CFAS [QUIZ 1]

• Which of the following is true about IASB and IASC

  1. The IASB was formed to replace the IASC.
  2. The IASC was formed to replace the IASB.
  3. The accounting standards issued by the IASB were adopted by the IASC.
  4. The accounting standards issued by the IASC were adopted by the IASB.

  1 and 4
• The International Financial Reporting Standards Interpretations Committee (IFRSIC) is the committee that develops authoritative interpretations of existing IAS and IFRS and provides guidance on financial reporting issues not specifically addressed by IAS and IFRS.
• The Philippine accounting-standard body was established by the Professional Regulatory Commission (PRC).
• The following is correct about FRSC.

  1. The FRSC replaces the Accounting Standards Council.
  2. The FRSC's main function is to establish generally accepted accounting principles (GAAP) in the Philippines.
  3. The FRSC was established to assist the Board of Accountancy (BOA) in carrying out its power and function in promulgating accounting standards in the Philippines.
• The Philippine Interpretations Committee (PIC) was established by the Financial Reporting Standards Council (FRSC).
• The following are correct about the PIC.

  1. The PIC was established to develop authoritative interpretations of existing PAS and PFRS and provide guidance on financial reporting issues not specifically addressed in PAS and PFRS.
  2. A PIC Interpretation becomes part of PFRS once they are approved by the FRSC.
  3. IFRIC and SIC are the international counterpart of the PIC.
• The PFRSs include the following:

  1. Philippine Accounting Standards
  2. Philippine Financial Reporting Standards
  3. Philippine Interpretations Committee
• The law regulating the practice of accountancy in the Philippines is the R.A. 9298 known as the Philippine Accountancy Act of 2004.
• The body authorized by law to promulgate rules and regulations affecting the practice of accountancy in the Philippines is the Board of Accountancy.
• The accredited professional organization of CPAs in the Philippines is the Philippine Institute of Certified Public Accountants.
• The primary service offered by CPAs in public practice is auditing services.
• David, a CPA, is employed in Ford as the company's chief accountant. In this case, David is practicing his profession under the scope of commerce and industry.
• Academe is the field of practice involved in teaching of accounting, auditing, management advisory services, finance, business law, taxation and other technically related services.
• Government is the area of accountancy that is heavily focused in the process of analyzing, classifying, summarizing, and communicating transactions involving the receipt and disposition of government funds and properly and interpreting the results.
• Certified Public Accountants are licensed by the state government.
• Financial accounting emphasizes reporting to creditors and investors.
• Managerial accounting emphasizes developing accounting information for use within an entity.
• The primary responsibility for properly applying GAAP lies with the management.
• Proper application of generally accepted accounting principles is most dependent upon professional judgment of the accountant.
• The Conceptual Framework is not an IFRS.
• The Conceptual Framework describes the concepts for general purpose financial reporting.
• Nothing in the Conceptual Framework overrides any specific IFRS.
• In case of conflict, the requirements of the IFRS prevail over the Conceptual Framework.
• A Conceptual Framework should define the basic terms and concepts of accounting.
• The underlying theme of the Conceptual Framework is decision usefulness.
• The objective of financial reporting is to provide information that is useful to assess the amount, timing, and uncertainty of prospective cash receipts.
• The objective of financial reporting provides the "why" of accounting.
• The primary users of financial information include investors, lenders, and creditors.
• The fundamental qualitative characteristics are the characteristics that relate to the content or substance of financial information.
• Faithful representation is the quality of information that means the numbers and descriptions match what really existed or happened.
• Neutrality is the qualitative characteristic of financial information which requires that information should not favor one party to the detriment of another party.
• Verifiability, Comparability, Understandability, and Timeliness are the enhancing qualitative characteristics of useful information.
• The conceptual framework mentions one constraint on useful financial reporting which is the cost.
• Financial statements are prepared at least annually.
• Financial statements are prepared under the assumption that the reporting entity will continue in operation for the foreseeable future which is known as the going concern.
• Reporting entity is an entity that is required, or chooses, to prepare financial statements.
• The financial statements are referred to as Unconsolidated Financial Statements if the reporting entity comprises of the parent company only.
• The elements of financial position describes amounts of resources and claims against resources at a point in time.
• Asset refers to present economic resources controlled by the entity as a result of past events.
• For a liability to exist, the entity must have an obligation.