PFA 1

Chapter 01 – The Accounting Profession

Ma. Ruby A. Bagsit

QUESTION 1-23 Multiple choice (ACP)

 
1. What is the law regulating the practice of accountancy in 
a. R.A. No. 9298 
b. R.A. No. 9198 
c. R.A. No. 9928 
d. RA. No. 9892 

2. It is the body authorized by law to promulgate rules and regulations affecting the practice
of the accountancy profession in the Philippines. 
a. Board of Accountancy 
b. Philippine Institute of Certified Public Accountants 
c. Securities and Exchange Commission 
d. Financial Reporting Standards Council 

3. The qualifications of the members of the Board of Accountancy include all of the
following, except 

a. Must be a natural-born citizen and a resident of the Philippines. 

b. Must be duly registered CPA with at least ten years of work experience in any scope
of practice of accountancy. 
c. Must be of good moral character and must not have been convicted of crime
involving moral turpitude. 
d. Must have any pecuniary interest, directly or indirectly, in any school conferring
an academic degree necessary for admission to the practice of accountancy. 

4. What are. the three main areas in the practice of the accountancy profession? 
a. Public accounting, private accounting, and managerial accounting 
b. Auditing, taxation and managerial accounting 
c. Financial accounting, managerial accounting and corporate accounting 
d. Public accounting, private accounting, and government accounting 

5. What is the primary service of CPAs in public practice? 

a. Auditing 
b. Taxation 
c. Managerial accounting 
d. Controllership 

6. Accountants employed in entities in various capacity as accounting staff, chief accountant

or controller are said to be engaged in 
a. Public accounting 
 b. Private accounting 
c. Government accounting 
d. Financial accounting 

7. It is the area of the accountancy profession that encompasses the process of analyzing,

classifying, summarizing and communicating all transactions involving the receipt and
disposition of government funds and property and interpreting the results thereof. 
a. Internal auditing 
b. External auditing 
c. Private accounting 
d. Government accounting 

8. The Continuing Professional Development is required for 

a. Renewal of CPA license 
b. Accreditation to practice the accountancy profession. 
c. Both renewal of CPA license and accreditation to practice the accountancy
profession. 
d. Neither renewal of CPA license nor accreditation to practice the accountancy
profession. 

9. Certified Public Accountants are licensed by 

a. The Philippine Institute of Certified Public Accountants 
b. The Securities and Exchange Commission 
c. The Financial Executives Institute of the Philippines 
d. The state government 

10. Which statement is incorrect in relation to the practice of public accounting? 

a. Single practitioners for the practice of public accounting shall be registered CPAs in
the Philippines. 
b. Partners of partnership formed for the practice of public accounting shall be
registered CPAs in the Philippines. 
c. The Securities and Exchange Commission can register any corporation
organized for the practice of public accounting. 
d. The Professional Regulation Commission upon favorable recommendation of the
Board of Accountancy shall issue certificate of accreditation to CPAs in public
practice provided the registrant has acquired a minimum of three years of
meaningful experience in public practice. 
QUESTION 1-24 Multiple choice (ACP) 

1. Which is the accounting standard-setting body in the Philippines at the present time? 

a. Accounting Standard Council 
b. Auditing and Assurance Standards Council 
c. Philippine Accounting Standards Board 
d. Financial Reporting Standards 

2. All of the following are represented in FRSC, except 

a. Board of Accountancy 
b. Securities and Exchange Commi88ion 
c. Commission on Audit 
d. Department of Budget and Management 

3. The Philippine Financial Reporting Standards collectively include 

a. PFRS corresponding to IFRS. 
b. PAS corresponding to IAS 
c. Philippine Interpretations corresponding to IFRIC and SIC Interpretations and
Interpretations developed by PIC. 
d. All of these are included in Philippine Financial Reporting Standards. 

4. GAAP is an abbreviation for 

a. Generally authorized accounting procedures 
b. Generally applied accounting procedures 
c. Generally accepted auditing practices 
d. Generally accepted accounting principles 

5. Accounting standard-setting has been characterized as 

a. A political process 
b. Using a scientific method 
c. Pure deductive reasoning 
d. A legal process 
QUESTION 1-25 Multiple choice (IFRS) 
1. The International Accounting Standards Board was formed 
a. To enforce IFRS in foreign countries 
b. To develop a single set of high quality IFRS 
c. To establish accounting standards for multinational entities 
d. To develop accounting standards for countries that do have their own standard-setting
bodies 

2. The IASB declared that the merits of proposed standards are assessed 

a. From a position of neutrality 
b. From a position of materiality 
c. Based on possible impact on behavior 
d. Based on arguments of lobbyist 

3. What is the chronological order in the evaluation of a typical standard? 

a. Exposure draft, Standard and Discussion paper 
b. Exposure draft, Discussion paper and Standard 
c. Standard, Discussion paper and Exposure draft 
d. Discussion paper, Exposure draft and Standard 

4. The IASB publishes standards called 

a. International Accounting Standards 
b. Financial Reporting Standards 
c. International Financial Reporting Standards 
d. Statement of Financial Accounting Standards 

5. The IASB employs a due process system which 

a. Is an efficient system for collecting dues from members. 
b. Enables interested parties to express their views on issues under consideration. 
c. Identifies the most important accounting issues. 
d. Requires that all CPAs must receive a copy of IFRS. 

6. What is due process in the standard-setting by IASB? 

a. IASB operates in full view of the public. 
b. Public hearings are held on proposed standards. 
c. Interested parties can make their views known. 
d. All of these are part of due process in standard-setting. 

7. What is a possible danger if politics plays too big a role in developing IFRS? 
a. Accounting standards are not truly generally accepted. 
b. Individuals may influence the standards. 
c. User groups become active. 
d. The IASB delegates its authority to elected officials. 

8. Accounting standard-setting 
 a. Can be described as a political process which reflects political actions of various
interested user groups. 
b. Is based solely on research and empirical findings. 
c. Is a legalistic process. 
d. Is democratic in the sense that a majority of accountants must agree, 

9. The International Accounting Standards Board 

a. Was the predecessor to the IASC. 
b. Can overrule the USA GAAP. 
c. Promotes the use of high quality and understandable global accounting
standards. 
d. Has its headquarters in Geneva 

10. IFRIC Interpretations issued by IASB 

a. Are considered authoritative and must be followed. 
b. Cover newly identified financial reporting issues not specifically addressed. 
c. Cover issues with conflicting interpretations. 
d. All of these are true about IFRIC Interpretations. 
QUESTION 1-26 Multiple choice (IAA) 
1. Financial accounting is concerned with Has.
a. General purpose reported on financial position and financial performance. 
b. b Special reports for inventory management. 
c. Special report for income tax computation. 
d. General purpose report on change in share prices. 

2. Financial accounting can be broadly defined as the area of amounting that prepares 
a. General purpose financial statements to be used by parties internal to the entity. 
b. b Financial statements to be used by investors. 
c. General purpose financial statements to be used by parties both internal and
external to the entity. 
d. Financial statements to be used primarily by management. 

3. Financial accounting emphasizes reporting to 

a. Management 
b. Regulatory bodies 
c. Internal auditors 
d. Creditors and investors 

4. Managerial accounting emphasizes 

a. Reporting financial information to external users 
b. Reporting to the Securities and Exchange Commission 
c. Combining accounting with data processing 
d. Developing accounting information for use within an 

5. Which statement is true regarding managerial accounting? 

a. Managerial accounting is generally more precise. 
b. Managerial accounting need not follow GAAP while financial accounting must
follow GAAP. 
c. Managerial accounting has a future focus. 
d. The emphasis on managerial accounting is relevance and the emphasis on financial
accounting is timeline
QUESTION 1-27 Multiple choice (IAA) 
1. Generally accepted accounting principles 
a. Are accounting principles based on law. 
b. Derive their credibility and authority from law. 
c. Derive their authority from regulatory authority. 
d. Derive their credibility and authority from recognition and acceptance by the
accountancy profession. 

2. Which statement best describes generally accepted accounting principles? 

a. The accounting principles have been formulated in the public sector. 
b. The accounting principles have been developed on the basis of such factors as
usage and practical necessity. 
c. The accounting principles are the same as laws . 
d. The accounting principles do not apply to SMEs. 

3. Proper application of generally accepted accounting principles is most dependent upon 

a. Existence of specific guidelines 
b. Oversight of regulatory bodies 
c. External audit function 
d. Professional judgment of the accountant 

4. Once an accounting standard has been established 

a. The standard is continually reviewed to see if modification is necessary. 
b. The standard is not reviewed. 
c. The task of reviewing the standard is given to a national organization of CPAs. 
d. No revisions should be made to the standard. 

5. The primary responsibility for properly applying GAAP lies with 

a. External auditor 
b. Internal auditor 
c. Management 
d. National accounting organization