Q1 Compilation PDF

TRUE OR MULTIPLE FALSE CHOICE...

TRUE OR MULTIPLE FALSE CHOICE Statement 1: IFRS 18 prohibits an entity to use titles for the statements other that those used in the standard, such as “balance sheet”. - Both are TRUE - 2 is TRUE Statement 2: IFRS 18 allows an entity to use F The Statement of Financial Position includes tangible assets only. 2 is TRUE - 1 is TRUE other terms to label totals, subtotals and line - Both are FALSE items required by the standard as long as they are labelled in a way that faithfully represents the characteristics of the items, such as using the terms “net income” or “profit or loss”. Statement 1: If an entity provides financing to customers as a main business activity, it has the option to classify income and expenses from liabilities that arise from transactions that involve only the raising of funds in the operating - Both are TRUE An entity shall prepare financial statements on a going concern category. - 2 is TRUE T basis unless management either intends to liquidate the entity or to 2 is TRUE - 1 is TRUE cease trading, or has no realistic alternative but to do so. Statement 2: In the operating category of the - Both are FALSE statement of profit or loss, an entity shall classify and present expenses in line item in a way that provides the most useful structured summary of its expenses, using either the nature of expenses or the function of expenses within the entity. Statement 1: If the substance of an economic phenomenon and its legal form are not the same; providing information only about the substance would not faithfully represent the economic - Both are TRUE phenomenon. General purpose financial reports are designed to show the value - 2 is TRUE F 2 is TRUE of a reporting entity. - 1 is TRUE Statement 2: A neutral depiction is not slanted, - Both are FALSE weighted, emphasized, de-emphasized or otherwise manipulated to increase the probability that financial information will be received favorably or unfavorably by users.  Statement 1: Information about cash flows helps users understand a reporting entity’s operations, evaluate its financing and investing activities, assess its liquidity or solvency and interpret other - Both are TRUE information about financial performance. The Bureau of Internal Revenue is not directly involved in the - 2 is TRUE T Both are TRUE accounting standard-setting “due process” in the Philippines. - 1 is TRUE Statement 2: Information about how efficiently - Both are FALSE and effectively the reporting entity’s management has discharged its responsibilities to use the entity’s economic resources could help investors and creditors to assess management’s stewardship of those resources. Statement 1: Cash equivalents are held for the purpose of meeting short-term cash commitments - Both are TRUE rather than for investment or other purposes. General purpose financial reports are not primarily directed to - 2 is TRUE T 1 is TRUE serve the needs of regulators. - 1 is TRUE Statement 2: For an investment to qualify as a - Both are FALSE cash equivalent, it must be readily convertible to a known amount of cash and be subject to a significant risk of changes in value. - NSF customer check - Service charge Note receivable - Note receivable collected by collected by bank Which of the following items must be added to the bank in favor of Enhancing Qualitative Characteristics are those that make useful in favor of the cash balance per ledger in preparing a bank T the depositor information more useful. depositor and reconciliation which ends with adjusted cash and credited to credited to the balance? the account of account of the the depositor depositor - Erroneous bank debit Statement 1: Information about the nature and amounts of a reporting entity’s economic resources and claims can help users to identify the reporting entity’s financial strengths and - Both are TRUE weaknesses. - 2 is TRUE F Materiality is an Enhancing Qualitative Characteristic. Both are TRUE - 1 is TRUE Statement 2: Changes in a reporting entity’s - Both are FALSE economic resources and claims result from that entity’s financial performance and from other events or transactions such as issuing debt or equity instruments.  Statement 1: An entity shall present in either of the primary financial statements that enables users to evaluate the entity’s objectives, policies and processes for managing capital. - Both are TRUE Current liabilities refer to those obligations that are expected to be Both are - 2 is TRUE Statement 2: When an aggregate disclosure of F satisfied within one year only. FALSE - 1 is TRUE capital requirements and how capital is managed - Both are FALSE would not provide useful information or would distort a financial statement user’s understanding of an entity’s capital resources, the entity shall not disclose further information for each capital requirement. Prudence is the exercise of caution when making judgements Statement 1: Timeliness could mean an older under conditions of uncertainty. The exercise of prudence means financial information is as useful as current that assets and income are not overstated and liabilities and - Both are TRUE financial information. expenses are not understated. Equally, the exercise of prudence - 2 is TRUE T 1 is TRUE does not allow for the understatement of assets or income or the - 1 is TRUE Statement 2: Understandability could mean that overstatement of liabilities or expenses. Such misstatements can - Both are FALSE well-informed and diligent users may need to lead to the overstatement or understatement of income or seek the aid of an adviser to understand expenses in future periods. information about simple economic phenomena. Statement 1: Information may be capable of making a difference in a decision unless some users choose not to take advantage of it or are already aware of it from other sources. - Both are TRUE Financial information has predictive value if it assists a financial - 2 is TRUE Statement 2: Information could be relevant if F statement user confirm or change his or her assessment of a 2 is TRUE - 1 is TRUE omitting, misstating or obscuring it could be business’ cash flow generating capability. - Both are FALSE reasonably be expected to influence decisions that the primary users of general purpose financial reports make on the basis of those reports, which provide financial information about a specific reporting entity. Statement 1: Verifiability, completeness, understandability and timeliness are qualitative characteristics that enhance the usefulness of information that both is relevant and provides faithful representation of what it purports to - Both are TRUE represent. Accountants usually employ prudence in preparing financial Both are - 2 is TRUE T statements. FALSE - 1 is TRUE Statement 2: The fundamental qualitative - Both are FALSE characteristics may help determine which of two ways should be used to depict a phenomenon if both are considered to provide equally relevant information and an equally faithful representation of that phenomenon.  - prevent the trading of speculative securities. - ensure that investors have adequate ensure that information. Faithful representation cannot be achieved if estimates were made investors have F The primary purpose of the SEC is to in the financial statements. adequate - enforce generally information. accepted accounting principles. - issue accounting and auditing regulations for publicly held enterprises. - is democratic in the sense that a majority of accountants must agree with a standard before it becomes enforceable. can be described as a - can be described social process as a social process which reflects which reflects The Conceptual Framework is not a standard but it is the legal political actions political actions of F basis for the formulation of new standards and the revision of old of various various interested Financial accounting standard-setting standards. interested user user groups as well groups as well as a product of as a product of research and logic. research and logic. - is a legalistic process based on rules promulgated by governmental agencies. - is based solely on research and empirical findings.  Statement 1: The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful - Both are TRUE Before an accounting standard becomes such in the Philippines, only to existing and potential investors. - 2 is TRUE T an exposure draft must first be distributed for comment to CPA 2 is TRUE - 1 is TRUE professionals and other interested parties. Statement 2: Making decisions relating to - Both are FALSE providing resources to the entity could only include management’s actions that affect the use of the entity’s economic resources. Statement 1: Consistency is the same as comparability. - Both are TRUE Verifiability means that different knowledgeable and independent Both are - 2 is TRUE T observers could reach consensus that a particular depiction is a Statement 2: Under verifiability, direct verification FALSE - 1 is TRUE faithful representation. means checking inputs to a model, formula or - Both are FALSE other technique and recalculating the outputs using the same methodology. Statement 1: If financial information is to be Financial statements may include: (a) a statement of financial useful, it must be relevant and faithfully represent position as at the end of the period; (b) a statement of profit or loss - Both are TRUE what it purports to represent. and other comprehensive income for the period; (c) a statement of - 2 is TRUE F Both are TRUE changes in equity for the period; (d) a statement of cash flows as at - 1 is TRUE Statement 2: The usefulness of financial the end of the period; and (e) notes, comprising significant - Both are FALSE information is enhanced if it is comparable, accounting policies and other explanatory information. verifiable, timely and understandable. - Temporary investment as collateral for loan - Savings account Minimum balance deposit required to be The number one source of generally accepted accounting - Demand deposit F maintained in What is compensating balance? principles is government imposed regulation. account balance connection with a borrowing - Minimum deposit arrangement required to be maintained in connection with a borrowing arrangement  Statement 1: The role of notes is to provide structured summaries of a reporting entity’s recognized assets, liabilities, expenses and cash flows, that are useful to users of financial - Both are TRUE statements. Financial statements are prepared purely using the accrual basis of - 2 is TRUE F 2 is TRUE accounting. - 1 is TRUE Statement 2: An entity need not provide a specific - Both are FALSE presentation or disclosure required by IFRS Accounting Standards if the information resulting from that presentation or disclosure is not material. Statement 1: An entity shall classify income and expenses included in the statement presenting comprehensive income in one of two categories: will be reclassified to profit or loss when specific conditions are met; and will not be reclassified to - Both are TRUE profit or loss. An entity cannot rectify inappropriate accounting policies either by Both are - 2 is TRUE T disclosure of the accounting policies used or by notes or FALSE - 1 is TRUE Statement 2: An entity shall present, in each of explanatory material. - Both are FALSE the categories of the statement presenting comprehensive income, line items for the share of other comprehensive income of associates and joint ventures accounted for using the equity method and other items of other comprehensive income. Statement 1: IFRS 18 - Both are TRUE International Financial Reporting Standards (IFRSs) are Standards Statement 2: An entity shall present totals and Both are - 2 is TRUE F and Interpretations issued by the International Accounting subtotals in the statement of profit or loss for FALSE - 1 is TRUE Standards Council. operating profit or loss, profit or loss before - Both are FALSE financing and income taxes, and comprehensive income. Statement 1: An entity shall classify in the investing category income and expenses from investments in associates, joint ventures and consolidated subsidiaries. - Both are TRUE - 2 is TRUE 2 is TRUE Statement 2: An entity shall classify in the - 1 is TRUE financing category the amounts included in the - Both are FALSE statement of profit or loss for income and expenses that arise from initial and subsequent measurement of liabilities, including derecognition of the liabilities.  Statement 1: An entity shall presume that a subtotal of income and expenses that it uses in public communications outside its financial statements communicates to users of the financial - Both are TRUE statements management’s view of an aspect of - 2 is TRUE 2 is TRUE the financial performance of the entity as a whole, - 1 is TRUE absolutely. - Both are FALSE Statement 2: An entity shall disclose information about all measures that meet the definition of management-defined performance measures. Statement 1: An entity shall disclose components of cash and cash equivalents and shall present a reconciliation of the amounts in its statement of financial position with the equivalent items - Both are TRUE reported in the notes to financial statements. - 2 is TRUE 2 is TRUE - 1 is TRUE Statement 2: An entity shall disclose, together - Both are FALSE with a commentary by management, the amount of significant cash and cash equivalent balances held by the entity that are not available for use by the group. Statement 1: In some countries, bank overdrafts which are repayable on demand form an integral - Both are TRUE part of an entity’s cash management. - 2 is TRUE Both are TRUE - 1 is TRUE Statement 2: In some circumstances, bank - Both are FALSE overdrafts are included as a component of cash and cash equivalents.  - It assists BoA in carrying out its power and function to promulgate accounting standards in the Philippines. - It is the successor It receives of ASC and the financial creator of PIC. Which of the following is not a description or a support function of the Financial and Sustainability principally from - Its main function Reporting Standards Council (FSRSC)? the PRC. is to establish generally accepted accounting principles in the Philippines. - It receives financial support principally from the PRC. - Statements, recommendations, studies, or standards issued by standard-setting Pronouncemen bodies such as the ts by IASB and the Which of the following is not a source of generally Association of FASB accepted accounting principles in the Philippines? CPAs in Public - Available Practice literature on the topic or subject under study. - Existing practices in the Philippines.  Statement 1: Accrual depicts the effects of transactions and other events and circumstances on a reporting entity’s economic resources and claims in the periods in which those effects occur, unless the resulting cash receipts and payments - Both are TRUE occur in a different period. Both are - 2 is TRUE FALSE - 1 is TRUE Statement 2: Information about a reporting entity’s - Both are FALSE financial performance during a period, reflected by changes in its economic resources and claims other than by obtaining additional resources directly from investors and creditors, is useful in assessing the entity’s past and future ability to generate net cash outflows. Statement 1: An entity shall present current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position except when a presentation based on liquidity provides a more - Both are TRUE useful structured summary. - 2 is TRUE 1 is TRUE - 1 is TRUE Statement 2: If amounts disclosed in the notes - Both are FALSE are included in one or more line items in the primary financial statements, an entity shall disclose in the note the line item in which the amounts are included in the statement of financial position. Statement 1: An entity shall classify in the investing category the incremental expenses directly attributable to the issue and - Both are TRUE Both extinguishment of liabilities. - 2 is TRUE statements are - 1 is TRUE FALSE Statement 2: An entity shall classify in the - Both are FALSE financing category the incremental expenses directly attributable to the acquisition and disposal of assets.  - The IASB is the standard-setting body, made up of experts from diverse professional backgrounds and geographical regions. - The Trustees are responsible for the governance and The SEC of oversight of the countries using Board, promoting IFRS are IFRS Standards The IFRS Foundation is an independent, privately tasked for the and securing the organized, not-for-profit organization, operating to implementation organization’s serve the public interest. Which of the following is and imposition funding. incorrect concerning its structure? of penalties for - The organization non-complianc is overseen by a e. Monitoring Board, consisting of public authorities, such as financial market regulators. - The SEC of countries using IFRS are tasked for the implementation and imposition of penalties for non-compliance.