A complete, comprehensive and single document promulgated by the International Accounting Standards Board. Correct Answer: Conceptual Framework for Financial Reporting
A summary of the terms and concepts that underlie the preparation and presentation of financial statements for external users. ...
CFAS Conceptual Framework (Millan&Valix)| 223
questions| with complete solutions
A complete, comprehensive and single document promulgated by the International Accounting Standards Board. Correct Answer: Conceptual Framework for Financial Reporting
A summary of the terms and concepts that underlie the preparation and presentation of financial statements for external users. It is also an attempt to provide an overall theoretical foundation for
accounting. Correct Answer: Conceptual Framework
Intended to guide standard-setters, preparers and users of financial information in the preparation
and presentation of statements. Correct Answer: Conceptual Framework
It is the underlying theory for the development of accounting standards and revision of previously issued accounting standards. It is also concerned with general purpose financial statements, including consolidated financial statements. Correct Answer: Conceptual Framework
The financial statements are prepared at least ___________ and are directed toward the common needs of a wide range of users. Correct Answer: Annually
1)PFRSs
2)Judgment When making the judgment:
> Management shall consider the following: a) Requirements in other PFRSs dealing with similar transactions b) Conceptual Framework
> Management may consider the following: a) Pronouncements issued by other standard-setting bodies b) Other accounting literature and industry practices Correct Answer: Hierarchy of Reporting Standards
a. To assist the FRSC in developing accounting standards and reviewing existing standards.
b. To assist preparers of financial statements in applying accounting standards and in dealing with issues not yet covered by GAAP.
c. To assist the FRSC in the review and adoption of International Financial Reporting Standards.
d. To assist users of financial statements in interpreting the information contained in the financial
statements.
e. To assist auditors in forming an opinion as to whether financial statements conform with Philippine GAAP.
f. To provide information to those interested in the work of the FRSC in the formulation of PFRS. Correct Answer: Purposes of Conceptual Framework If there is a standard or an interpretation that specifically applies to a transaction, the standard or interpretation overrides the ____________ _______________. Correct Answer: Conceptual Framework
In the absence of standard or an interpretation that specifically applies to a transaction, management shall consider the applicability of the ____________ _____________ in developing
and applying an accounting policy that results in information that is relevant and reliable. Correct
Answer: Conceptual Framework
It is to be stated that the Conceptual Framework is not a ______________. Correct Answer: Philippine Financial Reporting Standard/PRFS
In case where there is a conflict, the requirements of the ________________________ shall prevail over the Conceptual Framework. Correct Answer: Philippine Financial Reporting Standards/PFRSs
The ________________________ may be revised from time to time based on the IASB's experience of working with it. However, revisions do not automatically result to changes in the Standards-not until after the IASB goes through its due process of amending a Standard. Correct Answer: Conceptual Framework
To provide financial information about the reporting entity that is useful to existing and potential
investors, lenders and other creditors in making decisions about providing resources to the entity.
Correct Answer: Objective of General Purpose Financial Reporting
The objective of General Purpose Financial Reporting is the ______________ of the Conceptual Framework. Correct Answer: Foundation
Include the existing and potential investors, lenders and other creditors. They are the parties to whom general purpose financial reports are primarily directed. They cannot require reporting entities to provide information directly to them and therefore must rely on general purpose financial reports for much of the financial information they need. Correct Answer: Primary users
Are concerned with the risk inherent in and return provided by their investments. They need information to help them determine whether they should buy, hold or sell. Correct Answer: Existing and Potential Investors
Are also interested in information which enables them to assess the ability of the entity to pay dividends. Correct Answer: Shareholders
Are interested in information which enables them to determine whether their loans, interest thereon and other amounts owing to them will be paid when due. Correct Answer: Lenders and other creditors
Refer to those who extend loans. (E.g., banks). Correct Answer: Lenders Refer to those who extend others forms of credit. (E.g., supplier) Correct Answer: Other Creditors
Include the employees, customers, governments and other agencies, and the public. They are users of financial information other than the existing and potential investors, lenders and other creditors. They are the parties that may find the general purpose financial reports useful but the reports are not directed to them primarily. Correct Answer: Other users
Are interested in information about the stability and profitability of the entity. They are interested in information which enables them to assess the ability of the entity to provide remuneration, retirement benefits and employment opportunities. Correct Answer: Employees
They have an interest in information about the continuance of an entity especially when they have a long-term inconvenient with or are dependent on the entity. Correct Answer: Customers
They are interested in the allocation of resources and therefore the activities of the entity. These users require information to regulate the activities of the entity, determine taxation policies and as a basis for national income and similar statistics. Correct Answer: Governments and other agencies
Entities may affect these users in a variety of ways. One example is when entities make a substantial contribution to the local economy in many ways including the number of people they employ and their patronage of local suppliers. The financial statements presented by the entities could assist these users by providing information about the trend and the range of its activities. Correct Answer: Public
a. Objective of financial reporting
b. Qualitative characteristics of useful financial information
c. Definition, recognition and measurement of the elements from which financial statements are constructed d. Concepts of capital and capital maintenance Correct Answer: Scope of Conceptual Framework
The provision of financial information about an entity to external users that is useful to them in making economic decisions and for assessing the effectiveness of the entity's management. Correct Answer: Financial Reporting
The principal way of providing financial information to external users is through the ____________ financial statements. Correct Answer: Annual
Encompasses not only financial statements but also other means of communicating information that relates directly or indirectly to the financial statements and significant ratios. Correct Answer: Financial Reporting
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