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Problem 2-2 Multiple Choice (Aicpa Adapted)

1. The document discusses key accounting assumptions and concepts including the economic entity assumption, periodicity assumption, and going concern assumption. 2. It asks multiple choice questions about the applicability of accounting concepts such as the accounting entity, economic entity, going concern assumption, and periodicity assumption. 3. The questions cover when consolidated financial statements are prepared, why present value of future cash flows is used, and what justifies the use of accruals and deferrals.

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Jao Flores
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426 views2 pages

Problem 2-2 Multiple Choice (Aicpa Adapted)

1. The document discusses key accounting assumptions and concepts including the economic entity assumption, periodicity assumption, and going concern assumption. 2. It asks multiple choice questions about the applicability of accounting concepts such as the accounting entity, economic entity, going concern assumption, and periodicity assumption. 3. The questions cover when consolidated financial statements are prepared, why present value of future cash flows is used, and what justifies the use of accruals and deferrals.

Uploaded by

Jao Flores
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1.

The economic entity assumption


a. Is inapplicable to unincorporated businesses
b. Recognizes the legal aspects of business organizations
c. Requires periodic income measurement
d. Is applicable to all forms of business organizations
2. Which underlying assumption serves as the basis for preparing financial statements at
regular artificial points in time?
a. Accounting entity
b. Going concern
c. Accounting period
d. Stable monetary unit
3. Which basic accounting assumption is threatened by the existence of severe inflation in the
economy?
a. Monetary unit assumption
b. Periodicity assumption
c. Going concern assumption
d. Economic entity assumption

PROBLEM 2-2 MULTIPLE CHOICE (AICPA ADAPTED)


1. The concept of accounting entity is applicable
a. Only to the legal aspects of business organization
b. Only to the economic aspects of business organization
c. Only to business organizations
d. Whenever accounting is involved
2. When a parent and subsidiary relationship exists, consolidated financial statements are
prepared in recognition of
a. Legal entity
b. Economic entity
c. Stable monetary unit
d. Time period
3. The valuation of a promise to receive cash in the future at present value is valid because of
what accounting concept?
a. Entity
b. Time period
c. Going concern
d. Monetary unit
4. What is the accounting concept that justifies the usage of accruals and deferrals?
a. Going concern
b. Materiality
c. Consistency
d. Stable monetary unit
5. During the lifetime of an entity accountants produce financial statements at arbitrary points
in time in accordance with what basic accounting concept?
a. Accrual
b. Periodicity
c. Unit of measure
d. Continuity

PROBLEM 2-3 MULTIPLE CHOICE (ACP)


1. The conceptual framework deals with all of the following except
a. The objective of financial reporting
b. The qualitative characteristics of useful financial information
c. The definition, recognition and measurement of the elements of financial statements
d. Supplementary information
2. Which of the following statements is true concerning the conceptual framework for Financial
Reporting?
a. The Conceptual Framework is not a reporting standard and does not define standard for
any particular measurement or disclosure issue.
b. The Conceptual Framework is concerned with general purpose financial statements
including consolidated financial statements.
c. Nothing in the Conceptual Framework overrides any specific Philippine Financial
reporting Standard.
d. All of these statements are true about the Conceptual Framework.
3. Which is not a purpose of the Conceptual Framework?
a. To assist the FRSC in developing accounting standards that will represent GAAP in the
Philippines.
b. To assist the FRSC in the review and adoption of existing international accounting
standards.
c. To assist auditors in forming an opinion as to whether financial statements conform with
Philippine GAAP.
d. To assist the Board of Accountancy in promulgating rules and regulations affecting the
practice of public accountancy.
4. Which is a basic purpose of the Conceptual Framework?
a. To assist users of financial statements in interpreting the information contained in the
financial statements.
b. To provide information to those interested in the work of the FRSC I the formulation of
PFRS.
c. To assist preparers of financial statements in applying accounting standards.

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