FAR1C2 Conceptual Framework Flashcards
What is Conceptual Framework for Financial Reporting?
1) It is a —, — and — — promulgated by the — Accounting Standards —.
2) It is a — of the — and — that underlie the — and — of financial statements for — users.
3) It is an — to — an — — —- for accounting.
4) It is — to — standard —, — and — of financial information in the — and — of statements.
5) It is the — — for the — of accounting — and revisions of previously issued accounting —.
6) It is — with — — financial statements, including — financial statements.
1) It is a complete, comprehensive and single document promulgated by the International Accounting Standards Board.
2) It is a summary of the terms and concepts that underlie the preparation and presentation of financial statements for external users.
3) It is an attempt to provide an overall theoretical foundation for accounting.
4) It is intended to guide standard setters, preparers and users of financial information in the preparation and presentation of statements.
5) It is the underlying theory for the development of accounting standards and revisions of previously issued accounting standards.
6) It is concerned with general purpose financial statements, including consolidated financial statements.
The financial statements are prepared at least, what?
The financial statements are prepared at least annually and are directed toward the common needs of a wide range of users.
Does Conceptual Framework include special purpose financial reports?
Special purpose financial reports, for example, prospectuses and computations prepared for taxation purposes are outside the scope of the Conceptual Framework.
What are the six (6) purposes of Conceptual Framework?
1) To — the — in — accounting — and — — standards.
2) To — — of financial statements in — accounting — and in dealing with — not yet — by GAAP.
3) To — the — in the — and — of — Financial Reporting —.
4) To — — of financial statements in — the information — in the financial —.
5) To — — in forming an — as to whether financial statements — with Philippine —.
6) To — — to those interested in the — of the — in the — of —.
1) To assist the FRSC in developing accounting standards and reviewing existing standards.
2) To assist preparers of financial statements in applying accounting standards and in dealing with issues not yet covered by GAAP.
3) To assist the FRSC in the review and adoption of International Financial Reporting Standards.
4) To assist users of financial statements in interpreting the information contained in the financial statements.
5) To assist auditors in forming an opinion as to whether financial statements conform with Philippine GAAP.
6) To provide information to those interested in the work of the FRSC in the formulation of PFRS.
What will happen if there are no standards? / What is the authoritative status of the Conceptual Framework?
In the — of a — or an — that specifically applies to a —, management shall — the — of the — — in — and — an accounting — that result in information that is — and —.
In the absence of a standard or an interpretation that specifically applies to a transaction, management shall consider the applicability of the Conceptual Framework in developing and applying an accounting policy that result in information that is relevant and reliable.
Is Conceptual Framework a Philippine Financial Reporting Standards?
No. It is to be stated that the Conceptual Framework is not a Philippine Financial Reporting Standards.
Does Conceptual Framework define standard for any particular measurement or disclosure issue?
The Conceptual Framework **does not define standard **for any particular measurement of disclosure issue.
Does Conceptual Framework overrides any specific Philippine Financial Reporting Standards?
Nothing in this Conceptual Framework overrides any specific Philippine Financial Reporting Standard.
What will happen in case where there is a conflict between Conceptual Framework and Philippine Financial Reporting Standards?
In case where there is a conflict, the requirements of the Philippine Financial Reporting Standards shall prevail over the Conceptual Framework.
What are the two (2) users of financial information according to Conceptual Framework for Financial Reporting?
Under the Conceptual Framework for Financial Reporting, the users of financial information may be classified into two, namely:
1) Primary users
2) Other users
Explain primary users of financial information.
- They are the — to whom general purpose financial reports are primarily —. They include the existing and potential —, — and other —-. Such users — require reporting entities to — information directly to — and therefore must — on general purpose financial reports for much of the financial information they —.
They are the parties to whom general purpose financial reports are primarily directed. They include the existing and potential investors, lenders and other creditors. Such users cannot require reporting entities to provide information directly to them and therefore must rely on general purpose financial reports for much of the financial information they need.
What are existing and potential investors?
- They are — with the — inherent in and — provided by their —. The investors need information to help them — whether they should —, — or —.
They are concerned with the risk inherent in and return provided by their investments. The investors need information to help them determine whether they should buy, hold or sell.
Why shareholders are interested in financial information?
Because it enables them to assess the ability of the entity to pay dividends.
Why lenders and other creditors are interested in financial information?
They are interested in financial information because it enables them to determine whether their loans, interest thereon and other amounts owing to them will be paid when due.
Explain other users of financial information.
By residual definition, they are users of financial information — than the existing and potential investors, lenders and other creditors. They are so called because they are parties that may find the general purpose financial reports — but the reports are not — to them —. They include the —, —, — and their —, and the —.
By residual definition, they are users of financial information other than the existing and potential investors, lenders and other creditors. They are so called because they are parties that may find the general purpose financial reports useful but the reports are not directed to them primarily. They include the employees, customers, governments and their agencies, and the public.
