CFAS 1 questions and answers 100% correct

CFAS 1 questions and answers 100% correctTo generate general purpose financial statementw that provide information, about economic entities, that is to be used as basis for the formulation of economic decisions Purpose of accounting in society Historical Cost the value of the costs incurred in acquiring or creating the asset, comprising the consideration paid to acquire or crease the asset plus transaction costs Current Cost the cost of an equivalent asset at the measurement date, comprising the consideration that would be paid at the measurement date plus the transaction costs that would be incurred at the that date. Regulatory agency indirect user of accounting information Financial Accounting - Recording financial transactions. - Summarizing and presenting financial information on financial reports - Analyzing the financial reports Board of directors internal user of a company's financial information Category of users of Financial Information: Direct Users - Users with direct interest use financial information as a tool to protect their own interest in the enterprise. - Owners, managers, creditors, suppliers, customers, employees, and taxing authority Category of users of Financial Information: Indirect Users - Users that provide advice to or protect the interest of a direct user. - regulatory agencies, labor unions and financial and legal consultants Classification of users of Financial Information: Internal Users users who have ready access to specific types of accounting information Classification of users of Financial Information: External Users users other than the management of the entity do not have ready access to financial reports and rely heavily on negatiations and regulations to obtain information about a business enterprise Historical Cost the value of consideration received to incur or take on the liability minus the transaction costs Current Cost the consideration that would be received for an equivalent liability at the measurement date minus the transaction costs that would be incurred at that date. Taxing authority direct user of accounting information Economic entity - a business enterprise - an individual - a division within a business enterprise Philippine Financial Reporting Standards Consist of: - Specific Philippine Financial Reporting Standards, which are adopted from the IFRS - Philippine Accounting Standards, which are adopted from the IAS - Philippine Interpretations, which adopted from the interpretations of the IFRIC and the Standard Interpretations Committee (SIC) - Interpretations of the PIC Financial Reporting Standards Council the body created by BoA in 2006 to assist the Board in carrying out its power and function to promulgate accounting standards in the PH Philippine Accountancy Act of 2004 RA 9298 15 members based on RA 9298, the FRSC is composed of not less than 30 days As part of the due process of developing an accounting standard, the FRSC issues exposure draft for comment within a period 60 days, unless a shorter period is considered appropriate. How long is this shorter period? IFRS Foundation an independent, not-for-profit private sector organization that governs the activities for the IASB International Accounting Standards Board (IASB) the body that authors the IFRS Process of establishing financial reporting standards `a social process, which incorporates political actions of various interested user groups as well as professional research and logic Due process applied by FRSC in developing a financial reporting standard - Formation of a task force to address the issue - Consideration of comments on the exposure draft - Approval vote by a majority members of the FRSC members Board of Accountancy Body authorized by law to promulgate rules and regulations affecting the practice of the accountancy profession in the Philippines - Securities and Exchange Commission - Board of Accountancy - Philippine Institute of Certified Public Accountants - Bureau of Internal Revenue represented in the FRSC Creditors external user and direct user Management Accounting branch of accounting that serves the information needs of internal users Financial accounting branch of accounting that makes financial information about an entity accessible to the external users The needs of the users of the information objectives of financial reporting for business enterprises are based on Accounting a service activity whose function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions Accounting Standards Council established in 1981 and the original accounting standard body in the PH. It performed its function of establishing GAAP in the PH until it was succeeded by the FRSC in 2006 Bookkeeping part of accounting that involves recording transactions and events, either manually or electronically. Comparability enhancing qualitative characteristic: that enables users to identify similarities and differences between at least 2 sets of economic circumstances International Accounting Standards accounting standards promulgated by the IASC aimed to bring into uniformity accounting practices used around the world. International Accounting Standards Board (IASB) An international body that develops a single set of enforceable and understandable accounting standards to bring into uniformity accounting practices used around the world. International Financial Reporting Standards (IFRS) accounting standards and interpretations adopted by the IASB Philippine Accounting Standards accounting standards adopted in the PH by the FRSC and ASC that originated from the works of the IASC