CHAPTER 40 . TFRIC INTERPRETATIONS IFRIC 1 194 Changes in existi in rr similar Lanigi2® deeommissioning, restoration and IFRIC 2 Members’ shares in instruments IFRIC 17 cooperative entities and similar Distribution of noncash assets to owners TFRIC 19 Extinguishing financial liabilities with equity instruments CHAPTER 1 1 THE ACCOUNTANCY PROFESSION TECHNICAL KNOWLEDGE To understand the definition of accounting. To identify the overall objective of accounting. To describe the practice of the accountancy profession in the Philippines. To understand the Continuing Professional Development in the field of accounting. To know the meaning of generally accepted accounting principles. To identify the standard-setting body in the Philippines. To describe the creation of the International Accounting Standards Board. To know the meaning of IFRS.EFINITION OF ACCOUNTING The Accounting Standards Council i followi donnie uncil provides the following Accounting is a service activity. The accounting function is to provide itative ir ic he acco uncti ‘quantitative information Primarily financial ‘in nature, about economic entities, ‘hat fo intended to be useful in making economic decision. The Committee on Accounting Terminology of the American . Institute of Certified Public i Tastitute o Accountants defines accounting Accounting is the art of recording, classifying and summarizing i siicont manner and in erms of mony, transatons and ves which are in part at financial character interpreting the results thereof. ae — The American Accounting Association in its Statement of Basic Accounting Theory defines accounting as follows: Accounting is the process of identifying, measuring and communicating economic information to permit informed Judgment and decision by users of the information. Important points ‘The following important points made in the definition of accounting should be noted: One — Accounting is about quantitative information. Two - The information is likely to be financial in nature. ‘Three - The information should be useful i i making. ‘The definition that has stood the teet of time is the definition given by the American Accounting Association. : ‘This definition states that the very purpose of aocounting is toprovide ‘quantitative information to be useful in making an economic decision. The definition also states that accounting has a number of components, namely: a. Identifying as the analytical component. b. Measuring as the technical component. ¢. Communicating as the formal component. ' Identifying ‘This accounting process is the recognition or nonrecognition of business activities as “accountable” events. For example, the hiring of employees, the death of the entity president and the entering into a contract are all business activities but such events are not accountable because they cannot be quantified or expressed in terms of a unit of measure. An event is accountable or quantifiable’ when it has an effect on assets, liabilities and equity. In other words, the subject matter of accounting is economic activity or the measurement of economic resources and economic obli Only economic activities are emphasized and recognized in accounting. Sociological and psychological matters are beyond the province of accounting.rnal and internal transactions ~funomic activities of an entity are refered to as transactio which may be classified as external and interoal 7 External transactions or exchange transacti sconoimic eventa involving one entity and another toe? Examples of external transactions are: &. Purchase of goods from a suppli . Borrowing money ffom a bask” ¢. Sale of goods to a customer d. Payment of salaries to employees e. Payment of taxes to the government Internal transactio entity only. Internal transactions are the economic activiti place entirely within the entity," ™n* SoAvities that take ns are economic events involving the Production and casualty loss are examples of internal transactions. Production is the process by which resources are transformed into products. Casualty is any sudden and unanticipated loss from fire, flood, earthquake and other event ordinarily termed as an act of God. Measuring This accounting process is the assigning of peso amounts ‘to the accountable economic transactions and events. ‘If accounting information is to be useful, it must be expressed in terms of a common financial denominator. Financial statements without monetary amounts would be largely unintelligible or incomprehensible. The Philippine peso is the unit of measuring accountable economic transactions. _ ‘The measurement bases are historical cost and-current value. Historical cost is the original acquisition cost and the most common measure of financial transactions. Current value includes fair value, value in. use, fulfillment value and current cost. . 4 Communicating Communicating is the ‘accounting reports to potential users of accounting information, Identifying and measuring are pointles if the information contained in the accounting records cannot be communicated in some form to potential users. Actually, the communicating process is the reason why ‘accounting has been called the “universal language of business”. Implicit in the communication process are the recording, classifying and summarizing aspects of accounting. Recording or journalizing is the process of systematically maintaining a record of all economic business transactions after they have been identified and measured. Classifying is the sorting or grouping of similar and interrelated economic transactions into their respective classes. Classifying is accomplished by posting to the ledger. ‘The ledger is-a group of accounts which are systematically categorized into asset accounts, liability agcounts, equity accounts, revenue accounts and expense accounts. ‘Summarizing is the preparation of financial statements which include the statement of financial position, income ‘statement, statement of comprehensive income, statement of changes in equity and statement of cash flows. Accounting as an information system Accounting is an information system that measures business activities, processes information into reports and communicates the reports to decision makers. A key product of this information system is a set of financial statements — the documents that report financial information about an entity to decision makers. Financial reports tell us how well an, entity is performing in terms of profitand loss and where it stands in financial terms. process of preparing and distributing a jof accounting is to provide quantitati business that i owners and y task is to supply financial pment users ake informed judgment and better decision. patos significant economic de 7 THE ACCOUNTANCY PROFESSION At present, Republic Act No. 9298 is the law regulating the practice of accountancy in the Philippines. ‘This law is known as the Philippine Accountancy Act of 2004. . Accountancy hat developed as a profession attaining a status equivalent to that of law and medicine. government examination given by the Board of Accountancy. ‘The Board of Accountancy is the body authorized by law to promulgate rules and regulations affecting the practice of the ‘accountancy profession in the Philippines. ‘The Board of Accountancy is responsible for preparing and grading the Philippine OPA examination. ‘This computer-based examination is offered twice a year, one in May and another one in October, in authorized testing centers around the country. Limitation of the practice of public aecountancy Single practitioners and partnerships for the practice of public accountancy shall be registered certified public accountants in the Philippines. ‘A certificate of accreditation ‘shall be issued to certified public accountanta in public practice only upon showing in accordance with rules and regulations promulgated by the Board of ‘Accountancy and approved by the Professional Regulation Commission that such registrant has acquired a minimum of three years of meaningful experience invany of the areas of public practice including taxation: ‘The Securities and Exchange Commission shall not register any corporaition organized for the practice of public accountancy. | Acereditation to practice public accountancy Certified public accountants, firms and partnerships of certified public accountants, including partners and staff members thereof, are required to register with the Board of Accountancy and Professional Regulation Commission for the practice of | public accountancy. ‘The Professional Regulation Commission upon favorable recommendation of the Board of Accountancy shall issue the Certificate of Registration to practice public accountancy which shall be valid for 3 years and renewable every 3 years upon payment of required fees. Certified Public Accountants generally practice their profession in three main areas, namely: a. Public accounting . Private accounting ¢, Government accounting.PUBLIC ACCOUNTING we z The field of public accounting or public accountancy i of individual practitioners, email ascounting fue aad large Public accountants usually offer three kinds of services, namely auditing, taxation and management advisory services. As a matter of fact, large multinational accounting firms have separate division for each of these services. re Auditing Auditing has traditionally been the primary service offered by most public accounting practitioners. Auditing or external auditing is the examination of financial statements by independent certified public qocountant forthe ‘Purpose of expressing an opinion as io the fairness with which the financial siatements ore prepared, Actually, external auditing is the attest function of independent CPAs. ‘The Bureau of Internal Revenue requires audited financial statements to accompany the filing of annual income tax return. Banks and other lending institutions frequently require an audit by an independent CPA before granting a loan to the jorrower. ‘8 and prospective investors place considerable nn audited financial statements on making economic Taxation service includes the preparation of annual income tax returns and determination of tax consequences of certain proposed business endeavors. The CPA ni investigatio To of vice effectively and efficiently, the public accountant must be thoroughly familiar with the tax laws and regulations and updated with changes in taxation law and court cases concerned with interpreting taxation law. infrequently represents the client. in tax 8 Management advisory services Management advisory services have become increasingly important in recent years although audit and tax services ~ are undoubtedly the mainstay of public accountants. ‘The term management advisory services has no precise coverage but is used generally to refer to services to clients on matters of accounting, finance, business polici organization procedur many other: phases of Specifically, management advisory services include: a. Advice on installation of computer system b. Quality control c. Installation and modification of accounting system 4. Budgeting e. Forward planning and forecasting £ Design’ and modification of retirement plans &. Advice on mergers and consolidations PRIVATE ACCOUNTING ~ ‘Many Certified Public Accountants are employed in business entities in various capacity.as accounting staff, chief * accountant, internal auditor and controller. ‘The highest accounting officer in an entity is known as the controller. ‘The major objective of the private accountant is management in planning and controlling the enti operations. ‘ Private accounting includes maintaining the records, producing the financial reports, preparing the budgets and controlling and allocating the resources of the entity. The private accountant has also the responsibility for the determination of the various taxes the entity is obliged to pay.GOVERNMENT ACCOUNTING. Government accounting 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. ‘The focus of government accounting is the custody and administration of public funds. Many Certified Public Accountants are employed in many branches of the government, more particularly: a. Bureau of Internal Revenue : b. Commission on Audit ¢. Department of Budget and Management 4. Securities and Exchange Commission e. Bangko Sentral ng Pilipinas CONTINUING PROFESSIONAL DEVELOPMENT (CPD) Republic Act No. 10912 is the law mandating and strengthening the continuing professional development program for all regulated professions, including the ‘accountancy profession. All certifiéd public accountants shall abide by the requirements, rules end regulations on continuing professional development to be promulgated by the Board of ‘Accountancy, subject to the approval of the Professional Regulation Commission, in coordination with the accredited national professional organization of certified public ‘accountants or any duly accredited educational institutions. Continuing professional development refers to the inculeation ‘and acquisition of advanced knowledge, skill, proficiency, and ethical and moral values after the initial registration of the Certified Public Accountant for assimilation into professional practice and lifelong learning. tinuing professional development raises and enhances the eeeite ell and competence of the Certified Public ‘Accountant, 10 CPD credit units ‘The UPD credit units refer to the CPD credit hours required fot the renewal of CPA license and accreditation of a CPA to Practice the accountancy profession every three years. Under the new BOA Resolution, .all Certified Public Accountants regardless of area or sector of practice shall be required to comply with 120 CPD credit units. The Continuing Professional Development is required for the renewal of CPA license and accreditation of CPA to practice the accountancy profession. As recently promulgated, only 15 CPD credit units are required for the renewal of CPA license. However, 120 CPD credit units are required for accreditation of a CPA to practice the accountancy profession. Excess credit units earned shall not be carried over to the next three-year period, except credit units earned for masteral and doctoral degrees. It is to be emphasized that the Continuing Professional Development has become mandatory for Certified Public Accountants. Exemption from CPD ACPA shall be permanently exempted from CPD requirements upon reaching the age of 65 years. "However, this exemption applied only to the renewal of CPA Hicense and not for the purpose of accreditation to practice the accountancy profession.| | | ccounting versus auditing In a broad sense, accounting embraces auditing, Auditing is one of the areas of accounting epecialization, In a limited sense, accounting it 180, i is essentially constructive in nature. Accounting, cea ial 8 oF aeady pometen ig. ves when financial statements are On the other hand, auciting is analyti e : lytical. The work auditor begins when the work ofthe ascouniontende ‘After the financial statements are prepared, the auditor will begin to perform the task of auditing. ‘The auditor examines the financial statements to ascertain whether they are in conformity with generally accepted accounting principles. Accounting versus bookkeeping Bookkeeping is procedural and largely concerned with. development and maintenance of accounting records. Bookkeeping is the “how” of accounting. Accounting is conceptual and is concerned with the why, reason or justification for any action adopted. Bookkeeping is a procedural element of accounting as arithmetic is a procedural element of mathematics. Accounting versus accountancy Broadly speaking, the two terms are synonymous because they both refer to the entire field of accounting theory and practice. Technically speaking, however accountancy refers to the profession of accounting practice. ‘Accounting is used in reference only to a particular field of ‘accountancy such as public accounting, private accounting and government accounting. 12 Financial accounting versus managerial accounting Financial accounting ie ptimarily concerned with the recording of business transactions and the eventual preparation of financial statements. Finaricial accounting focuses on general purpose reports known as financial statements intended for internal and external users. Financial accounting is the area of accounting that emphasizes reporting to creditors and investors. Managerial accounting is the accumulation and preparation of financial reports for internal users only. In other words, managerial accounting is the area of accounting that emphasizes developing accounting information for use within an entity. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Accounting has evolved through time changing with the needs, of society. As new: types of transactions occur in trade and commerce, accountants develop rules and procedures for recording them. ‘These accounting rules, procedures and practices came to be known as generally accepted accounting principles or simply GAAP. ‘The principles have developed on, the basis of experience, reason, custom, usage and practical necessity. Generally accepted accounting principles represent the rules, procedures, practice and standards followed in the preparation and presentation of financial statements Generally accepted accounting principles are like laws that must be followed in financial reporting. ‘The process of establishing GAAP is a political process which incorporates political actions of various interested user groups as well as professional judgment, logic and research. 13Purpose of accounting standards ‘The overall purpose of accounting standards is to identify proper accounting practices for the preparation and presentation of financial statements. ‘Accounting standards create a common understanding between preparers and users of financial statements particularly the measurement of assets and liabilities. ‘A cot of high-quality accounting standards is a necessity to cyeure comparability and uniformity in financial statements ‘based on the same financial information. FINANCIAL REPORTING STANDARDS COUNCIL In the Philippines, the development of generally accepted we ee ting principles is formalized initially through the ae ton of the Accounting Standards, Council or ASC. ‘The Financial Reporting Standards Council or FRSC now replaces the Accounting Standards Council ‘The FRSC is the accounting standard setting body created by the Professional Regulation Commis ‘upon Py ommendation of the Board of Accountancy to st the ~ Board of Accountancy in carrying out its powers ‘and functions provided under R.A. Act No. 9288. to establish and improve accounting generally accepted in the Philippines. ‘The accounting standards promulgated by the Financial Foporting Standards Council constitute the highest Report: of generally accepted accounting principles in the Philippines. wed statements of the FRSC are known as Poiltippine ‘secounting: ‘Standards or PAS and Philippine Financial Reporting ‘Standards or ‘PFRS. Composition of FRSC ‘The FRSC is coniposed of 15.members with a Chairman whe The BREC ie corvoently a senior accovnting practitioner and i i i “Major organization of preparers and users of ‘financial statements Financial Executives Institute cof the Philippines or FINEX ‘Accredited national professional organization of CPAS: | ‘The Chairman and members of the FRSC shall have a term Of 3 yeare renewable for another term. Any member of the ASC shall not be disqualified from being appointed to the Philippine Interpretations Committee ‘The Philippine Interpretations Committee or PIC was formed by the FRSC in August 2006 and has replaced the Interpretations Committee or IC formed by the Accounting Standards Council in May 2000. ‘The role of the PIC is to prepare interpretations of PFRS for approval by the FRSC and to provide timely guidance oh rancial reporting issues not specifically addressed in current PFRS. In other. words, interpretations are intended to give Guthoritative guidance on issues that are likely to receive divergent or unacceptable treatment because the standards do not provide specific and clearcut ‘rules and guidelines. ‘The counterpart of the PIC ip the United Kingdom is the International Financial Reporting Interpretations Committee Or IFRIC which has slready replaced the Standing gepretations Committee or SIC. 15| | | INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE The International Accounting Standards Committee or [ASC is an independent private sector body, with the objective of > achieving uniformity in the accounting principles which are used by business and other organizations for financial reporting around the world. ‘It was formed in June 1973 through an agreement made by professional accountancy bodies from Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland, and the United States of America. The IASC is headquartered in London, United Kingdom. Objectives of ASC a. To formulate and publish in the public interest accounting standards to be observed in the presentation of financial statements and to promote their worldwide acceptance’ and observance. b. To work generally for the improvement and harmonization of regulations, accounting standards and procedures telating to the presentation of financial statements. INTERNATIONAL ACCOUNTING STANDARDS BOARD Accounti IASB now International Accounting Standards Board or IASB Ralaces ‘the International Accounting Standards Committee or IASC. 3 -B publishes standards in a series of pronouncement sn a re national Financial Reporting Standards or IFRS. However, the IASB has adopted the body of standards issued by the IASC. Se ronouncements of the IASC continue to be designated The protional Accounting Standards" or IAS. setting .s5 includes in the correct The TASB standatgseynion paper, exposure Graf! ond accounting standard. 16 Move toward IFRS. In developing accounting standards that will be gen pi il ‘ally accepted in the Philippines, standards issued by other standard setting bodies such as the USA Financial Accounting Standards Board (FASB) and the IASB are considered. . In the past years, most of the Philippine standards issued ! are based on America accounting standards. “ae At present, the FRSC has adopted in their entirety all International Accounting Standards and International Financial Reporting Standards. ‘The move toward IFRS is essential to achieve the goal of one uniform and globally accepted financiol reporting standards. ‘The Philippines is fully compliant with IFRS effective January 2005, a process which was started back in 1997 in moving from USA GAAP to IFRS. ‘The following factors are considered in totally to international accounting stand: ciding to move is a. Support of international accounting standards by Philippine organizations, such as the Philippine SEC, ‘Board of Accountancy and PICPA. b. Increasing internalization of business which has ‘heightened interest in a common language for financial reporting. -e, Improvement of international accounting standards or removal of free choices of accounting treatments. . Increasing recognition of international accounting standards by the World Bank, Asian Development Bank and World Trade Organization.Philippine Financial Reporting Stanldards. ‘The Financial Reporting Standards Council iasues standards in a series of pronouncements called "Philippine Financial Reporting Standards" or PFRS. ‘ The Philippine Financial Reporting Standards collectively include all of the following: ‘ a. Philippine Financial Reporting Standards which correspond to International Financial, Reporting Standards. ‘The Philippine Financial Reporting Standards are numbered the same as their counterpart in International Financial Reporting Standards. b. Philippine Accounting Standards which correspond.to [International Accounting Standards. ‘The Philippine Accounting Standards are numbered the same as their counterpart in International Accounting Standards. Philippine Interpretations which correspond to Interpretations of the IFRIC and the Standing Interpretations Committee, and Interpretations developed by the Philippine Interpretations Committee. QUESTIONS 1 Define accounting. 2, What are the important points made in the definition of accounting? 3. Explain “identifying” as a component of accounting. 4, What are transactions? 5. Distinguish external transactions and internal transactions. 6. When is a transaction accountable or quantifiable? 7, Explain "measuring" as a component of accounting? 8, What are the measurement bases used in accounting? 9, Explain "communicating" as component of accounting. 10. Explain recording, classifying and summarizing in relation to the communicating component of accounting. 11. Explain why accounting has been called the "universal language of business". 12, Explain accounting as an information system. 18, What is the overall objective of accounting? 14, Deseribe the accountaney profession. 15. What is R.A. No. 9298? 16. What do you understand by the Board of Accountancy? 17. Explain the limitation ‘of the practise of public accountancy. 19 L18. Explain the accreditation to practice of accountancy. 19. What are the three main i areas ic Meat are the three ma in the practice of the 20. Explain public accounting. 21. What ure the three kinds of 5 the practice of public meee eae 22. Explain auditing. 23. Describe the taxation service offered by CPAs. 24. Explain management advisory services. 25. What are some management advisory services offered by CPAs? 26. Explain private acocunting. 27. Explain government accounting. 28. What do you understand by the Continuing Professional Development of CPAs? 29. What is the meaning of CPD credit units? 30. How many CPD credit units are required? 31. What is the purpose of the required CPD credit units? 32. What is the exemption from the CPD requirements? . 83. Distinguish accounting and auditing. 84: Distinguish accounting and bookkeeping. 36, Distinguish accounting-and accountancy. 20 ‘96. What is financial accounting? 37. What is managerial accounting? 88. What is the meaning of generally accepted accounting principles or GAAP? 39. What constitute GAAP in the Philippines? 40. Explain the purpose of accounting standards. 41. What do you understand about the Financial Reporting Standards Council? 42. What is the composition of FRSC? 43: What do you understand about PIC and IFRIC? 44. What do you understand about the International Accounting Standards Committee? 45. What are the twin objectives of the IASC? 46. What is IASB? 47. What do you understand by IFRIC? 48, Explain why the Philippines has moved totally from American accounting standards to international atcounting standards. 49. What do you understand by the "International Financial Reporting Standards"? 50. What are collectively included in "Philippine Financial Reporting Standards"? 21PROBLEMS Problem 1-1 Multiple choice (ACP) 1. Accounting is a service activity and the function isto 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 Terminvlogy ¢. American Accounting Association d. Board of Accountancy 2. All of the following describe accounting, except a. A service activity b. An information system . A universal language of business @. An exact science rather than an art 8. The important points made in the definition of accounting include all of the following, except. _ Accounting information is quantitative. & Accountieg information is both quantitative and mualitative. ae ing information is financial in nature. g, RESAEtDe infomation eS paaeg is inti rocess is the recognition or nonrecognition 4 Tip rpunding mr ish ein 5. What are the events that affect the entity and in which other ” entities participate? a. Internal events ‘p. External events ¢ Current events d. Obligating events 22 | | 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. ©. Only economic activities are emphasized and recognized in accounitng. 4. 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. bi ‘The assigning of peso amounts to the accountable events. c. The preparation and distribution of accounting reports to users of accounting information. 4. 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 ¢. Fair value d. Value in use 9. The communicating process of accounting includes all of the following, except a. Recording >. Classifying ¢. Summarizing 4. 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. ¢. 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 23Problem 1-2 Multiple choice (ACP) ‘ | 1 Wf i he law relating the pri ef suntan in Problem 1:3 Multiple choice (ACP) a RA No. 9298 1, What is the standard-setting body. in the Philippines at b. RA. No. 9198 ¢ RANo. 9928 : s d. R.A No. 9892 a. Accounting Standards Council 2. What is the body a aby b. Auditing and fostranee Standards Council : 2 body authorized by law to promulgate rules ¢. Philippine Accounting Standards Board — and regulations affectin : in | | profession in the Philinsbweayractee of the ‘accountancy a. Financial Reporting Standards Council ' a. Board of Accountancy ‘ b. Philippine Institute of Certified Public Accountants the present time? 2. All of the following are represented in FRSC, except ¢ Securities and Exchange Commission a, Board of Accountancy 4 d, Financial Reporting Standards Council b. Securities and Exchange Commission y 3. What are the three mai : ¢. Commission on Audit | ee hee 4. Department of Budget and Management | a. Public accounting, private accounting and managerial ~ 3.The’ Philippine Financial Reporting Standards accountime ne Philippine ¥ | ». Auditing, -axation and manegerial account collectively include ¢. ‘inancial accounting, manaj ial acc it) de ‘ i: corporate} ecenanece? gecial accounting, an a. PERS corresponding to IFRS. d. Public accounting, private accounting and government b. PAS corresponding to IAS "accounting. ¢. Philippine Interpretations corresponding to IFRIC 4. Which statement is incorrect in relation to the practice aS rt CL of public accountancy? wweloped by PIC. 7 \ ee ne 4. Allofltheas are included in Phitippine Financial a. Si i 0 orting Standards accountancy shall be registered CPAs in the : a I, *hilippines. i BREE parzerehipe formed fr the practi of 4. Accounting standard-setting has been characterized as, ee shall be registere in th ok political process ¢. The Securities and Exchange Commission can register b. Using the scientific method any eorporation organized for the practice of public c, Pure deductive reasoning ‘accountancy : 4. A legal process 4, All of these statements are incorrect. : 5. GAAP is sn abbreviation for 6. CPAs are licensed by + mae b Te city government c. Generally accepted auditing practices & Grate government d. Generally accepted accounting principles 266. What is the primary service of CPAs in public practice?” a. Auditing b Taxation c nagerial accountin, a. Controllership 7, Accountants employed in entities in vari i accounting staf, ch accountant or controler are sal 10 ‘be engaged in a. Public accounting b. Private accounting ¢. Government accounting d. Financial accounting &.It is the area of the accountancy profession that encompasses the process of analyzing, classifying, and communcating all transactions involving the receipt and disposition of government funds and property and interpreting the results thereof. a. In ternal 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. 26 Problem 1-4 Multiple choic (IFRS) 1 The International Accounting Standards Board was formed a. To enforce IFRS in foreign countries Bi To develop a single ect of high quality IFRS To establish accounting standards for multinational entities ie ‘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. ce: Promotes the use of high-quality and understandable plobel accounting standards. 4. Has its headquarters in Geneva a 9 8. The IASB declared that the merits of proposed standards are assessed “a. From a position of neutrality b. From a position of materiality ¢. 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 craft and accounting standard 5. The IASB employs a due process system which jent system for collecting dues from rested parties to express their views on inder consideration. portant. d. Requires that all CPAs must receive a copy of IFRS. 27