Problem 1-1 Multiple Choice (ACP)

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 accounting 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 than an art
3. The important points made in the definition of accounting include all 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
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 nonrecognition of business activities as accountable events.
b. The assigning of peso amounts to the accounting 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 the following, except
a. Recording
b. Classifying
c. Summarizing
d. Interpreting
10. What is the overall objective of accounting?
a. To provide the 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.
Problem 1-2 Multiple choice (ACP)
1. What is the law regulating the practice of accountancy in the Philippines?
a. R.A. No. 9298
b. R.A. No. 9198
c. R. A. No. 9928
d. R.A. No. 9892
2. What 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. 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
4. 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 Securities and Exchange Commission can register any corporation organized
for the practice of public accountancy.
d. All of these statements are incorrect.
5. CPAs are licensed by
a. The PICPA
b. The SEC
c. The city government
d. State government
Problem 1-3 Multiple Choice (ACP)
1. What is the standard setting body in the Philippines at the present time?
a. Accounting Standards Council
b. Auditing and Assurance Standards Council
c. Philippine Accounting Standards Board
d. Financial Reporting Standards Council
2. All of the following are representative in FRSC, except
a. Board of Accountancy
b. Securities and Exchange Commission
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 Interpretation and
Interpretations developed by PIC.
d. All of these are included in Philippine Financial Reporting Standards
4. Accounting standard-setting has been characterized as
a. A political process
b. Using the scientific method
c. Pure deductive reasoning
d. A legal process
5. 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
6. What is the primary service of CPAs in public practice?
a. Auditing
b. Taxation
c. Managerial Accounting
d. Controllership
 7. 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
8. 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
9. How many CPD credit units are required for accreditation to practice the
accountancy profession?
a. 120 units
b. 100 units
c. 60 units
d. 15 units
10. 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
Problem 1-4 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 not have their own
standard-setting bodies.
2. 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
3. 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
4. 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
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 accounting issues that are the most important.
d. Requires that all CPAs must receive a copy of IFRS
6. What is due process in 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. 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
8. What is possible danger if politics plays too big 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.
9. 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 accountant must agree with a
standard before it become enforceable.
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 where unsatisfactory or conflicting interpretations have developed.
d. All of these are true about IFRIC Interpretations.

Problem 1-5 Multiple choice (IAA)

1. 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.
2. 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.
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 SEC
c. Expertise in data processing
d. Developing accounting information for use within an entity
5. 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.
Problem 1-6 Multiple choice (IAA)
1. 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.
2. Which statement best describes 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.
3. 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
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 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 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