QUIZ FOR IAS 1 AND 7

Question 1

Materiality and aggregation states that:

A. Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

B. IAS 1 requires that an entity prepare its financial statements, except for cash flow information, using the accrual basis of accounting.

C. The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change is justified either by a change in circumstances or a requirement of a new.

D. The Conceptual Framework notes that financial statements are normally prepared assuming the entity is a going concern and will continue in operation for the foreseeable future

Answer 1

A. Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

Question 2

The fundamental qualitative characteristics of useful financial information are:

A. Comparability and relevance.

B. Relevance and reliability.

C. Relevance and faithful representation.

D. Comparability, relevance and faithful representation.

Answer 2

C. Relevance and faithful representation.

Question 3

Statement 1: An asset is derecognized when the entity loses control of such asset.
Statement 2: An asset is recognized when it is probable that the future economic benefits associated with the asset will flow to the entity and its cost can be measured reliably.

A. Both Statements are correct.

B. Only Statement I is correct.

C. Both Statements are incorrect

D. Only Statement II is correct.

Answer 3

A. Both Statements are correct.

Question 4

Statement 1: Revenue Recognition - revenue is to be recognized when it is probable that future economic benefits will flow to the company and reliable measurement of the amount of revenue is possible.
Statement 2: Expense Recognition - outflows or “using up” of assets or incurring of liabilities (or a combination of both) during a period as a result of delivering or producing goods and/or rendering services.

A. Only Statement II is correct.

B. Only Statement I is correct.

C. Both Statements are incorrect

D. Both Statements are correct.

Answer 4

D. Both Statements are correct.

Question 5

The Board of Accountancy is composed of a _____ and six members appointed by the President of the Philippines.

A. High professional and ethical standards

B. Professional Regulation Commission

C. Global competitiveness

D. Chairman

Answer 5

D. Chairman

Question 6

Financial information must be classified and presented clearly and concisely to make it understandable.

A. Understandability.

B. Verifiability.

C. Comparability.

D. Timeliness.

Answer 6

A. Understandability

Question 7

Consolidated financial statements provide information about the assets, liabilities, equity, income and expenses of both the parent and its subsidiaries as:

A. A single reporting entity.

B. Separate reporting entities.

C. A partnership.

D. A legal entity

Answer 7

A single reporting entity.

Question 8

The International Financial Reporting Standards Foundation Monitoring Board is:

A. capital market authorities are the regulators of the industries under their jurisdictions.

B. is the independent standard-setting body of the IFRS Foundation.

C. the interpretative body of the IASB, which works with the Board in supporting the application of IFRS Standards.

D. responsible for the governance and oversight of the IASB, including the Constitution and due process for the development of the accounting standards.

Answer 8

A. capital market authorities are the regulators of the industries under their jurisdictions.

Question 9

On December 31, 20X3, a company lawyer determines that it is probable that the company will lose a legal case filed by its supplier. It estimates that the loss would be between P6 million and P10 million, On January 10, 20X4, a settlement was made, and the company paid P9 million. How should this be reported in the company’s financial statements for the year ended December 31, 20X3, which was issued on March 15, 20X4?

A. As a loss of P10 million in the statement of comprehensive income

B. As a component of the notes to the financial statements, only

C. As a provision of P9 million in the statement of financial position

D. As a provision of P8 million in the statement of financial statements

Answer 9

B. As a component of the notes to the financial statements, only

Question 10

The Commerce and Industry Sector:

A. involved in teaching of accounting, auditing, management advisory services, finance, business law, taxation, and other technically related sub- jects.

B. offer services such the audit or verification of financial transaction, the preparation, signing, or certification for clients of reports of audit, balance sheet, and the design, installation, and revision of accounting system.

C. involved in decision making requiring professional knowledge in the science of accounting, or when such employment or position requires that the holder thereof must be a certified public accountant.

D. appointed to a position in an accounting professional group in government or in a government- owned and/or controlled corporation, including those performing proprietary functions, where decision making requires professional knowledge in the science of accounting, or where a civil service eligibility as a certified public accountant is a pre- requisite

Answer 10

C. involved in decision making requiring professional knowledge in the science of accounting, or when such employment or position requires✓ that the holder thereof must be a certified public accountant.

Question 11

Statement 1: Enhancing qualitative characteristics is not required for a financial information to be useful.

Statement 2: For a financial information to be faithfully represented, it must be complete, neutral and free from error. *

A. Only Statement I is correct.

B. Both Statements are correct.

C. Only Statement II is correct.

D. Both Statements are incorrect

Answer 11

C. Only Statement II is correct.

Question 12

Recognition is the process of:

A. Adding together of assets, liabilities, equity, income or expenses that have shared characteristics.

B. Sorting assets, liabilities, equity, income or expenses on the basis of shared characteristics.

C. Determining where an item should be presented in the financial statements.

D. Capturing, for inclusion in the statement of financial position or the statement(s) of financial performance, an item that meets the definition of one of the elements of the financial statements-an asset, a liability, equity, income or expenses.

Answer 12

D. Capturing, for inclusion in the statement of financial position or the statement(s) of financial performance, an item that meets the definition of one of the elements of the financial statements-an asset, a liability, equity, income or expenses.

Question 13

Statement 1: The IFRS Foundation is responsible for developing a single set of high-quality global accounting standards, known as the IFRS Standards.

Statement 2: Independent standard-setting is the first level of the IFRS Foundation’s governance structure.

A. Only Statement II is correct.

B. Only Statement I is correct.

C. Both Statements are incorrect

D. Both Statements are correct.

Answer 13

D. Both Statements are correct.

Question 14

Statement 1: Decreases in liabilities that result in increases in equity is an expense.

Statement 2: Claims are presented as assets in the statement of financial position.

A. Both Statements are correct.

B. Only Statement II is correct.

C. Both Statements are incorrect

D. Only Statement I is correct.

Answer 14

C. Both Statements are incorrect

Question 15

Consistency of presentation states that:

A. IAS 1 requires that an entity prepare its financial statements, except for cash flow information, using the accrual basis of accounting.

B. Information is material if omitting, misstating or obscuring it could reasonably be expected to in- fluence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

C. The Conceptual Framework notes that financial statements are normally prepared assuming the entity is a going concern and will continue in operation for the foreseeable future.

D. The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change is justified either by a change in circumstances or a requirement of a new.

Answer 15

D. The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change is justified either by a change in circumstances or a requirement of a new.

Question 16

Statement 1: One of the purposes of the Conceptual Framework is to assist the IASB in developing the Standards.

Statement 2: The Conceptual Framework is the first standard included in the IFRS.

A. Both Statements are correct

B. Both Statements are incorrect

C. Only Statement I is correct.

D. Only Statement Il is correct.

Answer 16

C. Only Statement I is correct.

Question 17

For information to be relevant, it has to possess:

A. Only predictive value.

B. Only confirmative value.

C. Both predictive and confirmatory value.

D. Either predictive or confirmatory value, or both.

Answer 17

D. Either predictive or confirmatory value, or both.

Question 18

The Board of Accountancy was formed by the _____ to regulate the practice of accounting profession in the Philippines.

A. Professional Regulation Commission

B. Chairman

C. Philippine Institute of Certified Public Accountants

D. Global Institute of Certified Public Accountants s

Answer 18

A. Professional Regulation Commission

Question 19

Statement 1: The Financial Reporting Standards Council is the local counterpart of the IASB in developing and implementing accounting standards in the Philippines.

Statement 2: The IFRS Interpretations Committee supports the IASB in the application of IFRS Standards. It provides interpretations on the requirements that have been raised in question.

A. Only Statement II is correct.

B. Both Statements are incorrect

C. Only Statement I is correct.

D. Both Statements are correct.

Answer 19

D. Both Statements are correct.

Question 20

The Education/Academe Sector:

A. offer services such the audit or verification of financial transaction, the preparation, signing, or certification for clients of reports of audit, balance sheet, and the design, installation, and revision of accounting system.

B. involved in decision making requiring profession- al knowledge in the science of accounting, or when such employment or position requires that the holder thereof must be a certified public accountant.

C. appointed to a position in an accounting professional group in government or in a government- owned and/or controlled corporation, including those performing proprietary functions, where decision making requires professional knowledge in the science of accounting, or where a civil service eligibility as a certified public accountant is a pre- requisite.

D. involved in teaching of accounting, auditing, management advisory services, finance, business law, taxation, and other technically related subjects.

Answer 20

D. involved in teaching of accounting, auditing, management advisory services, finance, business law, taxation, and other technically related subjects.

Question 21

Which measurement bases are categorized as current value measurement bases in the Conceptual Framework?

A. Fulfilment value.

B. Fair value.

C. Current cost.

D. Value in use.

Answer 21

B. Fair value.

Question 22

This means that independent and knowledgeable observers are able to verify the information, in a consensus.

A. Comparability.

B. Understandability.

C. Verifiability.

D. Timeliness.

Answer 22

C. Verifiability.

Question 23

The Conceptual Framework describes prudence as:

A. A bias towards understating assets or income and towards overstating liabilities or expenses.

B. A preference towards the earlier recognition of expenses and liabilities than of income and as- sets.

C. The exercise of caution when making judgements under conditions of uncertainty.

D. A mechanism for smoothing profits over time (understate profits in good years and overstate profits in bad years)

Answer 23

A. A bias towards understating assets or income and towards overstating liabilities or expenses.

Question 24

The Public Practice Sector:

A. involved in decision making requiring profession- al knowledge in the science of accounting, or when such employment or position requires that the holder thereof must be a certified public accountant.

B. offer services such the audit or verification of financial transaction, the preparation, signing, or certification for clients of reports of audit, balance sheet, and the design, installation, and revision of accounting system.

C. appointed to a position in an accounting professional group in government or in a government- owned and/or controlled corporation, including those performing proprietary functions, where decision making requires professional knowledge in the science of accounting, or where a civil service eligibility as a certified public accountant is a pre- requisite.

D. involved in teaching of accounting, auditing, management advisory services, finance, business law, taxation, and other technically related sub- jects.

Answer 24

B. offer services such the audit or verification of financial transaction, the preparation, signing, or certification for clients of reports of audit, balance sheet, and the design, installation, and revision of accounting system.

Question 25

The Conceptual Framework defines a liability as:

A. Accounts payable

B. A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

C. An amount the entity may have to pay after the end of the reporting period.

D. A present obligation of the entity to transfer an economic resource as a result of past events.

Answer 25

D. A present obligation of the entity to transfer an economic resource as a result of past events.