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CFAS > OVERVIEW OF ACCOUNTING > Flashcards

OVERVIEW OF ACCOUNTING Flashcards

1
Q

Conceptual Framework prescribes the concepts for

A

General Purpose Financial Reporting

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2
Q

The Conceptual Framework also assists the _____ _____

A

International Accounting Standards Board
Standards

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3
Q

Standards are refed to as

A

International Financial Reporting Standards or the Philippine Financial Reporting Strandards

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3
Q

The Conceptual Framework develops consistent accounting policies when:

No _____ exists
When the situation allows _____

A

Standard or choice of accounting policy

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4
Q

The Conceptual Framework provides the foundation where Standards are developed with

A

Promoting TRANSPARENCY
Strengthen ACCOUNTABILITY
Contribute ECONOMIC EFFICIENCY

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4
Q

The Conceptual Framework is not a Standard

A

True

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5
Q

Standard < Conceptual Framework

A

False, Standards prevail first

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5
Q

The Objective of Financial Reporting

A

Provide financial information that is useful in making decisions

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6
Q

What is the hierarchy of reporting standards

A
  1. PFRS
  2. Judgement
    - Management Shall Consider
    a. Requirements of other PFRS with similar Transactions
    b. PFRS
  • Management May Consider
    a. Other standard-setting bodies
    b. Other accounting literature and practices
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6
Q

The objective of Financial Reporting is not the foundation of the Conceptual Framework

A

False, the objective of Financial Reporting is the foundation of Conceptual Framework

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7
Q

Investors, Lenders, and Creditors are considered

A

Primary users

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7
Q

Primary users can demand information directly from reporting entities

A

False, they must rely on general purpose financial repots

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8
Q

General Purpose Financial Statements show the value of a reporting entity

A

False, they provide an ESTIMATE of the value of a reporting entity

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8
Q

What are the reasons why users demand for information

A
  1. Investment (buy, sell, hold)
  2. Loans (provide, settle)
  3. Voting

on EXPECTED RETURNS

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8
Q

Financial Reporting aims to provide information that meets the needs of the _____ number of primary users

A

Maximum

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9
Q

Expected Return depends on

A
  1. Future net cash inflows - resources (assets) , claims against entity (liability), changes in those resources and claims
  2. Management Stewardship
9
Q

This refers to the economic resources and claims against an entity

A

Financial Positing

10
Q

This refers to the financial performance that leads to changes in financial position

A

Changes in Economic Resources and Claims

11
Q

Financial Position and Financial Performance are referred to as

A

Economic Phenomena

12
Q

Financial Position can help users asses the entity’s

A

a. Liquidity and Solvency
b. Additional Financing and How Possible
c. Management Stewardship

13
Q

This refers to an entity’s ability to pay short-term obligations

A

Liquidity

13
Q

This refers to an entity’s ability to pay long-term obligations

A

Solvency

13
Q

This refers to the use of too much debt

A

Overleverage

13
Q

This helps users asses an entity’s ability to produce return from its economic resources

A

Financial Performance

14
Q

After assessing an entity’s financial position, they can asses the ability to generate

A

Cash Flows

  • Maturity of receivables and timing
  • Potential for resources to produce
  • Distribution
15
Q

Information of the variability of the returns assesses

A

Uncertainty of Future Cash Flows

15
Q

Information based on accrual accounting assesses

A

Better basis than cash basis

16
Q

Information on past cash flows assesses

A

Ability to generate cash flows

17
Q

This refers to characteristics that make information useful to users

A

Fundamental Qualitative Characteristics

18
Q

This refers to characteristics that enhance the usefulness to users

A

Enhancing Qualitative Characteristics

CFAS (5 decks)

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