PAMANTASAN NG LUNGSOD NG VALENZUELA

College of Business, Accountancy and Public Administration Accountancy Department

THEORY OF ACCOUNTS

1. Under PAS 32, which of the following assets is not a financial asset? a. An equity instrument of another entity b. An equity instrument of another entity c. A contract that may or will be settled in the entity's own instrument and is not classified as an equity instrument of the entity d. Prepaid expenses 2. Which of the following liabilities is a financial liability? a. b. c. d. Deferred revenue A warranty obligation A constructive obligation An obligation to deliver own shares worth a fixed amount of cash

3. Which of the following instrument would not be classified as a financial liability? a. A preference share that will be redeemed by the issuer for cash on the future date b. A contract for the delivery of as many of the entity's ordinary shares as is equal in P100, 000 on a future date c. A written call option that gives the holder the right to purchase a fixed number of the entity's ordinary shares in return for a fixed price d. An issued perpetual debt instrument 4. What is the principal of accounting for a compound instrument? a. The issuer shall classify a compound instrument as either a liability or equity based on evaluation of the predominant characteristic of the contractual arrangement. b. The issuer shall classify the liability and equity components or a compound instrument separately as financial liability or equity instrument. c. The issuer shall classify a compound instrument as a liability in its entirely, until converted into equity component is detachable and separately transferable, in which case the liability and equity component shall be presented separately. d. The issuer shall classify a compound instrument as a liability in its entirely, until converted equity.

value to

5. What is the accounting for treasury share transactions? On repurchase on treasury shares, a gain or loss is recognized equal to the difference between the amounts at which the shares were issued and the repurchase price for the shares. b. On reissuance of treasury shares a gain or loss is recognized equal to the difference between the previous repurchased prices and reissuance price.
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a.

c. On repurchase or reissuance of previously repurchased own shares, no gain or loss is recognized. d. Treasury shares are accounted for as financial assets. 6. How are the proceeds from issuing a compound instrument allocated between the liability and equity components? a. First, the liability component is measured at fair value, and then the remainder of the proceeds is allocated to the equity component. b. First, equity component is measured at fair value, and then the remainder of the proceeds is allocated to the liability component. c. First, the fair values of both the equity component and the liability component as estimated. Then the proceeds are allocated to the liability and equity components based on the relation between the estimated fair value. d. The equity component is measured at its intrinsic value. The liability component is measured at the paramount less the intrinsic value of the equity component. 7. What are the conditions for offsetting of financial assets and financial liabilities? a. A legal right of set-off. b. A legal right of set-off and an intention to settle net or simultaneously. c. The existence of a clearing mechanism or other market mechanism for net settlement and an expectation of net settlement. d. A netting agreement and an expectation of net settlement. 8. For what items is fair value required to be disclosed? a. All financial instruments b. All financial instruments, except unquoted equity instruments and derivatives linked thereto. c. All financial assets and financial liabilities, except investments in unquoted instruments and derivatives linked thereto. d. All financial assets, except for investment in unquoted instruments and derivatives linked thereto. 9. Transaction costs that are directly attributed to the issuance of new shares should be a. Expensed immediately b. Charged to retained earnings c. Deducted from equity d. Deducted from equity, net of any related income tax benefit 10. Costs of public offering of shares or costs that relate to the stock market listing of Shares should be a. b. c. d. Expensed immediately Considered a component of other comprehensive income Deducted from equity Deducted from equity, net of any related income tax benefit

11. Transaction costs directly attributable to the issuance of new shares include all of the following, except a. Documentary stamp tax and other percentage tax b. Underwriting fee
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c. SEC registration fee for new shares d. Stock listing fee 12. Costs of public offering or listing of shares include I. II. III. a. b. c. d. Road show presentation Public relations consultant fee Newspaper publication fee directly relating to the share issue I only I and II only II and III only I, II and III

13. What is the treatment of joint costs that relate jointly to the concurrent listing and issuance of new shares, and listing of old existing shares? a. b. c. d. The joint costs should be expensed immediately. The joint costs should be deducted from equity, net of tax benefit. The joint costs should be deducted from equity, plus tax benefit. The joint costs should be allocated between newly issued and listed shares and the newly listed old existing shares prorate based on the number of shares outstanding.

14. Joint costs related to the concurrent listing and issuance of new shares and listing of old existing shares include all of the following, except a. Fairness opinion and valuation report b. Tax opinion and opinion of counsel c. Audit and other professional advice relating to prospectus design and printing d. Documentary stamp tax 15. Under PAS 33, contingent ordinary shares are treated as outstanding and included in the computation of both and diluted earnings per share if the conditions are satisfied. Which of the statements is true? I. II. Contingent ordinary shares are included in the calculation old basic earnings per share from the date the condition is satisfied. Contingent ordinary shares are included in the calculation of diluted earnings per share from the beginning of the period or from the date of contingent agreement, if later. a. b. c. d. I only II only Both I and II Neither I nor II

16. Entity A has an ordinary A class, nonvoting share, which is entitled to a fixed dividend of 6% per annum. The A class ordinary share will a. Be included in the per share calculation after adjustment for the fixed dividend b. Be included in the per share calculation for EPS without adjustment for the fixed dividend. c. Not be included in the per share calculation for EPS
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d. B e included in the calculation of diluted EPS. 17. Earnings per share are calculated before accounting for which of the following items? a. Preference dividend for the period b. Ordinary dividend c. Taxation d. Minority interest 18. Ordinary shares issued as part of a business combination are included in the EPS from a. The beginning of the accounting period b. The date of acquisition c. The end of the accounting period d. The midpoint of the accounting year 19. Which statement is true concerning EPS calculation? I. Potential ordinary shares issued by a subsidiary should be included in diluted EPS as they could potentially have an impact on the net profit for the period of and the number of shares to be included in the calculation. An entity should diluted EPS only if it differs from the basic EPS by a material amount. a. b. c. d. I only II only Both I and II Neither I nor II

II.

20. Under PAS 34, interim financial reports shall include as a minimum a. A complete set of financial statements b. A condensed set of financial statements and selected notes. c. A statement of financial position and an income statement only. d. A condensed statement of financial position, income statement and statement of cash flows only. 21. If an entity does net prepare interim financial reports a. The year-end financial statements are deemed not to comply with PFRS b. The year-end financial statements compliance with PRFS is not affected c. The year-end financial statements will not be acceptable under local legislation d. Interim financial reports should be included in the year-end financial statements 22. PAS 36, applies to which of the following? a. b. c. d. Inventories Financial assets Assets held for sale Property, plant and equipment

23. The internal sources of information indicating possible impairment include all of the following, except a. Evidence of obsolescence or physical damage of an asset.

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b. Significant change in the manner or extent in which the asset is used with an adverse effect on the entity. c. Evidence that the economic performance of an asset will be worse than expected. d. Significant decrease or decline in the market value of the asset 24. The external sources of information indicating possible impairment include all of the following, except a. Significant change in the technological, market, legal or economic environment of the business in which the asset is employed. b. An increase in the interest rate or market rate of return on investment which will likely affect the discount rate used in calculating value in use. c. The carrying amount of the net assets of the entity is more than its market capitalization. d. Significant decline in budgeted net cash flows or significant increase in budgeted loss flowing from the asset. 25. When deciding on the discount rate to be used in calculating value in used, which factor should not be taken into account? a. The time value of money b. Risk specific to the asset for which future cash flow estimates have been adjusted. c. Risk specific to the asset for which future cash flow estimates have been adjusted. d. Pretax rate

26. Which of the following impairment losses should never be reverses? a. Loss on property, plant and equipment. b. Loss on goodwill c. Loss on a business segment d. Loss on inventory 27. Where part of a cash generating unit is disposed of, the goodwill associated with the element disposed of a. Shall not be written off to the income statement entirely. b. Shall not be included in the calculation of gain or loss c. Shall be included in the calculation of gain or loss d. Shall be written off against retained earnings 28. When allocating an impairment loss, such a loss should reduce the carrying amount of which asset first? a. Property, plant, and equipment b. Intangible assets c. Goodwill d. Current assets

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29. Under PAS 38, this of the following disclosures is not required with respect to intangible assets? a. Useful lives of the intangible assets b. Reconciliation of carrying amount at the beginning and the end of the year c. Contractual commitments for the acquisition of intangible assets d. Fair value of similar intangible assets used by its competitors. 30. A new dot-com entity has recently completed one of its highly publicized research and development projects. Which of the following statements is true? a. Costs incurred during the "research phase" can be capitalized b. Costs incurred during the "development phase" can be capitalized if criteria such as technical feasibility of the project being established are met c. Training costs of technicians used in research can be capitalized d. Designing of jigs and tools would qualify as research activities. 31. Under PAS 37, a "provision" is recognized I. When there is a legal obligation arising from a past obligation event, the probability of the outflow of resources is more than remote but less than probable and reliable estimate can be made of the amount of obligation. II. When there is a constructive obligation as a result of a past obligating event, the outflow of resources is probable, and a reliable estimate can be made of the amount of the obligation. a. I only b. II only c. Both I and II d. Neither nor II 32. Which of the following is within the scope of PAS 37? a. Financial instrument carried at fair value b. Future payments under employment contracts c. Future payments on vacant leasehold premises d. An insurance entity's policy liability 33. A competitor has used an entity for unauthorized use of its patented technology. The amount that the entity may be required to pay to the competitor if the competitor succeeds in the lawsuit is determinable with reliability, and according to the legal counsel is less that probable but more than remote than an outflow of the resources would be needed to meet the obligation. The entity that was issued should be year-end a. Recognize a provision for this possible obligation b. Make a disclosure of the possible obligation in the notes to financial statements c. Make no provision Or disclosure and wait until the lawsuit is finally decided and then expense the amount paid on settlement d. Set aside as an appropriation, a contingency reserve, an amount based on the best estimate of the possible liability

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34. Under PAS 39, which of the following is not a category of financial assets? a. Financial assets at fair value through profit or loss b. Available for sale financial assets c. Held for sale investments d. Loans and receivables 35. All of the following are characteristic of financial assets classified as held-to-maturity investments, except a. They have fixed or determinable payments and a fixed maturity b. The holder can recover substantially all of its investment unless there has been credit deterioration c. They are quoted in an active market d. The holder has a demonstrated positive intension and ability to hold them to maturity 36. All of the following are characteristic of financial assets classified as loans and receivables, except a. They have to fixed or determinable payments b. The holder can recover substantially all of its investment unless there has been credit deterioration. c. They are not quoted in an active market d. The holder has a demonstrated positive intention and ability to hold them to maturity. 37. What is the principle for recognition of the financial asset? a. A financial asset is recognized when it is probable that the future economic benefits will flow to the entity and cost or value of the instrument can be measured reliably. b. A financial asset is recognized when the entity obtains control of the instruments and has the ability to dispose of the financial asset independent of the actions of others. c. A financial is recognized when the entity obtains the risks and rewards of ownership of the financial asset and has the ability to dispose the financial asset d. A financial is recognized when the entity becomes a party to the contractual provisions of the instrument 38. At what amount is a financial liability measured on initial recognition? a. The consideration paid or received for the financial asset or financial liability. b. Acquisition cost c. Fair value d. Zero 39. In which of the following circumstances is derecognition of a financial asset not appropriate? a. The contractual rights to the cash flows of the financial assets have expired. b. The financial asset has been transferred and substantially all the risks and rewards of ownership of the transferred asset have also been transferred. c. The financial asset has been transferred and the entity has retained substantially all the risks and rewards of ownership of the transferred asset.

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d. The financial asset has been transferred and the entity has neither retained nor transferred substantially all the risks and rewards of ownership of the transferred asset but the entity has lost control of the transferred asset. 40. Which of the following transfer of financial asset would qualify for derecognition? a. A sale of a financial asset where the entity retains an option to buy the asset back at its current fair value on the repurchase date. b. A sale of a financial asset where the entity agrees to repurchases the asset in one year for a fixed price plus interest. c. A sale of a portfolio of short-term accounts receivable where the entity guarantees to compensate the buyer for any losses in the portfolio. d. A loan of a security to another entity. 41. Which of the following is not a relevant consideration when evaluating whether to derecognize a financial liability? a. Whether the obligation has been discharged. b . Whether the obligation has been canceled c. Whether the obligation has been expired. d. Whether substantially all the risks and rewards of the obligation have been transferred. 42. What is the best evidence of the fair value of a financial instrument? a. Its cost, including transaction costs directly attributable to the purchase origination or issuance of the financial instrument. b. Its estimated value determined using discounted cash flow techniques, option pricing models or other valuation techniques. c. Its quoted price, if an active market exists for the financial instrument d. The present value of the contractual cash flows less impairment. 43. Which of the following is not objective evidence of impairment of a financial asset? a. Significant financial difficulty of the issuer or obligor. b. A decline in a fair value of the asset below its previous carrying amount. c. A breach contract, such as a default or delinquency in interest or principal payments d. Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial asset although the decrease cannot yet be associated with any individual financial asset. 44. All of the following are characteristic of a derivative, except a. It is acquired or incurred by the entity for the purpose of generating a profit from short-term fluctuations in market factors. b. Its value changes in response to the change in a specified underlying. c. It requires no initial investment or an initial net investment. d. It is settled at a future date.

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45. Which embedded derivative should not be accounted by separately? a. An investment in a convertible bond that is classified as available for sale. b. An investment in a bond whose interest payment are linked to the price of gold and the bond is classified as available for sale. c. An investment in a bond whose interest payment are linked to the price of silver and the bond is classified as at fair value through profit or loss. d. A call option in an investment in an equity instrument that allows the issuer to repurchase the instrument. 46. This is defined as a "purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally be regulation or convention in the market place concerned". a. Regular way contract b. Forward contract c. Finn commitment d. Forecast transaction 47. What is the meaning of "trade date accounting" in relation to regular way purchase or sale of financial asset? I. The recognition of the asset to be received and the liability to be paid on the date on which the entity commits itself to purchase or sell an asset. II. The recognition of the asset on the date received by the entity or derecognition of the asset on the date by the entity. a. I only b. II only c. Either I or II d. Neither I nor II 48. Under PAS 40, an investment property should be measured initially at a. Cost b. Cost less accumulated depreciation and impairment losses. c. Depreciable cost less accumulated impairment losses. d. Fair value less accumulated impairment losses. 49. A gain arising from a change in the fair value of an investment property for which an entity has opted to use the fair value model is recognized in a. Net profit or loss for the year. b. General reserve in the shareholders' equity. c. Valuation reserve in the shareholders' equity. d. Retained earnings. 50. Which of the following is not dealt with by PAS 41? a. The accounting for biological assets. b. The initial measurement of agricultural produce harvested from the entity's biological assets. c. The processing of agricultural produce after harvesting. d. The accounting treatment of government grant received in respect of biological assets.
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51. Generally speaking, biological assets relating to agricultural activity should be measured using a. b. c. d. Historical cost Historical cost less depreciation less impairment A fair value approach Net realizable value

52. An entity had a plantation forest that is likely to be harvested and sold in thirty years. The income should be accounted for in which of the following way? a. No income should reported annually until first harvest and sale in thirty years. b. Income should be measured annually and reported using a fair value approach that recognizes and measures biological growth. c. The eventual sale proceeds should be estimated and matched to the profit and loss account over the 30-year period d. The plantation forest should be measured every five years and the increase in value should be shown in the statement of recognized of gains and losses 53. Which of the following information shall be disclosed in relation to biological assets and agricultural produce? a. Separate disclosure of the gain or loss relating to biological assets and agricultural produce. b. The aggregate gain or loss arising on the initial recognition of biological assets and agricultural produce and from the change in fair value less cost to sell of biological assets. c. The total gain or loss from biological assets, agricultural produce, and from changes in fair value less cost to sell of biological assets. d. There is no requirement in the standard to disclose separately any gains or losses 54. Where there is a production cycle of more than one year for biological asset, separate disclosure is encouraged for a. Physical change only b. Price change only c. Total change in value d. Physical change and price change 55. An unconditional government grant related to a biological asset that has been measured at fair value less cost to sell should be recognized as a. Income when the grant becomes receivable b. A deferred credit when the grant becomes receivable c. Income when the grant application has been submitted d. A deferred credit when the grant has been approved

56. If a government grant related to a biological asset is conditional on certain events, the grant should recognized as a. Income when the conditions attaching to the grant are met b. Income when the grant has been approved c. A deferred credit when the conditions attached to the government grant are met d. A deferred credit when the grant is approved
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57. This is define in PFRS 1 as the first annual financial statements in which an entity adopts Philippine Financial Reporting Standards (PFRS) by an explicit and unreserved statement of compliance with PFRS. a. PFRS financial statements b. First PFRS financial statements c. Opening PFRS statement of financial position d. First audited PFRS financial statements 58. An entity that presents its first PFRS financial statements known as a. An originating entity b. A provisional presenter c. A first-time adopter d. An initial reporter 59. An entitys statement of financial position, published or unpublished, at the date of transaction to PFRS is best described as the a. Provisional PFRS statement of financial position b. Closing GAAP statements of financial position c. Opening PFRS statement of financial position d. Originating PFRS statement of financial position 60. Which of the following statements best describes the date of transition to PFRS? a. The beginning of the latest period presented in the entitys most recent annual financial statements under previous GAAP b. The end of the latest period presented in the entitys most recent annual financial under previous GAAP c. The beginning of the earliest period for which an entity presents full comparative information under PFRS in its first PFRS financial statements d. The end of the earliest period for which an entity presents full comparative information under PFRS in its first PFRS financial statements 61. Which of the following transaction involving the issuance of shared does not come within the definition of a share-based payment under PFRS 2? a. Employee share purchase plans b. Employee share option plans c. Share-based payment relating to an acquisition of a subsidiary d. Share appreciation rights 62. Which of the following is true regarding the requirements of PFRS 2? a. Private entities are exempt b. Small entities are exempt c. Subsidiaries using their parent entitys shares as consideration for goods and services are exempt d. There no exemptions for PFRS 2

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63. It is an arrangement that provides for automatic grant of additional share options whenever the option holder exercises previously granted options using the entitys shares, rather than cash to satisfy the exercise price a. Reload feature b. Reload option c. Share option d. Equity option 64. Under PFRS 3, which of the following examples is unlikely to meet the definition of an intangible asset? a. Marketing related, such as trademarks and internet domain names b. Costumer related, such as costumer lists and contracts c. Technology based, such as computer software and databases d. Pure research based, such as general expenditure on research 65. Which of the following would not contribute to the creation of negative goodwill? a. Errors in measuring the fair value of the acquirers net identifiable assets or the costs of the business combination b. A bargain purchase c. A requirement in PFRS to measure net assets acquired at the value other than fair value d. Making acquisitions at the top of a bull market for shares

66. PFRS 4 defines a reinsurance contract as a issued by one insurer, the reinsure, to Compensate another insurer for losses on one or more contracts issued by the cedant. What is the meaning of cedant in a reinsurance contract? a. Policy holder under a reinsurance contract b. Policy holder under an reinsurance contract c. Insurer under an insurance contract d. Reinsurer under a reinsurance contract 67. The recognition of unrealized gain or loss on the measurement of the financial assets and insurance liabilities as a component of other comprehensive income is described in insurance parlance as a. Fair value accounting b. Current value accounting c. Hedge accounting d. Shadow accounting 68. This is defined as the payments to which a particular policyholder has an unconditional right that is not subject to the contractual discretion insurer. a. Guaranteed benefits b. Unconditional benefits c. Proceeds of policy d. Executory benefits

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69. It is the insurers net contractual right under an insurance contract. a. Insurance asset b. Insurance liability c. Reinsurance asset d. Reinsurance liability 70. Which of the following accounting practices has been outlawed in relation to insurance contracts? a. Shadow accounting b. Catastrophe provisions c. A test for the adequacy or recognized insurance liabilities d. An impairment test for reinsurance assets 71. All of the following are requirements for insurance contracts, except a. Non offsetting of reinsurance assets against related insurance liabilities b. An annual assessment of the adequacy of recognized insurance liabilities c. An impairment test for reinsurance assets d. Recognition of provisions for future claims relating to a catastrophe 72. Which of the following types of contracts would probably not be covered by PFRS 4? a. Motor insurance b. Life insurance c. Medical insurance d. Pension plan 73. Under PFRS 5, how should the assets and the liabilities of a disposal group classified as held for sale be shown in the statement of financial position? a. The assets and liabilities should be offset and presented as a single amount b. The assets of the disposal group should be shown separately from other assets and the liabilities of the disposal group should be shown separately from other liabilities c. The assets and the liabilities should be presented as a single amount and as a deduction from equity d. There should be no separate disclosure assets and liabilities that form part of a disposal group 74. An entity acquires a subsidiary exclusively with a view to selling it. The subsidiary Meets the criteria to be classified as held for sale. At the end of reporting period, the subsidiary has not yet been sold and six months have passed since its acquisition. How will the subsidiary be valued at the date of the first financial statements after acquisition? a. At the fair value b. At the lower of its cost and fair value less cost to sell c. At carrying amount d. In accordance with applicable PFRS

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75. An entity has an asset that was classified as held for sale. However, the criteria for it to remain as held for sale no longer apply. The entity should a. Leave the noncurrent asset in the financial statements at its current carrying amount b. Premeasured the noncurrent asset at fair value c. Measure the noncurrent asset at the lower of its carrying amount before the asset was classified as held for sale adjusted for subsequent depreciation, amortization or revaluation, and its recoverable amount at the date of the decision not to sell d. Recognize the noncurrent asset at its carrying amount prior to its classification as held for sale adjusted for subsequent depreciation, amortization or revaluation. 76. How should the income from discontinued operation be presented in the income statement? a. The entity should disclose a single amount on the face of the income statement with analysis in the notes or s section of the income statement separate from continuing operations. b. The amounts from discontinue operations should be broken down over each category of revenue and expense. c. Discontinue operation should be shown as a movement on retained earnings d. Discontinue operation should be shown as a line item after gross profit with the taxation being shown as part of income tax expense 77. Which of the following criteria does not have to be met in order for an operation to be classified as discontinued? a. The operation should represent a separate major line of business or geographical as asset b. The operation is part of a single plan to dispose of a separate major line in business or geographical area c. The operation is subsidiary acquired exclusively with a view of resale d. The operation must be sold within three months of the year-end 78. Does PFRS 6 require an entity to recognize exploration and evaluation expenditure as asset? a. Yes, but only to the extent such expenditure is recoverable in future periods b. Yes, but only to the extent the technical feasibility and commercial viability of extracting the associated mineral resource have been demonstrated c. Yes, but only to the extent required by the entitys accounting policy for recognizing exploration and evaluation asset d. No, such expenditure is always expensed in profit or loss as incurred

79. An entity is required to consider which of the following in developing accounting policies for exploration and evaluation activities? a. The requirements and guidance in Standards and interpretations dealing with similar and related issue b. The definitions recognition criteria, and measurement concepts for assets, liabilities, income and expenses in the Conceptual Framework c. Recent pronouncements of standard-setting bodies, accounting literature and accepted industry practices
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d. Whether the accounting policy results in information that relevant and reliable 80. Which of the following would never qualify as an exploration and evaluation asset? a. Expenditure for acquisition of rights to explore b. Expenditure for exploratory drilling c. Expenditures related to the development of mineral resources d. Expenditures for activities in relation to evaluating to technical feasibility and commercial viability of extracting a mineral resource 81. Which of the following is not a disclosure required in relation to exploration and evaluation expenditures? a. Information about commercial reserve quantities b. Accounting policies for exploration and evaluation expenditures, including the recognition of exploration and evaluation assets c. The amounts of assets, liabilities, income, and expense, and opening and investing cash flows arising from the exploration and evaluation of mineral resources d. Information that identifies and explains the amounts recognized in the financial statements arising from the exploration and evaluation of mineral resources. 82. Which is not a characteristic of the full cost method of accounting in the oil and gas industry? a. All costs incurred in acquiring, exploring and developing within a defined cost center are capitalized and amortized b. Costs are capitalized even if a specific project in a cost center was a failure c. Costs of unsuccessful acquisition and exploration activities are charged to expense d. Exploration and evaluation asset is classified either as tangible asset or an intangible asset according to the nature of the asset 83. Under PFRS 7, the risks arising from financial instruments that are required to be disclosed include all of the following, except a. Qualitative and quantitative information about credit risk b. Qualitative and quantitative information about liquidity risk c. Qualitative and quantitative information about market risk d. Qualitative and quantitative information about operational risk 84. This defined as the risk that one party to a financial instrument will cause a financial loss to the other party by falling to discharge an obligation a. credit risk b. liquidity risk c. market risk d. operational risk 85. Which of the following best describes the risk that an entity will encounter if it has difficulty in meeting obligations associated with its financial liabilities? a. liquidity risk b. credit risk c. Financial risk d. Payment risk
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86. This is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. a. credit risk b. liquidity risk c. market risk d. operational risk 87. The components of market risk are a. Credit risk and liquidity risk b. Currency risk and credit risk c. Interest risk and Currency risk d. liquidity risk and Currency risk 88. Disclosure of information about significant concentration of credit risk is required for a. All financial instruments b. Financial instruments with off statement of financial position credit risk only c. Financial instruments with off statement of financial position market risk only d. Financial instruments with off statement of financial position risk of accounting loss only. 89. Under PFRS 8, an operating segment is reportable when I. II. The segment external and internal revenue in 10% or more of the combined external and internal revenue of all operating segments The segment profit or loss is 10% or more of the greater between the combined external profit of all operating segments that reported profit and the combined loss of all operating segments that reported loss The assets of the segment are 10% or more of the total assets of all operating segments a. b. c. d. I and II only I and III only II and III only I, II, and III

III.

90. Which of the following statements is true about major costumer disclosure? I. II. A major costumer is defined as one providing revenue which amounts to 10% or more of the combined external and internal revenue of all operating segments The identities of the major customers must be disclosed a. b. c. d. I only II only Both I and II Neither I nor II

91. Under SIC 15, what is the treatment of operating lease incentives upfront cash, reimbursement of costs incurred by lessee and rent-free period granted by the lessor to the lessee? I. The lessor shall recognize the aggregate cost of the incentives as a reduction of the rent income over the lease term on s straight line basis
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II.

The lessee shall recognize the aggregate benefit of the encentives as reduction of rent expense over the lease term a. b. c. d. I only II only Both I and II Neither I nor II

92. Under IFRIC 2, members shares in cooperatives may give the holder the right to request redemption for cash or other financial asset. Such members shares shall be accounted for as a. Equity b. Liability c. Either as equity or liability d. Party equity and party liability 93. Members shares in cooperatives shall be classified as equity I. II. If the entity has the unconditional right to refuse redemption of members shares If the redemption of members shares is unconditionally prohibited by law a. b. c. d. I only II only Both I and II Neither I nor II

94. Fair value of an asset should be based upon a. The replacement cost of an asset b. The price that would be received to sell the asset measurement date c. The original cost of the asset plus as adjustment for obsolescence d. The price that would be paid to acquire tha asset

95. Which of the following describes a principal market for establishing fair value of an asset? a. The market that has the greatest volume and level of activity for the asset b. Any broker or dealer market thay buys or sells the asset c. The most observable market in which the price of the asset is minimized d. The market in which tha amount received would be maximized 96. Which of the following would meet the qualifications as market participants? a. A liquidation market in which sellers are compelled to sell b. A subsidiary of the reporting unit interested in purchasing assets similar to those being valued c. An independent entity that is knowledgeable about the asset d. A broker or dealer that wishes to establish new market for the asset 97. Which of the following is an assumption used in fair value measurements? a. The asset must be in-use b. The asset must be considered in-exchange
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c. The most conservative estimate must be used d. The asset is in its highest and best use 98. Which of the following is not a valuation technique used in fair value estimates? a. Income approach b. Residual value approach c. Market approach d. Cost approach 99. Valuation techniques for fair value that include the Black-Scholes formula, a binomial model, or discounted cash flows are examples of which valuation technique? a. Income approach b. Market approach c. Cost approach d. Exit value approach 100. The market approach valuation technique for measuring fair value requires which of the following? a. Present value of future cash flows b. Prices and other relevant information f transaction from identical or comparable assets c. The price to replace the service capacity of the asset d. The weighted average of the present value of future cash flows.

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