in equity other than those relating to contributions from equity participants.

Answer 9

Income

Question 10

It is the decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrence of liabilities that result in decreases in equity, other than those relating to distributions to equity participants.

Answer 10

Expense

Question 11

Assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition.
Liabilities are recorded at the amount of proceeds received in exchange for the obligation, or in some circumstances, at the amount of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business.

Answer 11

Historical Cost

Question 12

Assets are carried at the amount of cash or cash equivalents that would have to be paid if the same or an equivalent asset was acquired currently.
Liabilities are carried at the undiscounted amount of cash or cash equivalents that would be required to settle the obligation currently.

Answer 12

Current Cost

Question 13

Assets are carried at the amount of cash or cash equivalents that could currently be obtained by selling the asset in an orderly disposal.
Liabilities are carried at their settlement values; that is, the undiscounted amounts of cash or cash equivalents expected to be paid to satisfy the liabilities in the normal course of business.

Answer 13

Realizable (Settlement) Cost

Question 14

SIC

Answer 14

Standing Interpretation Committee

Question 15

The body in charge of setting international standards.

Answer 15

International Accounting Standards Board (IASB)

Question 16

In charge of developing interpretative guidance on accounting issues that are not specifically dealt with in the IFRSs or that are likely to receive divergent or unacceptable interpretations in the absence of authoritative guidance.

Answer 16

International Financial
Reporting Interpretations Committee

Question 17

IFRS

Answer 17

International Financial Recording Standard

Question 18

Establishes the GAAP in the Philippines.
Establish and improve accounting standards that will be generally accepted in the Philippines.

Answer 18

Financial Reporting Standard Council (FRSC) of the Philippines

Question 19

A coherent system of interrelated basic concepts and propositions that prescribe objectives, limits, and other fundamentals of financial accounting and serves as a basis for developing and evaluating accounting principles and resolving accounting and reporting controversies (FASB).

Answer 19

Conceptual Framework

Question 20

The principal function is to issue implementation guidelines on PFRSs.

Answer 20

Philippine Interpretation Committee

Question 21

The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof

Answer 21

Accounting Definition by American Institute of Certified Public Accountants (AICPA)

Question 22

The phase of preparing and distributing accounting reports to potential users of the accounting information.
Implicit in this process are the recording, classifying, and summarizing aspects of accounting.

Answer 22

Communicating

Question 23

Pervasive constraint on the information on the information that can be provided by financial reporting.

Answer 23

Cost

Question 24

The Elements of Financial Statements: Financial Position

Answer 24

Asset, Liability and Equity

Question 25

The Elements of Financial Statements: Financial Performance

Answer 25

Expense & Income