1.

Consistency is an important factor in comparability within a single entity which requires that
a. Some costs should be recognized as expenses on the basis of a presumed direct association with specific revenue.
b. Assets whose prices are increased by external events other than transfers should be retained in the accounting records at their recorded
amounts until they are exchanged.
c. Historical cost should be the primary basis in measuring intangible assets and property, plant and equipment.
d. Change in circumstances or in the nature of the underlying transactions should be disclosed.

2. An example of a deductible temporary difference occurs when
a. The installment sales method is used for tax purposes but the accrual method of recognizing sales revenue is used for financial
accounting purposes.
b. Accelerated depreciation is used for tax puposes but straight line depreciation is used for accounting purposes.
c. Warranty expenses are recognized on the accrual basis for financial accounting purposes but recognized for tax purposes as the
warranty conditions are met.
d. The cost recovery method of recognizing construction revenue is used for tax purposes but the percentage of completion method is
used for financial accounting purposes.

3. Application of the full disclosure principle
a. Is theoretically desirable but not practical because the cost of complete disclosure exceeds the benefit.
b. Is violated when important financial information is buried in the notes to the financial statements.
c. Is demonstrated by the use of supplementary information presenting the effects of changing prices.
d. Requires that the financial statements be consistent and comparable.

4. The Securities and Exchange Commission and Philippine Stock Exchange require entities covered by the reportial requirements of the Revised
Securities Act to file
a. Quarterly interim financial reports within 45 days after the end of each of the first three quarters.
b. Quarterly interim financial reports within 30 days after the end of each of the first three quarters
c. Semiannual interim financial reports within 45 days after the end of the first six months.
d. Semiannual interim financial reports within 30 days after the end of the first six months.

5. Which of the following is an application of the principle of conservatism?
a. A provision for a temporary decline in value of a debt security classified as financial asset at amortized cost is recognized.
b. A liability is accrued for a guarantee of the indebtedness of others.
c. An expected loss on a long-term construction-type contract is recognized in full immediately.
d. A peso denominated note payable is adjusted for a peso devaluation that occurs after the end of the reporting period.

6. When it is difficult to distinguish between a change in estimate and a change in accounting policy, an entity shall
a. Treat the entire change as a change in estimate with appropriate disclosure.
b. Apportion on a reasonable basis the relative amounts of change in estimate and the change in accounting policy and treat each one
accordingly.
c. Treat the entire change as a change in accounting policy.
d. Ignore it in the year of the change and then wait for the following year to see how the change develops and then treat it accordingly.

7. The conservative approach in the measurement of financial position is best illustrated in which of the following?
a. Arbitrary reduction of a property item to report a conservative asset position.
b. Recognition of a fictitious liability.
c. Inventory is measured at cost or net realizable value, whichever is lower.
d. An intangible asset is measured at nominal amount.

8. An entity had a plantation forest that is likely to be harvested and sold in 30 years. The income shall be accounted for in which of the following?
a. No income shall reported annually until first harvest and sale in 30 years.
b. Income shall be measured annually and reported using a fair value approach that recognizes andf measures biological growth.
c. The eventual sale proceeds shall be estimated and matched to the profit and loss account over the 30-year period.
d. The plantation forest shall be valued every 5 years and the increase in value shall be recognized as component of other comprehensive
income.

9. Which of the following statements is incorrect concerning the qualitative characteristic of relevance?
a. The relevance of information is affected by its nature and materiality
b. To be useful, information must be relevant to the decision-making needs of users
c. The predictive and confirmatory roles of information are not interrelated.
d. Relevance is the capacity of the information to influence an economic decision.

10. A noncurrent asset that ceases to be classified as held for sale shall be measured at
a. Carrying amount.
b. Recoverable amount at the date of the subsequent decision not to sell.
c. Lower between the carrying amount before the asset was classified as held for sale adjusted for depreciation that would have been
recognized if the asset had not been classified as held for sale and the recoverable amount at the date of the subsequent decision not to
sell.
d. Higher between the carrying amount before the asset was classified as held for sale adjusted for depreciation that would have been
recognized if the asset had not been classified as held for sale and the recoverable amount at the date of the subsequent decision not to
sell.

11. Which of the following statements is incorrect concerning materiality?
a. Information is material if the omission or misstatement could influence the economic decisions that users make on the basis of the
financial information about entities.
b. Materiality depends on the absolute size of the item or error judged in the particular circumstances of the omission or misstatement.
c. Materiality is not fundamental qualitative characteristics but rather a threshold or cut off point in determining useful information.
d. Materiality is dependent on professional judgment because no threshold limit is defined in the Conceptual Framework.

12. Which is incorrect concerning return on plan assets?
a. The actual return on plan assets is one component of the expense recognized in the income statement.
b. The difference between the expected return and actual return on plan assets is an actuarial gain or loss.
c. The expected return on plan assets is based on market expectations, at the beginning of the period, for returns over the entire life of the
related obligation.
d. In determining the expected and actual return on plan assets, an entity shall deduct expected administration costs not included in
actuarial assumptions in measuring defined benefit obligation, and tax payable by the plan itself.

13. Which of the following is not a characteristic of faithful representation?
a. The financial information must be complete within the bounds of materiality and cost
b. The financial information contained in the financial statements must be free from bias
c. The phenomena described in the financial statements and the process used to produce the reported information must be free from
error.
d. The financial information must have predictive value and confirmatory value

14. Which statement is incorrect?
a. Functional currency is the currency of the primary economic environment in which the entity operates.
b. Foreign currency is a currency other than the functional currency of the entity.
c. Presentation currency is the currency in which the financial statements are presented.
d. Net investment in a foreign operation is the amount of the reporting entitys interest in the total assets of that operation.

15. Which of the following statements is incorrect in relation to the enhancing qualitative characteristics?
a. Financial information must exclude complex matters in order to achieve understandability
b. To be most useful, the financial information shall be compared with similar information of previous periods, or with information
produced by other entities.
c. Verifiable financial information implies consensus
d. Financial information shall be made available to users in time to influence their decisions.

16. Indicators of situations which individually or in combination could also lead to a lease being classified as finance lease include all of the
following, except
a. The leased asset is of a specialized nature such that only the leasee can use it without major modification.
b. If the lessee cancels the lease, the lessors losses associated with the cancelation are borne by the lessee.
c. Gain or losses from the fluctuation in the fair value of the residual accrue to the lessee.
d. The lessee has the ability to continue the lease for a secondary period at a rent which is substantially the same as the market rent.

17. Which of the following situations violates the concept of faithful representation?
a. Financial statements when issued nine months late.
b. Data on segments having the same expected risk and growth rates are reported to analyst estimating future profits.
c. Financial statements included an item of property, plant and equipment with carrying amount increased to management estimate of
market value.
d. Managers reports to shareholders regularly refer to new projects undertaken, but the financial statements
never report project results.

18. The Conceptual Framework
a. Includes prudence or conservatism which means when in doubt, choose the solution that will be least likely to overstate assets and
income.
b. Includes prudence or conservatism which means when in doubt, choose the solution that will be least likely
to understate liabilities and expenses.
c. Includes prudence or conservatism as a desirable but not required quality of accounting information.
d. Excludes prudence or conservatism because it is inconsistent with neutrality.

19. An entity has entered into a contract with another entity which will supply a range of services. The payment for those services will be in cash
and based upon the price of the entitys ordinary shares on completion of the contract. In accordance with PFRS 2, what type of share-based
payment transaction does this represent?
a. Asset-settled share-based payment transaction c. Cash-settled share-based payment transaction
b. Liability-settled share-based payment transaction d. Equity-settled share-based payments transaction

20. An implicit assumption of the qualitative characteristics of understandability is that
a. Information must be decision-useful to all potential users of financial statements.
b. General-purpose financial reporting is the primary source of information for users of financial statements.
c. Users need reasonable knowledge of business and financial accounting matters to understand the information in the financial statements.
d. All of the choices are correct

21. There is substantial modification of terms of an old financial liability if the gain or loss on extinguishment is
a. At least 10% of the old liability c. At least 10% of the new liability
b. Less than 10% of the old liability d. Less than 10% of the new liability

22. Which of the following statements is true in relation to the enhancing qualitative characteristic of understandability of financial information?
a. Users have a reasonable knowledge of business and economic activities and review the information with reasonable diligence
b. Users are expected to have significant business knowledge.
c. Financial statements shall exclude complex matters.
d. Financial statements shall be free from material error.




23. 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 shall
a. Leave the noncurrent asset in the financial statements at its current carrying amount.
b. Remeasure 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.

24. Financial information does not demonstrate consistency when
a. Entities in the same industry use different accounting method to account for the same type of transaction
b. An entity changes the estimate of residual value of an equipment.
c. An entity fails to adjust the financial statement for change in the value of the measuring unit.
d. None of these

25. The enhancing qualitative characteristics of financial information are
a. Comparability and understandability
b. Verifiability and timeliness
c. Comparability, understandability and verifiability
d. Comparability, understandability, verifiability and timeliness

26. Financial information exhibits consistency when
a. Accounting procedures are adopted which smooth net income and make results consistent between years.
b. Gains and losses are shown separately in the income statement.
c. Accounting entities give similar events the same accounting treatment each period.
d. Expenditures are reported as expenses and netted against revenue in the period when paid.

27. The ingredients of relevant financial information are
a. Predictive value and Confirmatory value
b. Predictive value, confirmatory value and timeliness
c. Predictive value, confirmatory value and materiality
d. Predictive value, confirmatory value, timeliness and materiality

28. What are qualitative characteristics of financial statements?
a. Qualitative characteristics are the attributes that make the information provided in financial statements useful to users
b. Qualitative characteristics are broad classes of financial effects of transactions and other events.
c. Qualitative characteristics are non qualitative aspects of an entitys position and performance and changes in financial position
d. Qualitative characteristics measure the extent to which an entity has complied with all relevant standards and interpretations.

29. Qualitative characteristics
a. Are considered either fundamental or enhancing.
b. Contribute to the decision-usefulness of financial reporting information
c. Distinguish better information from inferior information for decision-making purposes
d. All of the choices are correct.

30. The fundamental qualitative characteristics are
a. Relevance and faithful representation
b. Relevance, faithful representation and materiality
c. Relevance and reliability
d. Faithful representation and materiality

31. Four types of money prices are used in measuring resources in financial accounting. The measurement which uses such concepts as present
value, discounted cash flow and value in use is known as
a. Price in a current purchase exchange
b. Price in past purchase exchange
c. Price based on future exchange
d. Price in a current sale exchange

32. The principles which constitutes the ground rules for financial reporting are termed generally accepted accounting principles. To qualify as
generally accepted an accounting principle must
a. Usually guide corporate managers in preparing financial statements, which will be understood by widely scattered shareholders.
b. Guide corporate managers in preparing financial statements, which will be used, for collective bargaining agreement with trade
unions.
c. Guide an entrepreneur of the choice of an accounting entity like single proprietorship, partnership or corporation.
d. receive substantial authoritative support

33. Under generally accepted accounting principles
a. Income and expenses, assets and liabilities are measured based on the occurrence of changes in the economic resources and
obligations.
b. Assets and liabilities are measured on the basis of their liquidation value.
c. Income and expenses are recognized on the basis of cash receipts and payments, including depreciation of property, plant and
equipment.
d. Financial position and financial performance are measured on the basis of cash received and cash paid.

34. The objectives of financial reporting are based on
a. The need for conservatism
b. Reporting on managements stewardship
c. Generally accepted accounting principles
d. The needs of the users of the information

35. During a period when an entity is under the direction of a particular management, financial reporting will directly provide information about
a. Both entity performance and management performance
b. Management performance but not entity performance
c. Entity performance but not management performance
d. Neither entity performance nor management performance.

36. Which one of the following is not listed as a major objective of financial reporting?
a. Financial reporting shall provide information about entity resources, claims to those resources and changes in them.
b. Financial reporting shall provide information useful in evaluating managements stewardship.
c. Financial reporting shall provide information useful in investment, credit and similar decisions.
d. Financial reporting shall provide information useful in assessing cash flow prospects.

37. Which of the following statements is not normally an objective of financial reporting?
a. To provide information about an entitys assets and claims against those assets.
b. To provide information that is useful in assessing an entitys sources and uses of cash
c. To provide information that is useful in lending and investing decisions
d. To provide information about an entitys liquidation value

38. What is the objective of financial reporting?
a. To provide information about the financial position, financial performance and changes in financial position of an entity.
b. To prepare and present a statement of financial position, an income statement, a statement of comprehensive income, a statement of
cash flows and statement of changes in equity.
c. To provide financial information about an entity that is useful to existing and potential investors, lenders and other creditors in making
decisions about providing resources to the entity.
d. To prepare financial statements in accordance with all applicable standards and interpretations.

39. The primary focus of financial reporting has been on meeting the needs of which of the following groups?
a. Managers of an entity
b. Existing and potential investors, lenders and other creditors
c. National and local taxing authorities
d. Independent CPAs

40. The overall objectives of financial reporting is to provide information
a. That is useful for decision making
b. About an entitys assets, liabilities and owners equity
c. About an entitys financial performance during a period
d. That allows owners to assess managements performance

41. Which is an objective of financial reporting?
a. To provide information that is useful to those making investment and credit decisions.
b. To provide information that is useful to management.
c. To provide information about those investing in the entity.
d. To provide information about ways to solve internal and external conflicts about the entity.

42. What is a major objective of financial reporting?
a. To provide information that is useful to management in making decisions.
b. To provide information that clearly portrays nonfinancial transactions.
c. To provide information that is useful to assess the amounts, timing, and uncertainty of prospective cash receipts.
d. To provide information that excludes claims against the resources.

43. One element of the objective of financial reporting is to provide
a. Information about the investors in the entity.
b. Information about the liquidation value of the resources held by the entity.
c. Information that is useful in assessing cash flow prospects.
d. Information that will attract new investors.

44. Which of the following statement is incorrect concerning fair presentation if financial statements?
a. Fair presentation requires the faithful representation of the effects of transactions and other events.
b. Financial statements shall present fairly the financial position, financial performance and cash flows of an entity.
c. In virtually all circumstances, a fair presentation is achieved by compliance with applicable PFRS
d. An entity whose financial statements comply with PFRS shall not make an explicit and unreserved statement of such compliance in
notes.

45. Which of the following statements best describes the term financial position?
a. The net income and expenses of an entity.
b. The net of financial assets less liabilities of an entity.
c. The potential to contribute to the flow of cash and cash equivalents to the entity.
d. The assets, liabilities and equity of an entity.

46. Which of the following best describes financial performance of an entity?
a. The revenue, expenses and net income or loss for a period of an entity.
b. The assets, liabilities and equity of an entity.
c. The total assets minus total liabilities
d. The total cash inflows minus cash outflows

47. As part of the objectives of general-purpose financial reporting, there is an emphasis on assessing cash flow prospects. This is an interpreted
to mean
a. Cash basis accounting is preferred over accrual basis accounting.
b. Information about the financial effects of cash receipts and cash payments is generally considered the best indicator of an entitys
present and continuing ability to generate favorable cash flows.
c. Over the long run, trends in revenue and expenses are generally more meaningful than trends in cash receipts and disbursements.
d. All the choices are correct regarding assessing cash flow prospects.

48. Which of the following statements in relation to financial reporting is incorrect?
a. General purpose financial reports do not and cannot provide all of the information that primary users need.
b. General purpose financial reports are designed to show the value of the reporting entity.
c. General purpose financial reports are intended to provide common information to users.
d. Financial reports are largely based on estimate and judgment rather than exact depiction.

49. What is the authoritative status of the Conceptual Framework?
a. The Conceptual Framework has the highest level of authority
b. In the absence of a standard or an interpretation that specifically applies to a transaction, the Conceptual Framework shall be followed.
c. In the absence of a standard or an interpretation that specifically applies to a transaction, management shall consider the applicability
of the Conceptual Framework I developing and applying an accounting policy that results in information that is relevant and reliable.
d. The Conceptual Framework applies only when the Financial Reporting Standards Council develops or revised standards.

50. All of the following are required to achieve fair presentation of financial statements, except
a. To present information in a manner that provides relevant and faithfully represented financial information.
b. To provide additional disclosure when compliance with specific PFRS is insufficient to understand the entitys financial position and
financial performance.
c. To select and apply accounting policies in accordance with applicable PFRS.
d. To rectify inappropriate accounting policies in either by disclosure of accounting policies used or by notes or explanatory information.

51. Which of the following differences would result in future taxable amount?
a. Expenses or losses that are deductible after they are recognized in accounting income.
b. Revenues or gains that are taxable before they are recognized in accounting income.
c. Expenses or losses that are deductible before they are recognized in accounting income.
d. Revenues or gains that are recognized in accounting income but are never included in taxable income.

52. The Conceptual Framework is intended to establish
a. Generally accepted accounting principles in financial reporting by entities.
b. The meaning of present fairly in accordance with GAAP
c. The objectives and concepts for use in development standards of financial accounting and reporting
d. The hierarchy of sources of GAAP

53. This a complete, comprehensive and single document promulgated by IASB establishing the concepts that underlie financial reporting.
a. Conceptual Framework for Financial Reporting
b. Conceptual Framework for Financial Statements
c. Conceptual Framework for Business Entities
d. Conceptual Framework

54. The Conceptual framework should
a. Lead to uniformity of financial statements among entities within the same industry
b. Eliminate alternative accounting principles and methods
c. Guide the PICPA in developing generally accepted auditing standards.
d. Define the basic objectives, terms and concepts of accounting.

55. An entity is permitted to depart from a particular standard if all of the following conditions are satisfied except
a. In extremely rare circumstances.
b. When management concludes that compliance with the standard would be misleading.
c. When the departure from the standard is necessary to achieve fair presentation.
d. When the regulatory conceptual framework prohibits such a departure.

56. Which is not a basic purpose of the Conceptual framework?
a. To assist the Financial Reporting Standards Council in developing accounting standards.
b. To assists preparers of financial statements in applying accounting standards
c. To assist the Financial Reporting Standards Council in reviewing and adopting International Accounting Standards
d. To assist the Board of accountancy in promulgating rules and regulations affecting the practice of accountancy in the Philippines

57. Which of the following is not a purpose of the Conceptual framework?
a. To provide definitions of key terms and fundamental concepts
b. To provide specific guidelines for resolving situations not covered by existing accounting standards
c. To assist accountants and others in selecting among alternative accounting and reporting methods.
d. To assist the Financial Reporting Standards Council in the standard-setting process

58. Which of the following is not an important characteristics of the financial statements that accountants currently prepare?
a. The information in financial statements is expressed in units of money adjusted for changing purchasing power
b. Financial statements articulate with one another because measuring financial position is related to measuring changes in financial
position.
c. The information in financial statements is summarized and classified to help meet users needs.
d. Financial statements can be justified only if the benefits they provide exceed the costs.

59. Which of the following statements describes the term going concern?
a. When current liabilities of an entity exceed current assets
b. The ability of the entity to continue in operation for the foreseeable future
c. The potential to contribute to the flow of cash and cash equivalents to the entity
d. The expenses of an entity exceed its income

60. Which of the following is not an implication of the going concern assumption?
a. The historical cost principle is credible
b. Depreciation and amortization policies are justifiable and appropriate.
c. The current and noncurrent classifications of assets and liabilities is justifiable and significant.
d. Amortizing research and development cost over several periods is justifiable and appropriate.

61. The purpose of the International Financial Reporting Standards is to
a. Issue enforceable standards which regulate the financial accounting and reporting of multinational entities.
b. Develop a uniform currency in which the financial transactions of entities throughout the world would be measured.
c. Promote uniform accounting standards among countries of the world.
d. Arbitrate accounting disputes between auditors and international entities.

62. The International Accounting Standards Board was formed to
a. Enforce IFRS in foreign countries
b. Develop a single set of high quality IFRS
c. Establish accounting standards for multinational entities
d. Develop accounting standards for countries that do not have standard-setting body

63. Which of the following statements best describes generally accepted accounting principles?
a. They have been formulated in the public sector.
b. They have been developed on the basis of such factors as usage and practical necessity
c. They are the same as laws within our legal system.
d. They do not apply to small entities

64. Proper application of accounting principles is most dependent upon
a. Existence of specific guidelines
b. Oversight of regulatory bodies
c. External audit function
d. Professional judgment of the accountant

65. An enity is planning to dispose of a collection of assets. The entity designates these assets as a disposal group. The carrying amount of these
assets immediately before classification as held for sale was P20 million. Upon being classified as held for sale, the assets were revalued to P18
million. The entity feels that it would cost P1 million to sell the disposal group. What would be the carrying amount of the disposal group in the
entitys statement of financial position after its classification as held for sale?
a. 20 million b. 18 million c. 17 million d. 19 million

66. Financial accounting standard-setting
a. Is a democratic process in that a majority of practicing accountants must agree with a standard before it becomes enforceable.
b. Is a legislative process based on rules promulgated by government agencies.
c. Is based solely on research
d. Is social process which incorporates political actions of various interested user groups as well as professional research and logic.

67. For debt restructuring involving substantial modification of terms, it is appropriate for a debtor to recognize a gain when the carrying amount of
the debt
a. Exceeds the total future cash payments specified by the new terms.
b. Is less than the total future cash payments specified by the new terms.
c. Exceeds the present value of the future cash payments specified by the new terms.
d. Is less than the present value of the future cash payments specified by the new terms.

68. Once an accounting standard has been established
a. The standard is continually reviewed to see if the modifications is necessary
b. The standard is not reviewed unless the Securities and Exchange Commission makes a complaint.
c. The task of reviewing the standards to see if medication is necessary is given to the PICPA.
d. The principle of consistency requires that no revisions ever be made to the standard

69. Many shares and most share options are not traded in an active market. Therefore, it is often difficult to arrive at a fair value of the equity
instrument being issued. Which of the following option valuation techniques should not be used as a measure of fair value in the first instance?
a. Black-Scholes model b. Binomial model c. Monte-Carlo model d. Intrinsic value

70. As independent or external auditors, CPAs are primarily responsible for
a. Preparing financial statements in conformity with GAAP
b. Certifying the accuracy of financial statement
c. Expressing an opinion as to the fairness of financial statements
d. Filing financial statements with the SEC

71. A cancelable lease is deemed noncancelable when (choose the incorrect one)
a. The lease can be canceled only upon the occurrence of a remote contingency
b. The lease can be canceled without the permission of the lessor
c. The lessee, upon cancelation, enters into a new lease for the same or an equivalent asset with the same lessor.
d. The lease can be canceled only upon payment of a penalty of such magnitude that the lessee shall be discouraged from cancelling the
lease

72. One of the basic features of financial accounting is
a. Direct measurement of economic resources and obligations and changes in them in terms of money and sociological and psychological
impact.
b. Direct measurement of economic resources and obligations and changes in them in terms of money.
c. Direct measurement of economic resources and obligations and changes in them in terms of money and sociological impact.
d. Direct measurement of economic resources and obligations and changes in them in terms of money and psychological impact

73. Which is incorrect concerning the basic accounting considerations for a defined benefit plan?
a. The fair value of plan assets is the source of fund set aside in meeting future benefit payments.
b. The projected benefit obligation is the present value of expected future payments required to settle the obligation arising from
employee service in the current and prior periods.
c. If the fair value of plan assets is more than the projected benefit obligation, the plan is overfunded and there is prepaid benefit cost.
d. The fair value of plan assets is classified as noncurrent asset and the projected benefit obligation is classified as noncurrent liability in
the statement of financial position.


74. Accounting is a service activity and its function is to 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 Terminology
c. American Accounting Association
d. Board of Accountancy

75. In the absence of an accounting standard that applies specifically to a transaction, what is the most authoritative source in developing and
applying an accounting policy?
a. The requirement and guidance in the standard or interpretation dealing with similar and related issue.
b. The definition, recognition criteria and measurement of asset, liability, income and expense in the conceptual framework.
c. Most recent pronouncement of other standard-setting body.
d. Accounting literature and accepted industry practice.

76. It is the body authorized by law to promulgate rules and regulations affecting the practice of the accountancy profession in the Philippines.
a. Board of Accountancy
b. Philippine Institute of Certified Public Accountants
c. Securities and Exchange Commission
d. Financial Reporting Standards Council

77. Which statement is incorrect concerning interim financial reporting?
a. To save time and cost, entities often use estimates to measure inventories at interim dates to a greater extent than at annual reporting
dates.
b. Depreciation and amortization for an interim period shall be based only on assets owned during the interim period.
c. The cost of planned major periodic maintenance or overhaul that is expected to occur late in the year is not anticipated for interim
purposes, unless an event has caused the entity to have a legal or constructive obligation.
d. Charitable contribution, employee training costs and other costs that are expected to be incurred irregularly during the financial year
shall be accrued as of the interim reporting date.

78. It is the accounting standard setting body in the Philippines at the present time.
a. Accounting Standards Council
b. Auditing and Assurance Standards Council
c. Philippine Accounting Standards Board
d. Financial Reporting Standards Council

79. The purpose of interperiod tax allocation is to
a. Allow reporting entities to fully utilize tax losses carried forward from a previous year.
b. Allow reporting entities whose tax liabilities vary significantly from year to year to smooth payments to taxing agencies.
c. Recognize an asset or liability for the tax consequences of temporary differences that exist at the end of the reporting period.
d. Amortize the deferred tax liability shown in the statement of financial position.

80. In the development of the accounting standards, the FRSC employs a due process system which
a. Is efficient for collecting dues from members
b. Enables interested parties to express their views on accounting issues under consideration.
c. Identifies the accounting issues that are the most important.
d. Requires that all CPAs must receive a copy of PFRS.