FAR 2

What is the Conceptual Framework concerned with?

• Tax reports

• Budget reports

• General purpose financial statements

• Special purpose reports

What is the underlying theme of the Conceptual Framework?

• Decision usefulness

• Completeness of information

• Accuracy of information

• Timeliness of information

What is the basic purpose of the Conceptual Framework?

• To serve as a guide in human resource management

• To serve as a guide in marketing strategies

• To serve as a guide in resolving legal issues

• To serve as a guide in developing future PFRSs

Who is assisted by the Conceptual Framework in interpreting the information in financial statements?

• Users of FS

• Preparers of FS

• FRSC

• Auditors

What is the authoritative status of the Conceptual Framework?

• It is a legal document

• It is not a Philippine Financial Reporting Standard

• It overrides any specific Philippine Financial Reporting Standard

• It is a Philippine Financial Reporting Standard

What is the underlying assumption of the Going Concern principle?

• The accounting entity is viewed as continuing in operation indefinitely

• The accounting entity is viewed as not relevant

• The accounting entity is viewed as closing down soon

• The accounting entity is viewed as changing its operations frequently

What does the Accrual Principle address?

• Recognition of assets and liabilities

• Recognition of equity

• Recognition of income and expenses as against the cash basis principle

• Recognition of taxes

Under the Accounting Entity Concept, how is the entity viewed?

• As a subsidiary of another entity

• As part of a larger entity

• Together with its owners

• Separately from its owners

What is the Time Period Principle based on?

• The operation of the business being viewed indefinitely

• The operation of the business being viewed for a specific period

• The operation of the business being viewed for a short period

• The operation of the business being viewed for a long period

Under the Monetary Unit Principle, accounting information should be stated in a common measurement basis, which is in the Philippines it is:

• Euro

• Peso

• Yen

• Dollar