Chapter 1

1. Define Accounting

2. Explain identifying as a component of accounting.

3. When is a transaction accountable or quantifiable?

4. Explain measuring as a component of accounting?

5. What is the overall objective of accounting?

6. Explain recording, classifying and summarizing in relation to the communicating
component of accounting.

7. Explain the limitations of the practice of public accountancy?

8. Describe the accountancy profession.

9. What is RA No 9298

10. What do you understand by the board of Accountancy?

11. What is the overall objective of financial reporting?

12. Explain the accreditation to practice of accountancy. (need a certificate of accreditation)

13. what are the three main areas in the practice of the accountancy profession?
14. Explain public accounting.

15. Explain auditing, taxation service and management advisory services.

16. Explain private accounting.

17. Explain government accounting.

18. What do you understand by the Continuing Professional Development (CPD) of CPA’s?

19. What is the meaning of Continuing Professional Development (CPD) credit units.

20. How many CPD credit unit are required? Bonus

21. What is the purpose of the required CPD units?

CPD units are required in order to continue to practice the profession public accountancy
and to renew one’s CPA license. It is also for the accountancy professionals to be updated
with the changes of rules or laws.
22. What is the exemption from the CPD requirements?

23. Distinguish all accounting and auditing.

24. Distinguish accounting and bookkeeping.

25. Distinguish accounting and accountancy?

26. Distinguish financial accounting and managerial accounting.

27. Explain generally accepted accounting principles or GAAP.

28. What constitute GAAP in the Philippines?

standards that encompass the details, complexities, and legalities of business and
corporate accounting

29. Explain the purpose of accounting standards?

30. What do you understand about the Financial Reporting Standards Council? Bonus

31. What is the composition of FRSC? Bonus

32. What do you understand about the International Accounting Standards Committee?

33. What do you understand by the International Accounting Standards Board?

34. What do you understand by the International Financial Reporting Standards?

35. What are collectively included in Philippine Financial Reporting Standards?

Chapter 2

1. What is the meaning of Conceptual Framework?

2. What are the purposes of the Revised Conceptual Framework?

3. Explain the authoritative status of the Conceptual Framework.

4. Explain the primary users and their information needs.

5. Explain the other users and their information needs.

6. What is the scope of the Revised Conceptual Framework? Enumerate the 8 scopes.
7. Explain Financial Reporting

8. What is the overall objective of financial reporting?

9. What are the specific objectives of financial reporting? 3 specific objectives.

10. Explain Financial position.

11. Explain liquidity and solvency.

12. Explain Financial performance.

13. Explain accrual accounting.

14. Explain Management stewardship of the entity’s economic resources.

15. What are the limitations of financial reporting? 4 limitations.

Chapter 3

1. What is the meaning of qualitative characteristics of financial information?

2. What are fundamental qualitative characteristics?

3. What are the two fundamental qualitative characteristics?

4. Explain the most efficient and effective process of applying the fundamental qualitative
characteristics.

5. Explain relevance.

6. What are the two ingredients of relevance?

Predictive value and Confirmatory value
7. Explain predictive value.

8. Explain confirmatory value.

9. When is an item material?

“Items are material if they could individually or collectively influence the economic
decisions of users, taken from financial statements.”

10. Explain the new definition of materiality.

Information is material if omitting, misstating or obscuring it could reasonably be
expected to influence the economic decisions that primary users of general
purpose financial statements make on the basis of those statements which
provide financial information about a specific reporting entity

11. What are the factors that may be considered in determining materiality?
The size of the item in relation to the total of the group to which the item belongs is
considered. The nature of the item may be inherently material because by its very
nature it affects economic decision.

12. Explain the fundamental qualitative characteristic of faithful representation.

Representation of financial phenomena is truthful, accurate, and free of bias. It means that
the actual effects of the transactions shall be properly accounted for and reported in
the financial statements.
13. What are the three ingredients of faithful representation?
Completeness
Neutrality
Free from error
14. Explain completeness of financial information.
It is the result of the adequate disclosure standard or the principle of full disclosure.
It includes all information necessary for a user to understand the phenomenon
being depicted, including all necessary descriptions and explanations.
15. What is the standard of adequate disclosure?
All significant and relevant information leading to the preparation of financial
statements shall be clearly reported.
16. Explain notes to financial statements in relation to completeness of financial information.
It provides narrative description or disaggregation of the items presented in the
financial statements and information about items that do not qualify for recognition
17. Explain neutrality of financial information.

18. Explain prudence.

Exercise of care and caution when dealing with uncertainties in the measurement
process such that assets or income are not overstated, and liabilities or expenses are not
understated. Neutrality is supported by the exercise of prudence.
19. Explain conservatism.
It means that when alternatives exist, the alternative which has the least effect on
equity should be chosen. Conservatism means “in case of doubt, record any loss and
do not record any gain.
20. Explain free from error financial information.
There are no errors or omissions in the description of the phenomenon or transaction.
21. Explain the effect of measurement uncertainty to usefulness of financial information.

As long as the estimate is clearly and accurately described and explained, even a high level
of measurement uncertainty does not affect the usefulness of the financial information.
22. Explain the concept of substance over form.
This concept refers to transactions recorded in financial statements that reflect their
economic substance rather than merely their legal form. Simply put, this means that the
financial statements should capture the true intent of the transaction rather than only
following their strict legal form.
23. What are enhancing qualitative characteristics?

24. Enumerate the four enhancing qualitative characteristics.

25. Explain comparability.

 26. Explain comparability within a single entity.

27. Explain comparability between and across entities.

28. Explain consistency.

uniform application
29. Distinguish consistency from comparability.

30. Explain understandability.

It requires that financial information must be comprehensible or intelligible if it is to be
most useful.
31. Explain verifiability.

32. Distinguish direct verification and indirect verification.

Direct verification means verifying an amount or other representation through
direct observation, for example, by counting cash.
Indirect verification means checking the inputs to a model, formula or other technique
and recalculating the inputs using the same methodology.
33. Explain timeliness.
Financial information must be available or communicated early enough when a decision is
to be made. It enhances the truism that without knowledge of the past, the basis for
prediction will usually be lacking and without interest in the future, knowledge of the
past is sterile.

34. Explain cost constraint on useful financial information.

A cost constraint related to

financial reporting is when the cost of obtaining the financial information outweighs/more
significant than the benefit. Under U.S. GAAP, if the cost of obtaining certain financial
information is a constraint and results in excessive costs, then the entity is allowed to avoid
reporting the financial information.
35. What is the rule on cost constraint?
It is important that such cost is justified by the benefit derived from the financial information.
Chapter 4

1. What is the general objective of financial statements?

Provide information about economic resources of the reporting entity claims against the
entity and changes in the economic resources’ claims.
to provide information about the financial position, performance, and changes in financial
position of an entity that is useful to a wide range of users in making economic decisions.
2. Explain a reporting period.
Period when financial statements are prepared for general purpose financial reporting.
3. Explain a reporting entity.
An entity that is required or chooses to prepare/present financial statements. It can be
a single entity or a portion of an entity, or can comprise more than one entity. Reporting
entity is not necessarily a legal entity.
4. Define consolidated financial statements, unconsolidated financial statements and
combined financial statements.

5. Explain underlying assumptions in the preparation of financial statements.

Accounting assumptions are also known as postulates. It serves as the foundations or
bedrock of accounting in order to avoid misunderstanding but rather enhance the
understanding and usefulness of the financial statements.
6. Explain going concern assumption.

7. Explain time period assumption.

It requires that the definite life of an entity is subdivided into accounting periods which
are usually of equal length for the purpose of preparing financial reports on financial
position, performance and cash flows.

8. Distinguish calendar year and natural business year.

Calendar year is a twelve – month period that ends on December 31.
Natural business year is a twelve – month period that ends on any month when the
business is at the lowest or experiencing slack season.
9. Explain monetary unit assumption.
the principle that every business event and transaction must be expressed in terms of a
common denominator currency. It has two aspects, namely quantifiability and stability
of the peso.

10. Explain quantifiability and stability of the peso in relation to monetary assumption unit.
Quantifiability aspect means that the assets, liabilities, equity, income and expenses
should be stated in terms of a unit of measure which is the peso in the Philippines.

Stability of the peso assumption means that the purchasing power of peso is stable or
constant and that its instability is insignificants and therefore may be ignored.