Accounting Standards and Financial Reporting

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What is the primary objective of International Financial Reporting Standards?

To develop a single set of high-quality, understandable, and enforceable accounting standardss

To achieve comparability of financial information among different entities (correct)

To promote and facilitate the adoption of the standards

To strengthen accountability by reducing the information gap between capital providers and users

What type of standards are developed by the International Sustainability Standards Board (ISSB)?

IFRS Accounting Standards

International Accounting Standards

IFRS Sustainability Disclosure Standards (correct)

US GAAP Standards

What is the main difference between IFRS and US GAAP?

US GAAP is used globally, while IFRS is used only in the US

US GAAP is principle-based, while IFRS is procedure-based

IFRS is used globally, while US GAAP is used only in the US

IFRS is principle-based, while US GAAP is procedure-based (correct)

What is the mission of the IFRS Foundation?

To develop and promote IFRS Standards Signup and view all the answers

What is the purpose of the Norwalk Agreement?

To eliminate differences between IFRS and US GAAP Signup and view all the answers

What is the main goal of IFRS Standards in financial markets?

To bring transparency by enhancing the international comparability and quality of financial information Signup and view all the answers

What is the primary purpose of GAAP in financial reporting?

To provide a common understanding between preparers and users of financial statements Signup and view all the answers

What type of companies are legally required to publish their financial reports in accordance with GAAP?

Publicly accountable companies and financial institutions Signup and view all the answers

What is the outcome of the process of establishing GAAP?

A social process Signup and view all the answers

What is the main benefit of GAAP in financial reporting?

It provides a standardized way of describing a company's financial performance Signup and view all the answers

What is the role of GAAP in the preparation and presentation of financial statements?

It represents the ground rules in financial reporting Signup and view all the answers

What is the term used to describe an obligation that arises from an entity's customary practices, published policies, or specific statements?

Constructive obligation Signup and view all the answers

What is required for an obligation to satisfy the criterion of having the potential to require the entity to transfer an economic resource?

It is only necessary that the obligation already exists and that, in at least one circumstance, it would require the entity to transfer an economic resource Signup and view all the answers

What is the condition for a present obligation to exist as a result of past events?

The entity has already obtained economic benefits or taken an action, and as a consequence, the entity will or may have to transfer an economic resource Signup and view all the answers

What is the unit of account in the context of recognition criteria and measurement concepts?

The right or the group of rights, the obligation or the group of obligations, or the group of rights and obligations Signup and view all the answers

What type of event is required for an obligation to exist?

A specified uncertain future event Signup and view all the answers

What is the result of an entity's customary practices, published policies, or specific statements?

A constructive obligation that already exists Signup and view all the answers

What is the primary purpose of standard-setting bodies in accounting?

To produce technical standards for financial reporting Signup and view all the answers

Which organization does not set accounting standards?

IOSCO Signup and view all the answers

What is the hierarchy of IFRS that companies must follow?

IFRS, IFRS Interpretations, Pronouncements of other standard-setting bodies Signup and view all the answers

What is the purpose of the International Financial Reporting Standards (IFRS) Foundation?

To support the use of IFRS Signup and view all the answers

Why do companies need to follow a single set of accounting standards?

To facilitate expansion to other countries Signup and view all the answers

What is the role of the Financial Reporting Standards Council (FRSC) in the Philippines?

To produce technical standards for financial reporting Signup and view all the answers

What is the key factor that determines fair value?

Present value of cash flows or other economic benefits Signup and view all the answers

What is not included in fair value?

Transaction costs incurred when acquiring the asset Signup and view all the answers

What is value in use?

The present value of cash flows or other economic benefits from an asset's use and disposal Signup and view all the answers

What is included in value in use and fulfillment value?

The present value of transaction costs an entity expects to incur on the ultimate disposal of the asset Signup and view all the answers

What is fulfillment value?

The present value of cash or other economic resources that an entity expects to be obliged to transfer as it fulfills a liability Signup and view all the answers

Why do value in use and fulfillment value not include transaction costs incurred on acquiring an asset or taking on a liability?

Because they are based on future cash flows Signup and view all the answers