GONZALES, Kayla Shane D.

February 4, 2020
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CFAS - EXERCISE 2
ANSWERS:
1. A 16. D 31. D
2. D 17. D 32. C
3. A 18. D 33. A
4. A 19. A 34. A
5. B 20. D 35. A
6. D 21. A 36. C
7. B 22. B 37. D
8. A 23. D 38. D
9. D 24. A 39. B
10. D 25. A 40. D
11. A 26. B 41. B
12. A 27. C 42. D
13. D 28. A 43. A
14. C 29. C 44. B
15. D 30. B

1. Accounting is a service activity and the function is to provide quantitative

information, primarily financial in nature, about economic entities that is
intended to be useful in making economic decision. This definition is given by
A. Accounting Standards Council
B. AICPA Committee on Accounting Terminology
C. American Accounting Association
D. Board of Accountancy

2. All of the following describe accounting except:

A. A service activity
B. An information system
C. A universal language of business
D. An exact science rather an art

3. The important points made in the definition of accounting include all of the
following except:
A. Accounting information is quantitative
B. Accounting information is both quantitative and qualitative
C. Accounting information is financial in nature
D. Accounting information is useful in decision making.

4. This accounting process is the recognition or non-recognition of business

activities as accountable events
A. Identifying
B. Measuring
C. Communicating
D. Reporting
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5. What are the events that affect the entity and in which other entities
participate?
A. Internal events
B. External events
C. Current events
D. Obligating events

6. Which is incorrect in relation to an accountable event?

A. An event is accountable when it has an effect on asset, liability or equity.
B. The subject matter of accounting is the measurement of economic
resources and obligations.
C. Only economic activities are emphasized and recognized in accounting.
D. Sociological and psychological matters are quantifiable.

7. What is the measuring component in the definition of accounting?

A. The recognition or non-recognition of business activities is accountable
events.
B. The assigning of peso amounts to the accountable events.
C. The preparation and distribution of accounting reports to users of
accounting information.
D. The preparation of audit report by CPAs.

8. The most common financial attribute used in measuring financial

information is
A. Historical cost
B. Current cost
C. Fair value
D. Value in use

9. The communicating process of accounting includes all of the following,

except:
A. Recording
B. Classifying
C. Summarizing
D. Interpreting

10. What is the overall objective of accounting?

A. To provide information that the managers of an economic entity need to
control the operations.
B. To provide information that the creditors can use in deciding whether to
grant loans to an entity.
C. To measure the periodic income of the economic entity.
D. To provide quantitative financial information about an entity that is
useful in making economic decision.

11. What is the law regulating the practice of Accountancy in the Philippines?
GONZALES, Kayla Shane D. February 4, 2020
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A. RA 9298
B. RA 9198
C. RA 9928
D. RA 9892

12. What is the body authorized bylaw to promulgate rules and regulations
affecting the practice of the Accountancy profession in the Philippines?
A. Board of Accountancy
B. PICPA
C. SEC
D. FRSC

13. 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.

14. Which statement is incorrect in relation to the practice of public

accountancy?
A. Single practitioners for the practice of public accountancy shall be
registered CPAs in the Philippines.
B. Partners of partnerships formed for the practice of public accountancy
shall be registered CPAs in the Philippines.
C. The SEC can register any corporation organized for the practice of
public accountancy.
D. All of these statements are incorrect.

15. CPAs are licensed by

A. The PICPA
B. The SEC
C. The city government
D. State government

16. What is the standard-setting body in the Philippines at the present time?
A. Accounting Standards Council
B. Auditing and Assurance Standard Council
C. Philippine Accounting Standards Board
D. Financial Reporting Standards Council

17. All of the following are represented in the FRSC, except:

A. Board of Accountancy
B. SEC
C. COA
D. DBM
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18. The PFRS 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 the PFRS

19. Accounting standard-setting has been characterized as

A. A political process
B. Using the scientific method
C. Pure deductive reasoning
D. A legal process

20. 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

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

A. Auditing
B. Taxation
C. Managerial Accounting
D. Controllership

22. 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

23. 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

24. How many CPD credit units are required for accreditation to practice the
accountancy profession?
A. 120
B. 100
C. 60
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D. 15

25. A CPA shall be permanently exempted from renewal of CPA license

A. At the age of 65 years
B. When working abroad
C. When practicing the profession abroad
D. When studying abroad

26. 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 not have their own
standard-setting bodies.

27. The International Accounting Standards Board

A. Was the predecessor to the IASC
B. Can overrule the USA GAAP when their policies disagree
C. Promotes the use of high-quality and understandable global
accounting standards
D. Has its headquarters in Geneva

28. 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

29. The standard-setting process includes in the correct order

A. Exposure draft, research, discussion paper and accounting standard
B. Research, exposure draft, discussion paper and accounting standard
C. Research, discussion paper, exposure draft and accounting standard
D. Discussion paper, research, exposure draft and accounting standard

30. 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 accounting issues that are the most important.
D. Requires that all CPAs must receive a copy of IFRS.

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

A. IASB operates in full view of the public
B. Public hearings are held on the proposed standards.
C. Interested parties can make views known.
D. All of these are part of due process in standard-setting
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32. The standards published by IASB are called

A. International Accounting Standards
B. Financial Reporting Standards
C. International Financial Reporting Standards
D. Statement of Financial Accounting Standards

33. What is a possible danger if politics play too big a role in developing IFRS?
A. Financial reporting 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

34. Accounting standard-setting

A. Can be described as a political process which reflects political
actions of various interested user groups as well as a product of
research and logic
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 with
a standard before it becomes enforceable

35. Financial accounting is concerned with

A. General purpose reports on financial position and financial
performance
B. Special reports for inventory management
C. Special reports for income tax computation
D. General purpose reports on changes in share prices

36. Financial accounting can be broadly defined as the area of accounting that
prepares
A. General purpose financial statements to be used by parties internal to the
entity
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

37. Financial accounting emphasizes reporting to

A. Management
B. Regulatory bodies
C. Internal auditors
D. Creditors and investors

38. Managerial accounting emphasizes

A. Reporting financial information to external users
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B. Reporting to the SEC
C. Expertise in data processing
D. Developing accounting information for use within an entity

39. Which statement is true regarding managerial and financial accounting?

A. Managerial accounting is generally more precise
B. Managerial accounting need not follow generally accepted
accounting principles 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 timeliness.

40. Generally Accepted Accounting Principles

A. Are accounting adaptations based on law
B. Derive their credibility and authority from legal rulings and court
precedents
C. Derive their credibility and authority from a government regulatory
authority
D. Derive their credibility and authority from general recognition and
acceptance by the accountancy profession

41. Which statements best describe GAAP?

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 small and medium-sized
entities

42. Proper application of 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

43. 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 unless a regulatory authority makes a
complaint
C. The task of reviewing the standard is given to the national accounting
organization
D. The principle of consistency requires that no revisions ever made to the
standard.

44. The primary responsibility for properly applying GAAP lies with
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A. External auditor
B. Internal auditor
C. Management
D. National accounting organization