Questions and Answers
What is a primary reason active owners and managers utilize financial information?
Which of these best describes financial advisers and consultants in relation to financial statements?
What can external users of financial information typically include?
What is one of the uses of financial information for employee unions?
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Which of the following is NOT a benefit derived from the evaluation of financial status by active owners?
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What is the primary function of financial statements for inactive owners?
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Which group is considered a direct user of financial reports?
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Which statement best describes the role of creditors and lenders regarding financial information?
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What is a key interest of the general public concerning financial reports?
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Who among the following is NOT a direct user of financial reports?
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What is a primary concern of taxing authorities regarding financial information?
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Why do inactive owners monitor financial reports if they are not involved in day-to-day operations?
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Which type of users rely on financial reports to provide advice for protecting the interests of direct users?
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What is one characteristic of the information provided by management accounting?
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Which fund is NOT typically used in day-to-day operations of the government?
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What distinguishes bookkeeping from accounting?
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Which of the following is true about management accounting?
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What does NGAS stand for?
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What is the primary focus of the special-education fund?
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What does an audit involve?
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How is the format of management accounting reports best described?
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What follows after the pre-ballot IFRS is sent for review?
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How is the approved pronouncement made available after posting it on the IASB's limited access website?
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Which of the following best describes the role of the IFRIC?
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What characteristic of the financial reporting in the Philippines existed before 1981?
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What components are included in IFRS according to the provided content?
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What is the significance of the IAS Committee in the development of accounting standards?
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What type of financial reporting standards did the IASB evolve from?
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What is the usual initial duration for which the approved pronouncement is limited access on the IASB's website?
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What is the main function of the Accounting Standards Council (ASC) in the Philippines?
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Which of the following statements is true regarding Certified Public Accountants (PICPA)?
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Which document is developed by the Accounting Standards Council (ASC)?
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What does the IASB aim to achieve through its standard-setting process?
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What is the role of the Standing Interpretations Committee (SIC)?
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Which body influences the IASB's standard-setting process?
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What is the IASB's due process in developing financial reporting standards characterized by?
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What was the ASC's decision regarding accounting standards in 1997?
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Study Notes
Employee Involvement
- Active owners and managers utilize financial information for performance evaluation, planning, and decision-making.
- Financial data helps assess an entity's ability to provide remuneration and benefits to employees.
External Users of Financial Information
- External users include inactive owners, creditors, suppliers, potential investors, regulatory agencies, employee unions, financial advisers, and the general public.
- These users do not have direct access to financial reports and rely on regulations to obtain necessary business information.
Direct Users
- Inactive owners lack management participation but monitor financial statements to track overall company performance.
- Creditors, lenders, and suppliers assess company financials through statements to ensure the viability of financial relationships.
- Taxing authorities use financial information primarily to ensure tax compliance.
- Customers are interested in sustainability and long-term operations of an enterprise.
Indirect Users
- Indirect users leverage accounting data to provide advice that safeguards the interests of direct users.
- Internal users can access both financial and management accounting reports, which follow distinct rules under NGAS (New Government Accounting System).
Management Reporting
- Management accounting includes non-standard financial reports tailored to specific managerial needs, differing from formal financial accounting structures.
- Reports may involve unique presentation formats emphasizing clarity for management.
Auditing
- Auditing involves independent examinations conducted by certified public accountants to ensure the accuracy and integrity of financial statements.
International Accounting Standards (IAS)
- IAS originated from the IAS Committee and have been improved by the IASB (International Accounting Standards Board).
- International Financial Reporting Standards (IFRS) evolve from IAS and include specific standards, interpretations from IFRIC, and modifications from the Standing Interpretations Committee (SIC).
Standard Setting Process in the Philippines
- Prior to 1981, the Philippines lacked a formal accounting standards development process.
- In 1981, the Philippine Institute of Certified Public Accountants (PICPA) established the Accounting Standards Council (ASC) to formalize accounting practices.
- ASC's main role was to create and enhance Generally Accepted Accounting Principles (GAAP) in the country.
- Standards developed by ASC are referred to as Statements of Financial Accounting Standards (SFAS).
IASB Standard Setting Process
- The IASB follows a systematic due process for developing financial reporting standards involving global stakeholders.
- This process includes drafting, public exposure, and final approval stages to enhance transparency and accountability in financial reporting.
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Description
This quiz explores the various users of financial information, including active and inactive owners, external stakeholders, and creditors. It discusses how each group utilizes financial data for evaluation, planning, and decision-making, and emphasizes the importance of access to financial reports. Enhance your understanding of financial information's role in business management and stakeholder relations.