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CFAS > BACKGROUND OF CONCEPTUAL FRAMEWORK - Including IAS 1&7 (EXTRA REVIEW) > Flashcards

BACKGROUND OF CONCEPTUAL FRAMEWORK - Including IAS 1&7 (EXTRA REVIEW) Flashcards

1
Q

Stipulates that the Professional Regulatory Board of Accountancy (PRBOA), which operates under the Professional Regulations Commission (PRC) is responsible for the regulations of the professional accountant in the Philippines.

A

RA 9298: The Philippine Accountancy Act of 2004

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2
Q

What are the Areas of Accountancy?

A
  1. Academe
    a. 2 or 3 sem = 1 year of service
  2. Public
    a. Managerial and above 1 yr: 1
    b. Below Managerial= 3 yrs: 1
  3. Commerce and Industry
  4. Government
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3
Q

Oversees a particular profession

A

Philippine Regulations Commission

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4
Q

How many members Professional Regulatory Board of Accountancy (PRBOA) consist?

A

7 members including the chairman

-1 vice chairman: 1 yr: 1 term
5 members: 3 yrs: 1 term

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5
Q

Chairman is appointed or revoked by the President of the Philippines

T OR F

A

T

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6
Q

Standards council tasked for the adoption of IFRS and IAS in the Philippines
➤ 16 members

A

PRBOA → Financial Reporting Standards Council (FRSC)

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7
Q

Philippine Standards Accounting (PSA)
➤ Philippine Framework for Assurance Engagement (PFAE)
➤ 17 members

A

Auditing and Assurance Standards Council (AASC)

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8
Q

Has the authority to establish and interpret generally accepted accounting principles (GAAP).

A

Financial Accounting Standards Board (FASB)

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9
Q

What are the international standards?

A

IFRS Foundation > International Accounting Standards Board (IASB) - 22 members
IFRS Interpretations Committee
Advisory Council

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10
Q

All standards are based on the conceptual frameworks.

T or F

A

T

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11
Q

What are the types of users?

A

External Users
Internal Users
Direct Users
Indirect Users

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12
Q

Type of user where they are not directly involve on managing the entity

A

External Users

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13
Q

Type of user who uses the information for internal decision making

A

Internal Users

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14
Q

Type of user who protect their own investment or interest

A

Direct Users

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15
Q

Type of user who provides assistances or advice to the direct users

A

Indirect Users

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16
Q

What are the branches of accounting?

A
  1. Financial Accounting: focuses on external users
  2. Management Accounting: Focuses on Internal Users
  3. Cost Accounting: measurement and recognition of cost of services provided and products manufactured.
  4. Tax Accounting
  5. Government Accounting
  6. Bookkeeping: refers to the recording stage
  7. Auditing independent examination of financial Information
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17
Q

Describes the objective of and the concept for general purpose financial reporting.

A

Purpose of the Conceptual Framework

a. Assist the IASB to develop IFRS that are based on consistent concepts.

b. Assist preparers to develop consistent accounting policies when no standards applies to a particular transaction.

c. Assist all parties to understand and interpret the standard.

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18
Q

Objective of General Purpose Financial Reporting

A

a. Provide financial information about the entity that is useful to existing and potential investor, lenders and other in making a decision about providing funds/resources to the entity.

b. Used by: Employees, government and public

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19
Q

Ability or availability of cash in the near future

A

Liquidity

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20
Q

Availability of cash over long term to pay liabilities as they fall due

A

Solvency

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21
Q

General cash flows from existing resource base

A

Profitability

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22
Q

Ability to adjust to unexpected downturns

A

Financial Flexibility

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23
Q

Information about entity’s resource and claims

A

Financial Position

24
Q

Changes in entity’s resource and claims

A

Comprehensive income-

25
Q

Known as a present economic resource

26
Q

Known as a present obligation

27
Q

Known as residual interest

28
Q

Increases asset, decreases liability

29
Q

Principal operation activities of the business

30
Q

Subtracted from the carrying value of the asset.

31
Q

Decreases the asset, increases liability

32
Q

There is profit only if the physical productive capacity of the entity at the end of the period exceeds the physical productive capacity at the beginning of the same period.

A

Capital Maintenance Approach

33
Q

What are the two qualitative characteristics?

A

Fundamental and Enhancing

34
Q

Fundamental qualitative characteristics

A

Relevance and Faithful Representation

35
Q

Characteristics of relevance

A

a. Predictive Value (forecast/predictive)
b. Confirmatory (feedback)
c.. MATERIALITY

36
Q

Characteristics of Faithful Representation

A

a. Neutral
b. Complete- free from bias
2.1 window dressing- overstating the income and understating expense
c. free from error

37
Q

Enhancing qualitative characteristics

A
  1. Verifiability- same method and principles
  2. Comparability- key: consistency
    a. Inter-comparability (1) horizontal-2 periods (2) vertical- same period
    b. Intra-comparability-industry analysis (same industry- same size)
  3. Understandability- responsibility and purpose
    a. Notes to financial statements (disclosures)
  4. Timeliness- Reliability (timely and valid)
38
Q

What are the two recognition?

A

a. Initial Recognition
b. Subsequent Recognition

39
Q

What are the two measurements?

A

a. Historical Cost- including historical cost
b. Current Cost- Fair value, value in use, fulfillment value

40
Q

Omission or commission of information will affect the financial statement

A

Materiality

41
Q

General Rule not allowed
a. Should not affect the asset and liability
b. Should not offset income/expense

A

Offsetting

42
Q

Exceptions in offsetting

A

EXCEPTIONS
1. Required by the standard
➤ PAS 19: Employee Benefits
Long term benefits
Defined benefit obligation
Plan Asset
2.Immaterial/Insignificant -Judgment/disclosure
3. The same transactions
Equity investment at fair value through profit and loss

43
Q

Items of income profit/loss and directly reported in equity.

A

Other comprehensive income

44
Q

Sum of amount in profit or loss and other comprehensive income

A

Comprehensive Income

45
Q

PFRS includes?

A

PFRS (IASB)
PAS
Interpretations (IFRIC;SIC)

46
Q

To classify, one item to another item

A

Reclassification of Entries

47
Q

Update the balances

A

Adjusting entries (no errors)

48
Q

To correct classification, measurement and values of the accounts

A

Correcting Entries(w/errors)

49
Q

Components of financial position

A

a. Asset
b. Liability
c. Equity *as of specific date

50
Q

Components of Statement of financial comprehensive income/statement of profit and loss (income statement)

A

a. Income
b. Expense
c. OCI items (net of tax) *for a period of time

51
Q

Components of Statement of Cash flows

A

a. Operating
b. Investing
c. Financing *for a period of time

52
Q

COMPONENTS OF FINANCIAL STATEMENTS (PAS1)

A
  1. Financial position
  2. Statement of financial comprehensive income/statement of profit and loss (income statement)
  3. Statement of Cash flows
  4. Statement of changes in Owner’s equity
  5. Notes to financial statement accompanying information of all FS components
53
Q

Criteria For Current Liabilities

A
  1. Held for trading
  2. Expected to be settled within normal operating cycle
  3. Expected to be settled within 12 months after reporting period
  4. Entity does not have an unconditional right to defer, the settlement of obligation for atleast 12 months of the reporting period.
    a. Payable on Demand
    b. Breach of contract (breached contracts needs refinancing)
54
Q

What is refinancing agreement?

A

on or before the end of the reporting period for at least 12 months after the reporting period.

CFAS (5 decks)

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