/ CPA. REVIEW so-1cy.

J,_ i_i ,' Tf-IE PHILIPPINES

'l a ni i"-1

. ! HEORY OF ACCOUNTS -- PREWEE'<. LLCTCR� \!ALIX SIY VAUX FERRER

i"IH: IASB declared t hat 1 he m.eri ts ot p riwo sed st:wcards are assessed
. .

;i. From a posi ti o n of ne ut ra l i ty

. . ' •

':i. From a position of m.ueriality

c Based on possible impact on behavit�'
.•

J. Based on arguments of lobbyi�t

The "d ue process" system in the develc:->rnt'tt. ,)r .1. sthn-i ard
.a.Is an efficient system for collecting d1•• es !qm nembcrs. .
b. Enable s interested parties to express u1cir 'iie-.. s 0f1 i ssue s under c uns1der ati on .
.

.:. Identifies the acco unt ing issues that ::-.Je the most important.
._t. Requires that all accountants must :eceiv� a C•)P Y of accoun ting standards.

What is the chronological or der in the �·;a!uati•m �fa ty p i ca l standard':'

�1. Exposure draft. Standard and Discu:::::::: i·Jn pa:x·1

o. Exposure draft, Discussion paper and S1a�i-.i�:r...:
·�- Standard. Discussion pa per and Elq:.•�·sur� :i:·:1:1
d. D!srnssion paper. Exposure draft ano Si:ind:i!' ·

I
I
'�
Whnl is
.1.

b
c.
.•
.i pussil:.k dang.er if p0litics 11:-.i� _; W'.• hiv.
1:inancial reporting standards art r:·Jl :n.::- _.;...::,.·r,dly a�ceptt:d
Individuals may influ en ce the sta r.di!rJ c.
U ser groups become active.
.
•
•
.1

•
r· J k in de v c- i opin g lFRS'.1
. • • ! •t:•

d. The IASB delegates it s au thori ty. to eh:ct;:d '-'! l•ci als .

.
Whal is the authoritative status of the Cont'1�1H11al framewor!<?

The Concept ual Frai-nework has th1: h.�ht: ! I'.·· -:: .::,f aut ho ri ty .
-.i. .

b. In the ab se n c e ofa Standard or an lr:t.:rpr-:-1.:.'. i1(·r, tha t specifically appt:es to a transac1ioi1. the
.

Conc e ptual Framework should be fcli•'';, c(:

In the abs en ce of a Standard or an 1n··�!·;i: :1..t10n t h at speufically a p plie s to a trnnsactio1i..
ma1wgemern should c ons ider the '.pp:i..::1tii1i1, .)f the Conceptual Fram<::v.urk in de\ eloping
and applying an a<.:C: l u ming policy ti,.:, .::-·:L::1
· 11 ;11li.rnm1uon that is r �l e vant and relialik.
• .

,I. The Co ncept ual Framework app iies oni� v:lre: t!1e FRS( dev el o ps new or re vised standards.

., 1:. . What is a maj or objective of fin anci a l r�n-.:.;·1i,1·{' •

I

:.1.To provi de information that is usdu� L·.: r-1<11 a;;· .::ment i n making decisions.
b. To provide information that c lea r ly 1_,,,r;: 1: - '.!'"·1financial transactions.
'-" Tu provide inforrnarion th�I i<: :1::;t:·! ·I t·:r ,, : , .' '.:'S the amounts. timing. and unc ert a inty of
-
., .
. l.

-1 (· p•· :rspec:I ive ca;;h rect·ipts.

.J. To provide information tl1at excllj(1e�' 1.:J>l•n'!': i.: the resomces .
.
3.'i
. . '

The term "assessing caslt flow prospects· ·, - .111 •>!�1c<:tive of fin:m : cial rcpo11ing rne a ns
.

J •,
J.Cash basis is preferred over accrual o·.-:-: C[ ..··�.'.OLmting
f(J
0: Information about the financial effr·1.�l� ( ,, ··w::i· rc�c eip t s 3rid cash payments is considered th�·
I
best indicatorofc:ominuingabi!it· to .. -1..:; tio.: :avorable cash tlov.s.
·�- Ov e r tl1e long run. trends in n:·v··r•· . . •11 ; :·.:·:1se:'> are g,e 1 1 eral l y more meani ngflll
trends in cash receipts and payme11:.:;
'd. All of these are correct regard i ng as�:·;�<:in·.r·c:-i01� flow prospects.

�- Which of the following is an implicatio,1 ::.• :i, � 1 i'\:! (1.rncern assumption'?

:i. The historical cost principle is ere.lib! ·
• !
I). DL•preciation and amortization polic1e,- :ff.� :i1:--.t:!;Jble anJ appropri:ite.
c. ,md liabilities is jus tifi abl e and significant
•
The current-11oncum·nt clnssiticat:iin .- .
. ::. ·.!. �

1.l. All of these

 ,

(,
To achieve foith 1 u \ repre:�emation. the fin:mcia1 sl4,1<.:men:�
'

�. Must have predicriw and c�mfirmator··· va!ue.

b. Are com pk��:. neut:al and free from .h.i<!s and �:Tor.
c. Are compm·<iblc. understandabie, verifiable ;inc t'.melv.
.
d. All of these
·
�!n qualit�· ,r;iai relate s to both rek \ a n ce and
faithful'
\0. Which of 1he fr,lkw"ing. is enhancing '

representation?
�. C'omparnbility
b .• Confirmatory value
·�. Predictive value
d. Freedom from error

l I .,Whu1 i�: the underlying concept that supp1jt"�s c::1.1i1:.-,atiug. a tixed asset impairment charge? •

:i. Substance over form

h. · Consistency
c. l\'latchi1) 1l�
·
d. Faithful representatioi:

12. What is the com:ept chm :;uppons the issuanc:t: of '.;iterirn repo11s·)
.
,1. Rekva11ce
b. Materiali,-,·
Consisttn�:v
v.

:l. Faithfu; repri::s1:nt<t!i( ·n

1.1. Whn1 is th·� rCl\\lirt·nw111 for incorporntinP. an ite n i'1to Lhe i1h:nme slaternent or staremcnt 01·
lirn111cial po-;itil·ll'.'
•
a . It meet�; the d e fi n iti on of relevance and fairhfu:-repres.entation. • !•t:•
•
b. It m�et�i the d..:: linition or an clemer.t and en., �·e measurc:: d reliably
c lt SJ
t i d ies the criteri;;i of ca?i tal maimenan·::e
d. It meet:; the requirement of comp�rab:!it�' an�� :onsiste nc:y.
14. Wh ic h of tile fullowing i� trn� re gard ing the,; �st-benelit constraint'.'
:i. 13enetlts arc more di:·1icult tn qu:intif�.' than cu:t:>.
h. The IAS 13 seeks input on costs and benefit.> as part of due process.
(;. lkndits to preparers may include access LO c�-:1ital at a lo we r cost.
d. All of t11e c hoices an: correct.

15. Under PA�: L v. hil'\1 of :l!e �oil0win5 is trne ab01.a tin<.rncial statement requirements?
;.1. Prior year comfJ«rati ,.e financial "sw.teme'.'lt�> aw r·�quired.
h. I nco me statcni•:ms t'i•r three year5 are :·cqu:recl
c. Statemer.1.s nf linc1nc1a! position lor ihr�e ye!:!::. are required.
d. There are nn spccifa requiremen;s 1 egarding ..:·0:11paratiH: financial slatemen"cs.
�
: (>.The basis r..>r cl<ts-;il'yin�· ·1sscts :::s currem or non�:urrent is con,·crsion 10 cash 'v\ ithin
a. The. accoun • i rli' c :-·,: 1.- .)r �rne year_ wll ichever ; ; shorter.
b. The op•:rating ._·�·l'.k :ll •>tic ye•tr, whi•,'he\·1:':· j,; ;hur11:1 .
The uccoui-,!inµ. cycl·· or urn:: year. whiehever ii l 011jjcr.
,
c.
�. The operatinJ! eve le or o!1e year. whit:>he,�er is on'g.er

in�<)l";"fCt in.re!'.:!��Ull l�J ruir prest'ntation?

l 7. Which of the fo ll o wi ng. :;tatements is
a. Fair prescn:atio:i tlw taitnfu: !·�r�·:sentaiion of the effects of transacti o ns 111
n:quir<:s •

ai.:cordance with the defi;1ition criteria �Ci ass�ts.

!i:ibili11cs. income and expense.

1\n enjty whose trnar1c!3! s1a1e!'!'lct!l!-.: �un1;;!y

with PFRS shall make an expli('it and
b.
1111:-;.:scrv�d stateme!ll of su.::h :;omp!ic.!1ce iw th: note<;. •

.;;a1 �p;·(1r1C-!�ts as 1:umplying. with

/\n cn1itv �hall no'. .jes·::-il..:e !ln<.1n
PFRS unle�s they.
c.
01· r�::-:Rs. . .
compi:, �·irh all rh-: n:quirements .
inap nro pria �C ;l(�C( Jl.l!lt lOg rolte1es either by disclo s ure of' !ht!
d. .l\n (;'!1lll\. t.:�n rf.Cl
to:·:/ rnntcr!a l .
ify
l�r L:t nc,L•'� (°Jr er.pbn
'

accounting peiic;-.:·:-. i ..:'·i

 Page · 3
18 ".Vhich of the following sta·
lem en ts in
.
rc1allL·:'. r0 :'ii. . »c1al statements 1s incorrect?
. �- . . .

<L An entit y
•

tements on<' 1w1m.! e:-:r cern basi s when managen1ent ellher mterrµs
shall re re sta • •

·d ate h P p
. .
a
·
to 11qu1
cease tradH:g or�::is !; •) ,realistic alternative but to do s o . ,
•
t e entity or to . - •·

b· . A\ 11 enu ty s 11n_ 1 I prep

. ·

. d '�
• ·
are linancial star.em nts u:-iM
c.
· � . the cash basis of acco
f n e n t ity shall
_ u nt i ng. •

ij:!oilitic.> � r i n lom e ar.d e x p e e

. not o1·1·set assets and n s s. unless re4uir� �>r •

permitted by PFRS •

.
Li.
resent a c omp lete �-1.'t ;)t
�n entity sha l l p
. , .. !ancial statements, inc.:luding compar ati�e
mlormation. at lea
st annually.

19 · �
.. an e mity uses the
modi fied cash ba:;s t�� ncc�lwting. the n10ditications from the run: cash
a�is sho�ld
have substantial supp on whic11 1eq1;•�re•. thc.tt
a. The h n an c ial
statements have onl y IT.0('if•.ations from GAAP.
b. �he modifications must be the samen1;n:,rtl1osc rq1:i�ed by tax !av..
c.s
c. 1 he modifications musr be the
same as CAAP a.:d not illogical.
d. No modifications are allowed
.

20. An emi\y is required to prepare iht

a third st;:i1c::n�en1 or financial posit i on at the beginning of
earl!c:;: comparative pe2·i.1d \,\!hen th e f:'nlitv
a. Applies an accounting :1olicy retros1.·.:crivdy.
b. Makes a retrospective res ta tem ent cl icems in the financial statements.
c. Reclassifies ite ms i 11 th:! financial st�terr·�'!'!" .
..!. All u! the:;e
. .
21. Wili<th or the foll owing is not required to be pt•?senied as a minimum information'?
a. lnvc::sunent property
b. Investment accoun ted for under the.t:qu;:,· nwt!1cd
c. Biological asset
- d. Coming ent l iabil ity

22. :-\n e ntity shall present current and nom:ur,·u1i as::t!b .md l iubil ni es when
a. The c:ntity su ppl ies goods or servict'.:> w11;1in a ck.trly identifiable operating cycle.
b. The presentation based on liquidity prov1Jcs reli:..L!::: and more relevant information
•:. The entity is a public utility.
cl. The entity is a government entity.

23. Th� statement of financial position is use i� . ; 1i.lr ;,!ii ul the following. ex ce pt
u. A sses�ing risk I
b. Evaluating liquidity
c. L valuating financial flexibility
J
.a. Determining free cash flows li
I
I

24. Which of the rollowing is a limitation 01 chr· · �t�·::r.i..· 1t of financial position? !

,
Many items of linanc1al valu.e are 01111<l•".:. . '
a. .
lJ. ,Judgment and estimate are used .
. '

c. Current fair v al ue is not reported.

d. All of these

25. The correct order to prese n l current a%e:� : -:

'

a. Cash. accounts receivable. prepaid ice1�1';. lfl"(·11t1· :es.

b. Inventories, accounts receivable pre pa: c ;1e:i·1L- .. ·:.t.'h.
I·
c. ·Cash, inventories. ac cou nts receivable, pte;:rni,1 ittms.

d.

f
Inventories, prepaid items, accounts receivable:!. c:1sh•
.
26. A liabil ity due within twelve month s after •Le: �nd ·.)f :·:�porting peiiod is classified as
8. Noncurrent when it is refinanced on a lon�Hi.::r.11 basis after the end of re pon i n g period a d
before issuance of finam:ial statements
b. Current when it is refinanced or a 101� :.-L<:rf':'I b..i: is after the end of reporting period ai d
·

before i ss u ance of financial statements.

Panly curro;:nt �ind partly nuncu1T;:,11 v.·h en the e Hity has the di scretion to refinance for t:tt
.
-·

lea�t twelve months after the end ot" ;epNtint, ;-iem_.d under an existing. loan facility
J. C urrent when the entit ) has the dis'-·�Pt1nn ltl 1ct·nance for at least twe l ve months after t c
end of reporting period u nd er an exi�:tinJ:! !• ·�.n !.1•. lit)
1

• • ! 111• 57�6
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Page 4

2;. The ma_iur elemen ts of the income st�tcmem :ir�

a. Revenue. cost of goods sold, disrribution cos ts <nd general exp enses
b. Operating,, nonoperating, discontinued op er atio n and cumulative effec t
c. Rt:' en:.ie. expenses, gains and losses
cl. Or'eratin�. inves t ing a:1d tinancillg activitie�

2�. \Vhicl• Pl '.h( 1oll1>wing 1 !<' 1 ns i� required aisclosur: in thr in.:ome :;tncemcnt')
. . Revenue. cost of goods sold a nd a d vert is ing exp:�Me
•• ! 111•
a ·

b. Fi na nce costs. lax e:xp-::nse anc income

'

c. Operat ing expenses. m.•nuperating experses and extraordinary items

d. Gr<:ss profic. 11perminl. p .-ofi t and n�t profit
.
2S'. The inco me .i"1!e111e111 pro,·ides information that is LSeful for all or the following. except
To evaluate future performance of th;:; emitv
'
:.t.

b. To pro vide u basis for pr ed i cti ng futu re perf;munc e

c. Tu predict the :-imount. timing and .mcertaimv
. o ·future cash 11ows
•

cf. To asses:; the risk and uncert;imy of ac hi ev1 �g tuture e;ash flows

3(J Which of thi: foliuwing. c1)mponents Qf Ol'l will bt rl!clussificd to profit or loss when spt:citic
condi tions are mer:'
c1 ChHngcs in revaluatio.i surplu�
h. Remeasurement:; of ddi neJ bendit pl<:n •

c. Gains and losses from investments in .eq u ity inr. . ru me nts measured at FVTOCI.
d. The efb.:live portion ·)f ga ins :lnd lo:>se:.: on hetl!:!-ing instruments in a cash llow hedge

3 1. J-"01 pclrticular liabilities designated as at !;1ir v:l!•. e tr.rough pro tit or loss. the amouJ1t or the
c11a11;:.c in 1·i11r value that 1; ::ittributahlt: 10 change 1n the liabilit)''s credit risk. is • •

''
a· Component or other comprehensive income
b. lndudec in profit or l·iss
c. Recognized tlirecr.ly in r.�tdined eamin'..!s
.-
d. All of these
·

3:�. Whal is the purpose oi 1h0.: "11utt:�' tu li11anciel staler 1en1s"'>

a. To provide disclosure::> required by G.'\.�,P.
o. To correct improper pres entati on in fin°ancia1 statement s
c. To provide rccogniti011 oi amounts not indudd iio the total of the fi n anc i al statements.
o. To present m ar: a g e me nt respon!Je to auditor conment!:i

:;�.The full dis•:losure principle is best described b�1 w1ich olthe following?
"· All i11.fom1at i ..,;1 re lat� d to t usines� :rn�l nµerat!! 1g objrctives is requ ired to be disclosed in the
l'inancial statements.
b. In formation about each a ccou n t balance ap1=-earing in the financial statements is 10 be
ind uded in the notes to fii1ancial stater:1�nts.
c. EnougJ inform atio n should be d j ::;closed in lh•: financial statements so a person wi sh ing to
inve:;t in the enti ty c::m make a -_vi se decision.
d. Disclosure 01' �ny financi::it fo c cs !>ignifii::an1 enough to influ ence the j ud gm ent of an

• • ! •I:•
34. Under PAS 2. which of rhe fellowing i n ven : tiry i.ems i�: not valued at the lo�er of Ct)SI or net
•

realizable value�·
a. Manufactur�d ;11v�m..ir'i
.
h. Retail invcn!i)ry
c. 13iologicai !1:vemo1')
d. Industrial invenmry

Val�.ation 0i' in1·e1Hories :cquiri::s dc:tcrrnin3tio!: ·Jf nl: of the following. except
.:i. I he costs [v be ;ncltdeJ ir• invemory
b. The physic<ii goods u be inc!urled in !nventorv
�fhe co�t of �wods ht-Id o:i consigpmen� from �:her entities
;I. fhe CO$l tJov.- as:1umotion to he 3rloptec
•

57_6_6
 .1(. Vlhich of rh<:
followin<=-o Sl • llement . Page 5 •
a
.. NRV'15 1. .�
. 1.srn
. corno>cc .. ) c·
. e seB111
h :.:-�· ._ :\,. R \ '•)
.

gpnce less .,oing

esumate" cost
• · .

' " ,.,mple1• and

b.In n1os 1 situ
ations. e 111 i
1ies price cos>io•�lW<• a sale..

c. One o t o in vemo ry a 1 1al inve to

01;
f w method s m
ay be used t rec n � basi
d. Enlities
ry s.
o ord the inc ome effw of
can use an a
al
valuing invenlory
llowance acc
ount in
reduci11g inv e nto ry a1 NRV.
NRV! •
·
3 �'. When the
c ost of goo
d s sold m et
.

•
!
I
<l. There hod is ll' ·d w rc>v>
·(.\ inventory at NRV
i s direct red !
uction in the
b. A loss is sell ing pric e of r 1-:'
debited directl inventory.
c. Only the
y and credited to
p o n io of tht inv ent<•r:,.
n loss attribut�ibie
ro inver 10ry sold is recorded.
d. The NRV
is substitut e
d for cost and rhe
loss i:. '•uried in cost of goods sold.
]g. ]!' U ma ter i a i
amount of i n ve
n tor y has bc�l� Oi'oJ
statement of fin •.:i"n! through a formal purchase ontract JI the c
ancial position
date for future deli"·�ry
at firn� p rice s
a. This fact must be
disclosed .
b. Disclosure is
required only if pri
ce� have declir�ee since the date
c. Disclosure of the order.•
is r equ re d only i
if prices ltwe since ·isen sub
d. An appropriation stantially.
of retained e arni n g
s is neccSSi;ry.

�1>. Si!uatio11:; in which

net rt:alizable value 1:,
a. Agricultural
ust•d · ... ·11c:asurc in'.\.'ntory in c u
inve ntory l d.e
h� Minerals and mineral
.
•
.
•
products ,
•
l'. Commodities held
by broker-traders
d . • All of these

40. An i n ventory metho

d which is designed
and NRV is · o a�1r.:·0:: in�ate inv ent o ry valuation
at the lower uf l00:>t
:l.
• .
LIFO .

b. FIFO
c-. Conventional retail me
thod
a. Speci fie identi ficat i o 11

41. What is a.LlfO re

serve? • !
;L The di ffore n ce
becwc:'en th e LIFO invt1lt<.
1!·y 1nd the amount use
purposes. d for internal rep
oning
!:.. The lax saving by
using LIFO
The current e ffect of t1si . ;
ng LIFO on 1:::-1 inccn
c.

h
i nve n tory during' the
'-'· Change in LIFO
�'car
·' Which is 1101
a common liisclo
sure JCF im. �·11l·r..'
a. Jnvencory comp
ti. • I n vento ry locati
osition

·\
on
c. Inventory I
financing arrangem iI
d. I nvento y
\.
ent
r
cost method
. .

\
''-' /\n enlily
· purc hased a buil
ding and the seil<r
p�rtly in d benlures
of lhe entity. Unde
:,ccepted paymen1
parlly in equit
� r PA� 7. this lruns y shares and

1
statement ol cash
fl o ws a.':i whic h ac t ion should be· tre
a. The purc
has e of 1he buil
of tl1e following" /
ated in the l
I
ding sh o t1ld he i'1ve;;
and the debe ·ing cash outflow and I
•

ntures fi n ancing
.

cash �n:•t;uw:: the issu ance

of ' res
b. Thi purc has
e of the buil
ding shou id be i r
de be n1 ures fi na vesi i ng cash ou 1 tl o
w and lhe i
ncing c ash outfl ssu an c 0 r
c. The tran
o �· wh, <c inc ; ,; , uan
saction doe s 1101 ce or sha 1 es in ·
ves<ing cash o
belong in a o:.u�meo1 u1 fl o"'. ,
lhe notes lo the .i: cash flows and sho
finan1:ial stateme uld be disclo
sed on y in
i
cl. Ignore lhe m«.
1ransat1ion l ota
l l y since :1.is a no:ic:
i·;i, transaction.
/
j
-- ------
--- --- ---------
(
!1agl: 6
1
•
•
. ction s should
4t! ·. Mn!il c11ttt1e5 mterpret th at significant noncasb mvl�stmg and fin an cing t ransa
·
. . . • .

'oe 1eported
a. In thl.'. stat ement of ca!;h !lows.
b. ln the "notes to the tin<111Cial stmements.
I.ti the statement or tl1nncial positi1rn.
.
l.'..

d. In a separate scht:Juk which is part of the state1ncl1l of cash !lows.

45. Which of th� followi11g w;ll a f ect both t·lr!an cing ;inct operatmg act1v1t1es.
. • • • t)
f

a. lssuanct' ul"L"-\Uit;. sh;ires

1·.. Colkcti•m 01- ku11:0 tu otil:::· 1�1:ti!ie�
c. jJaymetl! ur JiviJenJ�.
d. • Redemption (it" debt
..
46. One of the hendits of the stateme�1t of cash tltiws is that it helps users ev aluate financial·
11exibility. Which or the f o llo win g ex!Jlanation� is ·1 description of financial flexibility'?
The nearnes5 lo cash 1Jf as sets did liabiliti�s
•

<1.
b. The e nt ity' s :.lbilit\ Ill respo!-d and a�api tC• !.:rnt�ci'tl ad versity and unexpected nee d s anti
opportunities.
c. The ent:ty's ability tCI pay debts ·Jn ma1urity.
J. The e n t i t y' s ahilitv to i 11ve sr in a numbe:· of p1"ljec1s '.Vith d i ffe ren t oh,iectives and costs.

4 ·1. . ·1· 1> nrnvc al net '-'ash p·:ovide:d by operating activities. it is 11cc1..•ssary t1> report re v en u e aml
.

expense s Oil a cash oasis. This is don e by

°

:.1. f{t:-rernrding all inc•.1me :;tace1�wnt transLi-=tiot:s that ciirectiy affect ca sh in separat� cash a
now journal.
h. Estimating the 1)erccn1ag1· ot' incom r :..l.1lcment 'ransactions that were o riginall y reported 01;
a cash basis and pruj1.·c1111g 111 is amount. 11.· : he- '•1(!re arrav of income statement transa ct ions.
c. Eliminati!lt:' till' L'tii.:ch 01 inc(m:c: :;t;tlt'llt:nl ir:ms rivns that did not result in a
�K
correspondi!;g i1Krc; s.: rir d�creasc in :::!:,h.
d. f:liminati1ig all !r:u:sacrions th::!t 1.:1ve t:.J curt"ent or fut ure effoc1 on cash. suc.h U .'"
depreciation. from the r.et inco me compurntiort� '. •
. .

48. Which or the foi Jowi ng ;tatements is tnie (;0J1Cer:·:11:!.! <the s tat e ment of cash nows?
a.' Whl.!n pension l:':-:pl 11:"c: e ...:ce"eds ca sl- !';,nc\i1�··'·· �he> Ji ff�:·ence i�. deducted from i1wes1 ing'
0

activities in the stat•.::m:nt of cash flov.'s.

b. The J;\SB requires entities �v .:lnssi i\· 'li' ::L�Gme lCJxe::; ;:inid as ope:-ating cash out!l�)\I;�, ·
. .
unl�ss the t axe s can be specifically iu:nr1fie::i ··•ith fi11an(·ir.g and inve s ti n g activities.
c. Under fFRS. the :lurcha:>e of land by issuing ord i:1arv shares will be shown as a calih outtlov: •

under investing acti\·ities ar.d a c&sh infio\v ur·der fi nanc in g activities.

d. All of thest· are truL" concernin� th e �1arr:n11.:rd 0f cnsh tll>WS.

49. Unu..:r PA.SS. which oi" the follov;!ng i� th·� �·ir�t step \.Vithin the hierai·cby of guidanc£when
selectin L! ar:counting po;icies? •
u. Consider the rnC'.;t recent pr0nou!lceme11ts ')f oth1.�r st11m.fard se t t in g bodies.
h. Apply a stand::i;·J !"rom PFRS il' ii speci fic:illy relates to the transaction. oth er event or
condition.
c. Consider th·.: :1!J!�·!i,:,,biti(/ o: th� defir.itions. ·ecognit!cn criteria and measure m ent concept�

in the Conc•.:p'.L1i1! l· ,:Jm=work

d. Apply thc n:qtiir,·:r. -. 1 1 · ; 111 F'FJ'.� de;dPlf! '\ ::1. si•ni!;;ir :rnd related issues.

, • ! lf;C
50. A voluntary cL:!i1L'.e 111 :1ccOti!1ting p��lic: .. ma�···->tily� ('">;! rnaJL' it'
a. A nev. �tanda ;·d ma;1Jali:S tile :::i:ring(· ir1 ;)Lili:·'
b. Management prckr:·; tre :1t:v,: p<�iicy .

rcl;vant mtormation
. _

c. The new policy oruv1cles reliab!;;. ana rn0r:.:-

d. There is no prol:ihit ion for tht change:
 Page 7

! ' 1 1de r PA S I O
wh ·i cli o t _l I1c 1· I I ow111 . · . . 1 · . 71os u ni>
g. \::'. \ cm:. .ii:..: ; .-�ponmg period wou ld r�qu 1 1 e uis�
·
.
� . •

·1 ·
.
Re t i re ment ot the ent ity
.
. ·

president
• • , .

b. o \he
w hen the evr•u that g�.\·e· ri se to the li t i ga t i on occu rred pnor t
• .

Settlei�1�nt or litigati0n
reporting date · ! •
c. • S t rik e of em p
lo yee s I
d. Issu e o f larg e num bei· of ordi nary
shR: ·.:: s • i
!

".. ''..: . · vv 1c
•11h · l1 ot' the tollowi
· ng is a true staterPf'nt regar-:1 : 1g .!isclosu res for s ub se qu e � t even ts')
·
· .

·1 ·
·
·
· I
Recogmze a oss tor a l l recogmzed arid un!ern�mzed su bseq uent evenc s in th e cu cr e n t
·
· yea1 ·
·
•

fi n anc i a l state m e n ts · •
<: u rre nt -vcar tt nan
cia
i.l• . � ul:isequent e ve n t 1 11 ti1 e
. · l
\">..... ecogm ze a gain or loss for any rer· i�n:��;:
. . . ,
-
•
•

statements.
o . . ·ia l s ta t e me n ts in the" vea r
c. 1ze a loss tor a recogn ized sub�t:·qul.'n! '.: v en t m th e t'mane
· - ·

1'-.cco�n
·
-
..

when the s u bsequ e n t event occur:;.

. •
.
. t: vent ·in
• ..

a l o s s for a re co gm zeJ su bs e q u e n t
I>' ': c o l,!. n 1ze al sta tem ent .,
J . th e curren t year fina nci

·
S "'> . /\ construction e nt ·i t y signed a contraci : 1 o u 1 1li , lileater over a pe r iod of two v ea rs and also ·

�
1 · ·
·
• .
.
�;igncd a mainten ance c o nt ra c t for five yeur:;. Bott contracts are n e gotiate d
as a smgk pac 1
, ,· <�gl:
·
U nder PAS 1 L how should the two contrn.cts he "'· counted for"

;1. Combined ancl lrea tec- as a si ngle cni-,tr: · . - 1

b. Segrnemed and consiJered two sep..:..-�l..: c o :1c:·..1l l:� •
•• ! • t:•
Rec ogn ized u nd er t he co st recov<.'ry m ethqli
c .• .

d. Treated d i ffe re nt l y . thl! bu i l ing contrnct und�!· he cost recovery m e t h od and the
• ,

d mamten ath... 1:

contract under the percentage of cp m p l et i o n rn •� t h od .

·

5 4 . C on t rac t revenue in construction contrnr:1 1'(1mr·i<.1 ·•;

a. T he initial amount ol revenue a g reed !n t n e r.l;11tr3ct ,

V a ri at i on in contract work .. clain1 and i ncent?v:· p a y m e nt
h.
�md
i

c. The i n i t i a l amount o f revenue agreed in �he c 1 1 ntracl. variation i n contract work. c l a i m.

d.
inc�nt i ve payment.
The i nitial amount of re venue agreed •n the ccmrac t and progress b i l l ings.
\
!
S 5 . ln a construction contract, : ns
the term ...variati on " nwr

:1. The initial amou nt 01 revenue agn·�ci ;n the :-:c n;-act

An instruction by th( c u stom er for a c hau�1: ! n"t!1e scope of work to be perfo,rned.
.

b.
<.:. /\n amou nt that th e contractor seek � 10 collect irom the c us to m e r as reimbursement fo1� j�f�\
not incl uded in the c o nst ru ct i o n c��ntrar'. : . i
.J An ad d i tion al amou1�c paid to the cont1:·..::·or !: :pecificd p erform a nc e standards are met. I
•
I
I
:.0. When it is prob�o l e that co ntr:act cost!' ex ce{·d ·
.: r -. r tract rev e nue . the e xpect�d loss sho ul d b� ! • •

.i. Set off ag a in st profit o f other contr'.lcts w_h,�re ;\':� i lable

b. Recognized as an ex pe n se imme1.Lal"' i \ . �1:1:e,.; :·c:venue to date e :.;.c eeds costs to date
. I
c. Apport io n ed to the ye ars of the cor;t :wt �(:co);ng•to the stage o f <.:ompletion
Recogn i zed as an exp e nse immediat !' 1 \· I
: •

d'. •

'5 7 . A l l rf::i.so11� ' ·r11 the expected re ven u e from a fixecl

of the following could be v1lid p ·icc­
construct ion conrract ha:; increased from ·. h '-' 01 i g 1 il�\! contract price. except
. . .

a. The costs i n t h e co n t ract have inc reu�eu :.;11u t i 1 ;; c�ntract i n c l udes cost escalation c1:iuses.
b. The contractor has i nc urred a d d i tional cos1s due t(; errors made by its emplo y ees.
·:: .
The co ntract o r has agreed variations Lu thr? c'-' ;� tract with the client.
d . The contract o r would receive an inCt'.ntivc �ay nent i f work c onti nues ahead of sched u l•i.

�;g_ In re lati 6n lo construction co ntract s . all of the. !O l luwing sh a l l be d i sc lose d . except

:1. rhe m e thod used to d e te rm i n e tht :;t:i�e o f Cl!1� 1 pletion
b. r he method used to determine the comrn�l re. :'nue in the period
·

-·
Advances received i n cash anal yzed i:ll:Cl•rd i 1 1 µ 10 each material co nt rac t
d. Total amount of comract revenue recog.n1 z::.·d 1:1 the period
 Pag e 8

5(j. Under PAS 12. h i ch 1ern porary d i fference wou!j result in a d efe rred tax liab ility?
w
a. lnterest revem;:' or. :mmi c i pa bo nd s l
b. Accrual of warranty expense
c. v
Excess tax depreciation o e r financial deprec ation
d. Subscription revenue received i n ad vance . •

60. Which temporary d i ffere nce would result jn a delerrcd tax asset?
a. Tax pt:nalt:, or surcharge
b. Dividend received Gil share investme::t
c. Exn!s� ta:-; deprecin. ion over ac c o um i ng depru ::1at1on .
•
.·

al accoun t ing
d. Rent n:ccive d in ad \' ance· included i n ta>:nble i Mvm·e b u t deferred fo r financi

·�' l . Taxable income of a cot po rat i o n

•

be1ween the two

.
a . ·. Differs from accoun t! ng i n c o me due 0to differ�� .ces ll
in inll!1�period a ocat i o n
method!; or income determination.
b. D i ffe rs from accounting income- d u e ro d i ffercnce. s in interperiod al o ca t i o n and
perman ent
'
l
di: 'ferences be t een t!ie two methods of i c •)m t determ ination.
w n
c. ls based on intematioaal financial repo�1i n g s tandard s .
d. I s reported on t he income statemen t • •

. •

62. The deferred tax ex pens� · .i� the

H. I n c rease in dt:frrrect Lt\ asset m inus the in•:ren:e i n d e fe rre d tax liabil ity .
l> . l11crea st· in de l'erretl ux ia i l i t minus the i n.:: r.:ast in deferred ta x asset.
l b v
c. I n crea se i:1 d-;:ferred tax as se t the i n c r :l�e n defe rred tax liabil ity.
plus �
d. Decrea se 1n deferred t ax asset minus the incr<�a:;e i n deferred tax l iability.

<d . Entities a l loctite i n :: o m c t.ix expense or benefit tc a i o f t h <.! following. except

a. D i scontinued operation
b. Prior period r1dj ustnw11t
L' . liross prulit • • ! •I:•
d . • Other comprehensive- inr.:ome

64. Which of' the fo l l ow i ng is correct about the presenmion of defer;ed tax assets and l i a b i l i ties?
a. C u rre n t deferred t a x assets are ne tted aga i n st cu Tent deterred tax liabil ities •

h . Al I noncurrent deferred tax as set s 3re n�ttec! .1L'.c inst noncurrent d efe rre d tax liabilities
c. Deferred tax assets art n e e r r�erterl against de ferre� tax liabili ties .
.
v .
d. Dclerred tax a ss e t s an� ne t t ed against deferr�d 1.1x l iabi l i ties if they relate to the sa 1e t a:-. i ng �
autl10r:ty.

65. Under PAS 1 6 . which of the fo l l o ·Ning is nut �1 maJ CT characteristic of a plant asset?
a. P )Ssesse�; physical sub.:,fancr:
b. Acq u i red for �t:.;e in operations
�

c. Lung-term in na!ure
d. A l l n r these are major 1,ha:acteristics o f a p l a n t a.;set.

66. Which is true ctl rn 1t the 1 c-1aluat iu11 11 1utkl 1�11 \ u tuiq :; viaut. p 1 v p1.:qy. i:!nd equipment?

a. Reval uation o r o :::.a�r� i r : li:;t b e made on the !ast th y o t' tlte fiscal year.
b. Reval uation or 3s:;ets n :ust be madt on the sarn� .l::i t e each year.
. .
c. There is no ru!t: for tile frequency N dat·= ,:,f ie·v ::. . uation
d. Revaluatien of assets musr h� made every l'�..:.i yeM'5; •

.
surplu s r � ul l g from i n i Lia! revdu a1 im1 or property. plant, and equipm ent
6 7 . The revalu :ition i s i n
should be
a. C.'rcdited t�) retained earnings.
b. Reieased to the i ncome stateme nt .
plan t. a n d equt pme nt.
c. Ded ucted l'rom curr ent .issets and r1c deo to the prop erty.
d. • Credi ted to revaluation surphs

5766
 Page ' 9
. tl'. :1d ivit y me tho d of Jcprec
iation
11: •
\;:

:1. ls a var iab le cha rge app

• •
!
roa ch
l >.
c.
A ss ume � that de prec i a t i o n
is a funct ion or �aSS J!t<: of time
dep r�c iatio n exp en ;�
Res ults � n con stan t charge t o
d. Resu lts Ill a de c re a s i n g charge
to de.p re c i a t i o n e'I p e nse

6ti. U nde r PAS 1 7, mini mum lease paym

ents •nay i n c h ; Je
·.1. Penalty for failure to renew
• !

b . il<i r gai n p urch as e o pt i o n

.: . G uaranteed re.sidual v8lue
d. Any of these

7tl. Which o f the fo l l o w i n g. best describes ..:: urr :nt pra1.:t1 :e in accounting for leases?
a. Leases are not capital i.1.ed.
b. Lc:.\\scs simi lar to instatlment purch:-1 ses ure capn.t! 1zed.
c. All l o n g- t e rm leases are capitalized.
d. All leases are cap i t ali zed .

7 I . Vv' h i c h of the following. statements in re l at i un ' ·. > i:1i· al d i rect costs is correct'? . •
In a d i re c t fi nancing lease, initial d i re l'. t . w; 1 s ::m: ad d ed to the net i nv e s t men t 111 the
�!.
kase.
b. In a sales type leas� . i n i t i a l Jire c t ccsts �H� e.x r,' : !0c;i:d ir the year of incurre·nce.
'
c. • For o perat i n g leaser. , init ial direct costs ::. u··� 'def'erre :r :md allocated over the lease term .
d. All o f the statements are c o rrec t .
. . .
T2. Wh1ch of the following wou l d n o t be incl u.Jc:d i:'. •. I i , icase receivable account?
a. Guaranteed res idual value
b. U nguaranteed re s i d u al value
c� A bargai n p u rcha se o p t i o n
d . All wou ld be included

7 � . u ;1der a sales type lease

:1. The sale price i n c l u de� the present vai «e of the: u ng ua ran t eed residual value • ;
1
b . The presen t value o f guaranteed residuiil .rnlue i s deducted t o de te rm i ne the cost of goops
sold .
c. The gros� p ro lit is t h e .;an1e whethe:· 1:1�· r;;-sidua! \ .l l ue is guaranteed o r u nguuranteed.
cl. Nllne o f these
.'
;
74« l Jnder PAS 1 8 . eac h of the following condi; icins mt; : ' be met to recognize revenue from t he scl!e
o l. good s. except
I

!
u. The entity has t ra n sfe rr ed to the bu y ... .. , i � n ; !i . :;!1l risks and re\\ ards of ownership o r the
gnmls. • •
! •J: •
h. The amount of revenue can be measu ; ·� �l rel .i:it- 1 .v • i
. I
c. The cost$ i ncu rred or to be incurred ·.:an be mea::: '. 1r.:d re l i a bly .
d. O wnersh ip has been transferred to the ;Ju'·�r.
. . I.
7 5 . Which of the following conditions doe; n o � :1p;::-. ll•· the reco g nit i o n of revenue for transacti � 1s
involving rendering of se1·vices?
1 '

:1. T h e amount of revenue c a n b e m eas 1 1 rec rekibh

'
b. 1 1 is probable that payment for services sl1<1 1 l be ·,. �cei ved .
.:: . The significant risks ar,d re wa rd s o!' o"Writrsh1p 1 1 1vc been t ran s fe rred to the buyer.
d . The co s ts incurred and the costs t o cor1Dk:.:- ( :Jn b e me a su red re l ia b l y .

76. Ir the outcome o f n::nderi og services .cur111u1 n·�· c : . 1 1 11dtt:J reliably . w hat re \ · e n u 1; recogni t1 m �
method is req uired? I
. I
3. Pe1Te:1tag·:: or complctiJn me th od
b.
l'.
Completed comract meth od
Cost recovery method
!
J
I

. 57J6
J . Install mellt method
 P.ag•� 10

, . Th
17 . meta ls
. e crn�n'.i for recogm t 1 0n
.
cc m
.
of revenue �t th� p! eti on of p r d uction of preciou s
o
include which of the following'?
a. Sak price is reason a b l y assured.
b. No � i gr. ;fi can t costs are involved i n di�tributin� product.
c. Units are interchange·lble.
d. A l l of these

IX. ::>ales where the good::; are delivered c1 n l y when the buyer makes final payment are
J. U i l l and l1oki sales
I). Sales subj •!C. to instaliation or inspection
·:. Cunsig11rnen! s,de:;
d. •t:•
• ·
Layaway sales !

79. Saies in 'vvh ich the buyer is net yet ready to tFJe d e l i very but does take title are
a. Barter sales
b. Bill and hold sales
c. La�·aw'1y sales
d. Sa les with buyback

go . Which of the fol lo w i n g is one of the conu1t;ons that must ex i st for an enti ty to recog n ize
reveni;e on se1)<trate uniL u nder a nmltipl1� deliverables arran gement'?

J. The del ivered item ha<> valut on <'. stand alor.c ·)asi.> and can be sold separately.
b. '{ hl: del ivered itl!m i:; not returnab le
.
c . Collection has occu1Ted for ::II ot'the ·;eparat� ,mits.
d . !'he separate u:1i1:; m u st he d e l i vered 'Ni tiiir. •Ji:, d<:1ys of rl;ie end of the accounting period.

:; I . The m es t o e method JI° ar_•.:ountinl,?. ma) be ti.'id to recognize revenue for

il n
u. Multip le de l iv..:roblt: pn.>cJucts or ser�i·.:l':;
b. Research and develo pment "rrnnt.:e me11\
-
c. Long-term ·: onsrruc 1.on c .Jnlract
d. Franchi:.;t: <' rrang.emt nl

:Q. )'he milc�hmc mcthotJ of' reve11ue ;·1:-:0�111tiu ' , i;i rnv ide s ti1at if subs�antive milestu;1e 1s
achic:: v t:d. \�hnl ;.n :ou111 1 11' :·1:-.enu"; i� ;c>.:v:.!1'11 :.cd'.'
a . Revenue is ,·ecognizcJ up t o tht: amol;;t 01 C<l� 11 .;0Jkcted
b: A prorata n:venue based upc'n the p�rcen!�ge !lelivered lo'dRte.
c. Co n ti n ge n t r.:: v enue iS n�cognized i n i ,,:: enun.:1 ,,
d. A p erce n ta ge of total revenu� ha�.ed o n the sef ·arate units del ivered
8 3 . An ent i t y contributes to an industrial pe�1si0n.plan t h at provides a pe s on arrangement for th� ni '
employees. A L 1rgc n�mbcr of o<her tmplu.v c r � alfo on tri but e to the pens i on plai1 and the,
c

·entity make� contribucions in re.;pect of each enoloyee. The only o b l i gat i o n of the entity is to
pay 1 he annual co11t;-1 bu:ions. U ; tdcr PA.� l 9 R �t::s pe ns ion scheme is a

a. M u l t i e 111ploy>:''' p�<'.n ;111d d defined co;1tributio,1 plan.

b. 1'./luitie1! 1pioy�" p:a:1 awl a define-d oc1·1ef!t pi&• .
c. Defined cun•ribwiur· µ!a�1 o.1ly.
ti. Delined be! i � i > iJ�:•i' ':1 . ! � .

84. Which of the fo i i0wi11g 1s not a chm·c.cte riscic c.r .1 defined co n tri b u t ion p hm'.>
u. The emploj;; :!. ') l (;fl I riiJUI ion earh pt:riuJ is b.1sec 0'.1 a formula.
: �1'.>uaily determined by an employee s highest
b. The bendi 1.:. I:; he r :c1.. iwd by 1;; :11p!e;vi:c-� a••
'

uf !><11'1:')· ,:,.,;1 i ,,,·, 1J l)�, ll'1\:' tc:rit:� O i the• , _. l : i i·, , . .

. ttorw �rd !'*' uncom plic
.
d cor.tn buuon .pla11.:s smngh �ted.
c. f'he a1:cou ni: ng tor :., define
the co1�tnb uted to tund � re
ci. The bl�ndi •.)!� ga i n or t he ri�k of lo-:s frr1111
_
assets the pens1ofl
_

borne by fr·( emple: .. ·�e.

,
8 5 . 1 n accoun t ' g fc 1'
· oei'inen hi.:ncf,t �Ian
a .
t· b"' es11 h!ished to ensure that enough money will e
b
m
Ar. oµpropnate. '.· t'un·d'
111g. 1)::11 · '
.: r1' i1·t1··
... ·

' ... t o b pl" i1 r1sed . · b

a. .

1 1,1 ,· b�r
nvad al>le at ret11ement to. rn-:e · ' '- ·
··-·· ·

•o i r ' ke a co n t1 1 ut1on
·

b. The emplover's
. ·
·
resp0 nswd 1ty is simp t·y
·· ' ·
· eac h year.
,
·

to the cash contn ut'ion .

· d eac:·h Period as equ al
· b
lie.:: ex pens�· recogntzl'
,-
. 1 ,. n r1:'flee t curre nt sahry level .
.. u
c. •

d . Tre i i:�l·, i ! i t , is dete" rnine d l:a5ed upc1n \ t C r'ab c::

•

5766' .

.: �
.... . ----
86 . V �sted benefits . .
:1. Us ual ly requ i re a cen · · • '. • .
\'t: 1r5 of servic e.
•
a·.n minim um nu!r1b c.-r (1 ! .

1). .
.
. et.
,,. ·IS enttt
, . t '·111 em
• d co recein: :·:en i i ' fi red.
·�
/\ 1 1: tho sL:. tha
. 11:
•
tJI l >V
�.\re no t con t1111�1ent u
.
. pon add 1t1onal service undet the p l an . •
c. •
•

. ·
ct. Ar e det me d by a l l of
the se.

87 The �omputat io n of pensic ·n e x pen se nc!ude :;

i ali o: ilc fo l l o v. i n g . exce p t
a .· Current servi c e cost
measured using CUl're nt .,aLH "}' level •

b. Past ser vice cos t

c . ' I n t e re st on defin ed be ne fi t o
b l i gat i rn
d . I nt e rest incom e on plan assets

8 :\ . When th e fair value of plan as sets exceeJ:-i the dcfo, :<l b en efi t obligati on. PAS 1 9R
•
:1. Requir es re c o gn i t ion of an asset . .
h Requires reco gn i t ion of an as set i t' the excess J_ 1ir value of pran asse ts exceeds the corndor
a m ou n t .
'-.. Re commends but doe�: not require ,recogniti c n o i an asset
d. Does not p e rm i t recogn i t i o n of a n asset.

8'.- . V./hich o f tht: f o l l o w i ng d isclosures of pc 1 ::; 1 <.111 p'.:1:� 1 n i'ormacion wouiJ

•• !
not be required'!
•• •••
·

a. • The m ajo r components of pension ex pcnse • '

h. Tht: amount o r past serv i ce cost chaq;.:d in °pre': 1 0us year�.

i
c . The funded status of uie plan and 1he amour.ts ri:.cv>,' ni zed in the tinanc ial statements i
d. The rate used i n measuring the be;1;.fit am·Junt
.!
90. U nde r PAS 20. a govcmment gra m shall be' r� ·c-ogn ::ed when •
a. There is re aso n ab l e assurance that the entity \.'v 1 I comply wi t h the conditions attaching to �he
government gran t.
•

j
b. The entiry has c o m p li ed with all tht: co11diti•.1ns :maching to t h e grant. 1

c . Th e re i s reasonable a!;surance that ·, iv· �: nt i t:' w i . I C'Jmply with the conditions attaching to � he
•

be received. i
·

grant and the grant will

d . The en t i ty h a s comp l i ed wi.t h all'the co11dit11J 1 1 :: anac hing t o th e grant and the g ra n t wi l l be
'
!
re ce i v ed
.
<J I . Whi c h o f the fol l owing i ! ; true re gard ing t11t- incon1e approach for government gra n t > ' .
:i. .
Depreciation is hi ghe r and net in c o m e iower il .he gra nt is rt:corded as deferred re v en u e · . I
higher

·1 .
h. and net inco1!1e !nv1cr i t .lie grant is an adjustment to the asset.

I
Depreci:ltion is
l. Deprec iation is· hight:r i f the grant i s a d.:'f,'rr:.:1.: r.:.-venue a n d nel income i s not a ffe.:1ed .
d. Depreciation is higher i f t lie grant is _11 1 ;ic;_i u ,11 1 cnl ot the asset.
. '

lJL Which o f the fol lowing s Lat emen ts is incu 1Tt'i:1 . in �da1io11 to g o v e rnme n t grant?
Any adj ustmenl needed "' hen a g1wemmem � 1 : 11 1 r becomes repayable is accounted for a · 11 •
<1.
. .
change m accounting esu mat e . . . .
I
.

b. In respec t of loan from the gov(-rnment .ll : �:·o i m e rest r.ne. an impu ted i nterest c h rge 4 •

should be made in profit or loss

·

c. Where conditions a p ply to a

. governnl tm !-:- ra.� 1 . i t should only be recognized when th e e is
j
q
reasonable assurance that the conditions wiil b · : me t . • :
•

1,I.
' : �
A gove rn men t g .ant th at beco m e r�ceiv tib � as'.c?m�en sation for losses a l re ad y i n cu Ted • [
.
.
should be reco g n izec as 111come 0 1 the per •.,\.1•J 1 1 w111 c h 1 t be co me s receivable I
I
'- ·:; , Under PAS 2 J . w here a fo re i gn 0pcrn1.i1)n
functional cu rre ncy is
: �1 •·�tion� independently from the pa rt' n l. the I
i
.1 That of the parent.
t). Determined using th1; gui dance for deterrn i n i 1�;! a11 entit� · s functional currency.
•. 'fhm of the c o u n t ry of incorporat wn.
(!. The same as the p resen ta t i on curknc� .

! •t :t
 .

Page 12 .

. .

94. For reporting purposes. currencies are detined <15

a. International and functional
b. Foreign. l'Unctional and present11ion
c. Domestic and international
d. Opcrnting. international and presentation

95. Under PAS 23. borrowing costs can be capicalizt:d ns pan o f the asset whe n •

a. The Js: L t is a qua Ii fy ing asset. .

b. The us:;et is 2 qualit'ying. asset and it i " not 1)' d�ablt: that the borrowing costs w i l l result t n
future L:conomi(' 1 i en•'tits t o t h e tlltit v.
' •

c. The asset i� :� qualil\ ing isset and ii 1� pn" b J t le tlrnl the borro wing cos�5 will result in r'µ cure. •

economic benefits to the entity but the ccfsts cr:nhot 0be measured reliably. .
T he as se t i s ::i qualifv i ng u:>set and it '.s proba!•l•! that the borrow i n g costs w i l l resul t Ill tu t ure
.
d.
econo mic benefits t(, the entit y and lhe costs 1�111 b·� rncas�ired relia bly .

96. Which of the fo l lowing statements is true regardi ;1g capitalization of interest?
. •

a. Interest c:0s1. eapitu l i z.ed in connc:ct1on wit f·: th � pun.:l i:ist: 01' laml to be used as a building site
should be debited to the land account.and not 10 the buiiding account.
·
b. Thc arnou11t 1if' inkrest cost capit::il ized d 1 1 1 ing. the period should not exceed ·the actua i •

interest cost incurred. • •

•

c. W hen excess borrowed funds ·n ot immedi::tely needed for construction are temjwrarily
invested, any interest earned should be rc.:orded as interest revenue.
d. 'lb!_ m i nimum amount of interest to be capitalized i s determined by multiplying a weighted
averap.c interest ra1c by the amount •Jf awn1ge accumu lated expend itures o n qualifying
assets during the period.

•) 7. l l nder P.i\. S 24. key m�nagement persoilnd c0rnr·ensation 111cludes

<L :)oci:-il security . corl' fibution
h. Poste111ployme11t lwnetit
c. Share -based •:C>n q11. 1 :s:1l1·Jn
d. Social security contribution. postt:mploy11ien: .b�nc!�t and snan>��tc.l compc1\s;ltion

1 party transactions. i t would he req u i recj t o

·
LJX . I ! ' a busi ness e n t i t y emered into certain r;lal<� •
disclose a ! l of the foll0wing i nfol'Tll ation. except
a. Nature .)f the rcbtilmship betw�en the partie ; to lht: transactions.
b. Nature of any futun: transactions planned be: t-.een 1.he �)m·ties and the terms i nvolved.
c. Peso amcunt of th e transactions fo:· each .:-:' th!! periods !'or 'vvhich a n income stateme1H i s
presented. •

d. Amounts l�ue from o r to related panies a s <.o 1h"" d::ite o f each statement o f financial position
•

presented.

99. Under PAS 26, th e report of a define<l contdb dion plan shall contain

a. /\ statem�nt of net assets avai i!ible for bent l 11 �

b. /\ desc:rii):ion of the funding J.IO! icv. ,,
\.:. Ei thc�· a statement of net usscis avai:abit for benetlts or a description of fu nding poLcy
.
d. Both a staterneni c•f net aS$ets a\'a ihble tbr k:nefit and a description of furfding pol i·�y
_

t 00. -�·he reµL)J't of <1 drffoed benefit plan �.;ha ii ,:oi 1iain
(. /\ stat emt:' : :;t;u v.. ing_ tnC lli:l a-;sel'.> .wn: lab\e l •.>r benefits, the prc:;ent v a l ue of promiseJ
.
b ....�11et�
. . 1 .:' :1nd
. u .... l'�·s• :ltino
0 e"re� :. ul' Jefi . . 1 i .
• • .. • •

·
A Sta!cment c•l' ner a�sets avai labte for
b'.xierits including a note disclosing the present
I I.
v aiue o f ' prn: n ; secl ben efi ts.

a. I rrn ly
b. II only
c. Either l OI" II
d. Neither I nor 11

5766
 CPA REVI EW SCEOCJL 0 1: \.. H E P H I L I P P I N E S
\
M u n i 1 u • (
\ .
I
I
TH EO RY OF AC CO UN
TS - P RE W E E K \ EC TU FER R E){
RE \' A L I X SIY VAUX

1
I
U � der PAS 28, be y on d
th� mere 20% 1h:-PsholJ. !lw , · ; i stcnce u f s 1 g n i tic a nt i n ll uc ncc is u s u a l y i
·

: •

!
•
evidence d by
a.
boa rd of d i rect0r · \
Represe nta tion i n the
•
b.
: n ak i n g pro ces �·
Partic i pat ion in pol icy
<:. M a t e r i a l transactions b�twe
en the inv1.:st \)I' a nd th: 111ve5t ce
d. A l l of these

l.
i i'1 rcbtion to ovtentinl votin g rights of the
W h ich of the foll owing statements investor u s
i n correct'?
a.
T are co n s i de red 1 11 a ' � c ss i n g v1hethcr the investor h as s i g
he pote tial voting ri!?hts n i fic a n t
n .
influence. •

b. The potential voting. riµ.hts should be c·urre ntly c�.ercisable.

c . T h e i n v e�;tor ' s sh are i 1 1 the profit or loss o r t h e i n v est t'e i s b ased 011 the pres e nt o wne rship
:

interest and the po i e nt i , t l ownership i nterest.

d. Al I \)r these s t at e m e n t s an.: correcl. .
.
. .

A1� enti ty ha�; sewral sub:; i d i aries that 0ncr�t/ i n . : hy°peri n tlationary economy which use�, t 1'�e
•
3.
• ' .

zloty .us the local currency . Management w 1 ..;hes Ill :-°how the financial srntements in US dolla�s . .

MaQy of the operations an: within coumriws t h at art... not r1yperir1flationa ry and these subsicliarifS
use the euro as the functional c u rrency. l i ndcr l'A:- 7:9. what currency shlni lJ the e nti ty w.e �o
present the consolidated financial statement�·�
a. The US dollar
b. The zloty
'
c. The euro
currency
I

d .• The entity may use any

I
4. �n e nt i t y h;is subsidiar; that o�erates :n .'1 hn11:ri nt1ationary ec ? nomy. The subs i dia1) 1>
l tnancial statements are rr.easured in term<> o f local currency. w h i_ c h 1 s the z l o t y . The pare n t 1 s
!ncated i n · U S A and prt'pMes statemer;ts 1 : 1 d:i l l :1! ; , Which procedure is c o r rect in terms pr
Cl'l1SOI idation o r t h e subsiciian. . s financial sta!e111l'l"rl :'
I
a.
b.
The subsidiary·s financial statements sh •: i i d d i)e 1 etranslated to U S A dollars.
The s ubsi d i a r y tina11cial statemel)ts .::i h ould br: restated in ac c o rdan c e
retran sla ted t o U S A dl'llars. ,
with PAS �9 a1�1d
· I
·

c. The subsidiary·s fi na n c i a l statements �:hnuld b1· :emeasured i n U S /\ d o l l ars and restated in

a<.:rnrdanu� w i t h ' PAS :'9. j
· ; a

�nd��·::::�: ���:� :���� �::::7::'.: :::� ��:: ::

u

1;�::�;:1 I,
�
5. . i ·��:;:i� : a:: � l i a b i l i ty ?
a. A pre ference share tha1 w i ll be redeemed !)y the .ssuer for cash on a future date . 1

b. A conlract for the d e l i very o f as ITl'.ln) < : f" the "'nt !ty " s o rd in ar y shares as are equal i n v u l ul:' u

c.
a tixed amo u n t on a future d ate
A written call option that gi v es t !·::! h0l Jl!r th( right t o purchase a fixed number o r t e,
. .I I
en t ity" s ordinary share� in return for a fix�d prkt: • !
.

i
.
d. An i ssued perpetual debt instrument

6. Which of the follov.. ing. is ;1 financial l i abi i i [ :- .)

a. Defrrred revenue
b. A warranty obl i gation
c.
d.
A constructi ve obl igation
An obligation to deliver own shares worth a ti vc J :.imount ilf cash I i
7. Transaction costs Lhat are directly attri buiabk t o tlll ··issuauce o f new s h a res should be
a.
b.
Expensed immediately
Charged to rewined earnings
.i
<.: . Decluctec! from equity
Deducteu from e q u i t y . net o f any related i nc o m : t :.i x bencti !
i
d.
5767 .

I
. '
 sho uld b e
o f 5 hare"
·

t listing
� ·

stock ma
. .
· ·
rl<e -

• 8. Costs ot' public offer.i ng o r

inc o me
. •
a. Ex pe nsed ima:ed 1me reh c n si v�
1:,.
t of othe r i omp
b. Considerl'.d as ·:omponen
D ed uc ted from equ ity
c.
.

re l at....,q inc
. om e tax be
nefit .
net of any
inc I u de
d. Deducted from equ ity.
new .sha res .
the iss•J ancc o f
. .
•

•. ,, . . hi r.
9. T n s act io n cost aire�
• ·

ra .
tly s
attnb uta t '

a. Documenta1y stamp t:lx

b. Underwriting fee
c. SEC registration fee for new share�
d. A l l of these

I 0. Costs of public offering or listing of r. h:ire� indude

a. Road s ho w pre s entati o n
• b. Public relations consultant fee
c. Sto.:k l i s t i ng fee
d. A l l of these

and inc l ud ed . in the

r.re treated as outs tand ing
l l . Ul'lder PAS 33. 1.: ont i n gt:1�! Ordl. nary sl1".. res -·
computation i f the c-0nJi1ion is satisfie«
a. For both basic and d i l u ted EPS fror.1 the date the c o nd i t i on is satisfied.
b. Fo r both basic .ind di l uted SPS fr0rn 1he beg i n n i ng o f year.
c. For both basic and d i l u ted EP� fror�1 �ate of :tgr�e�c n t . � . g, of
·

) "
d. for basic EPS from the date the co.idnron ts sat 1 s t 1 ed and fo1 d i l uted El S h orn beg i n n i n
.

year o r date of agreem e n c . i f later.

. ' .
.
. .
12 Th!! wcighteti uv�ruge nurnba of share � ouistar.dirlg for al l periods shall be ad_1usted for
a. Any c h an ge in the numb·?� of ord i n Jry ;::h�res w i t h o ut change i n resources
b. /\ ny pr i o r pe ri od error
c. Any is ue o f s ha re for cash
s s
d. Any .convert i ble i ns t um e nts settlec� in cash
r .. '

1 3 . \\/hen applying the trcasur:-- share mcthori for d i luted earn i n g:; per share. the m ark et price of
the ordinary shares used for the pu rc h a se is tht·
a. Price <i t the end o f the year
b. ,\ veragc ma rk e t price
c. Price at the heginnin3 of the year
d. None of .th e se

•
1 4 . When computing d i l utd !: P S . convert i b le honds are
a. Ignored
b. A:; sumed conv·�rted whether dilufr;e or antidilu'live
c. Assumed converted i f d i l utive
d. Assumed convened if an�i d i l utive

15. In computing �'2'! 1too <'lverag.t: share� fluistanding. when a stock dividend o'r share spi it occurs.
the Jddition;d o!nrc:- ar:�·
a. Weighted by the nurn\xr o i" th:t) s e�lstandit�g
h. Weighted by the number of month> ou tst C:Jnd i n g
c. Co n s id e red o ut st and i ng at the beginning of the vear
d . Co n idered outstanding at the beginning of t he
s �artiest year reported .
I 6. An ordinar y nonvo ting share which i� entit led to a fixed
. divide nd should
a. Be i n c l d ed in [PS c:1Jc:1la rion aft � r adiust mcnt of the
u fixed divide nd.
b. Be included in E P S calcu lation 'Ni .�1out a
di s tment of the fixed dividend.
u
c . Not b e mclud �d in ErjS calcu lal!o1 1 .
d . B e i nc l d ed i n lhc c 2 ! .: � l <.1ti0n o f d
u i l u t ed E r�s .
.

57 67
 ------�--_;_..-�- - -- -- --- · - ·

page , �
J
. .
': ·.d;:r PAS 3 4 \\ h ;ch .'
o f. 1 hc r 10 II OW .llU!. Sl:: t -. ,
�!.
.
. · i r0ue ?
l report rnay ( '. !11:- .
•
J\1\ lllt en m fin an cia
·�on:iple !t: :::c t of tinancia l s ta te m e n c s \\ i'th .
··• •

:;el ect ed notes.

•
: . .

Li. An i n ter i ni. l�n

'

.
•

. an c·ta I report may

-:•11;s1 ;t : i '.! ' �' mplelc set or li nan c i a l state men!� . or
con den sed set of fi n
anc i al statement " · t h ·;':'k 1." ·J note s. .!
c . A compl ete set
o f fi n a n c i al statement� -; req 1 J i ··'. rJ a t i n te r i m re p on i n g d ate .
A condensed set of financ ial
statemen 1 .� w 1 : r- .� .: " �cted no tes is required ac interim dat .
1.. .
;
.
�
1 B . \. / h ch of _the follow ing
s t atem e nts is trut> -;eqa1�� i1w
°
i n terim reporting?
'

i
fhc d i screte v i e w i s n:qu i r
a.
ed for int · ;·it" 1 i : i ' : v i 1 : stateme n ts. II
b. Inter im repo rts are req u i red on a
q uan ··· ·: ···'.! "''; _ . • i
Inter im reports are n o t re q � i red I

·c1 . . I
c.
I

i e n t ! of
�tenm reports re q u re the preparatk·n of•,,•1 h ::i st atem en t of e arn i n g s and a s : a t�m
. .

I inan cia: posi tion. •

I

!
s
1 9 . hii· i n tc� ri 111 ••:portin g. th� i n c o m e tax c:-;pense fC1r L� c e c o !ld �t1arter s ho ul d be c o m p u te d usin �
a. St atu torv tax rate for 1 he vear I
'
. , I
D. Effective tax rate expected to be a p � l i cn:,j,• ,-.., ,. ih: second quarter . i
E!Tcctivt: tax ra t e expected for the [ ,, , ! . .-'1:· : . . · l! nuu�d <ll th� end 0r tirst qum1er
·

..
d. Effect i v e tax rate expected for the tu !l �1 enr ti<; e9't i !T)a ted at the of seffitid quarter.

�1.1). \'.I nder PAS 36. the impairme!ll rules fot" lutif!.- ; ; · · .. ass.ets apply to all or the fo l lowing. except
:1. B u i l d in g c u rrently us1:·d in the bu�i1 1·:"0
b. Fi nancial instrument:;
c. Land
M inicomputers used t o r un a product:"· n pn-.. .

I
u.

1 1 . .'\II of the following statements are tru<> w : : : , 1 :·� ·:, . . to i mpairm ent or asset. except
· •
ti .I r i mp a i rme nt ind icaturs are pr e sen t. . fk' .�nl Ii�' . m::;t cond u c t an i m pa i rm e n t test. :
e
b. The i mpa i rm nt tesl < ' Ompares the c:�rrvi n•J. :.1 11' '.l ltnl with t h e lower or fair v a lu e less cost of l
d i s posal and value in usi:: ·
.!J
·
�

r. I I' the recoverable a m .i u n t s lo wer 1 h " 11 ; �11 1" \ i:· ! :1mount..an i m pa ir m e n t loss is recognize
i .
h
ll. I f recoverable amoun: i� i g he r than . : 1 :-r\ :i ,,, .... iour11. no in1ra1rmen1 loss 1s recugn izcd.
I
«
22 An i: n t i ty i .'. c.onsidcrin�: to apply an :-rnpa1rnwn; 1. est !o '.\'1 i nd i v i d u a l asst'! )r to the .:: J1sh·
generating ui1il i,J which 1i11.: �.:;set i.>e io!';Ls. 1\.'hid1 l ' r° di..: iu lt0>-.. ii".g stc.uements is t.-ue· ) !
r.: . I f the ind ividual assd
does noc t:?. : . v :T · · · :•·· · •n flows that art' largely independent n-l)rn
other assets, the cash �enerating U ni ! ( • �1:, _ 1 ,, : .1\!nt1tied.
+
0' I •

h. If the individu�I asset generates :i sigr::f;,�;H�t �\ropt�rt ion of cash i n tlo>\1s or the entity · a •
whole. the cash generating unit should ,,n; h·' :. r�·�nifit-d. :
c. If the individual asse . generates a1: :n� ':': ! . i !\ :.::1�1 1 t:iroporti o n uf the C3Sh inflows of the eniitv
as a whole, the cash �enerating uni: sh: ...i ·.1 , , : i . b'.! iuemifi�d.

d. All of these statements are true.

j -.
L: i . When an en t i t y determ i 1 1ed that an e4u- ::· 1 '. 1�·r:; , . . d in .)p e;·<:>tiens h:!s suffered i m pa i r m e n
�l 111
l1alue. the entry to record the im pa i rm e n t �·:·,,_ . , 1 j .. : 1
a. Recognize extra deprc:ciation e x. pe n s
> i· �,. :• :: 1 -:d .• .
!
h I n.el ud e a c re di t to accumulated de pre � . .:itio:-.
3 c. Include a cred it to equi pm e n t
I cl. Not be m ade if t h e eauipment is stitl 'ic:ir! .. 1 1 ,,,.d

!- . . !lnder PAS 37. a ··provision'" is recogn!:; ·.'

..
I :1. W he n 1here is a legal obligation ari s 1 1 1 ,.. ; - . ; !� · r:n:a event. the probab i licy of the outfl(\1 of
It! r1:�cmrcl'S i'.; less than rro bab l e , and G rl.''. :,; !m· . - 1 i : natt can be made.
b. W l !l'.n the re is a co�;,:rnct ; · ..:' ! '. I :_ ;1 f . 1 1'a:,; <·vent. the
�e obl i :!aticw ::�:; .i ?ut�ow ofresourc9sI is
(; probabl'.!. and a reliable estimate c:.. n ht' p·. : ! r ne amo u n t of the obltgatton .
· ·

7 When t here is a po ssi b le obligatio.i a, i · · ' 1 rast c\·ent .

I
. I
c

8 Wlten 111anal!<:ment dectdc-s that 1 . 1::. c· · . , 1 ' .1 :� 1·ov 1s1011 oe mad::.

t' ! ··= ·

�,
'!.

l)
� ••
•

· ·- ·
() . 5 6.7

• �\;.__
Wjii;�'it;; .-
I
f
 .
.

2. S . Which of the following accour.ts w ou l d no: bt' considered a ··provision"?

a. Warranty liability
b. Bad debts
c. Taxes payable
d . Note pa�table

20. Which of th::'. fo l l o w i n g. sltnl!ld be disdos.::u i1; th\:° i.rn:ncial st11tcn1c11ls us a C.:l)lllinµcnl l i a h i l i ly'.'
a. The 1�nt ; 1 y has accep1t·d l iab i l i t y 11 year-t:nd for unt:lir d i s m i ssal o!' nn c m r loyl"c.:.
ti. The cntit�· has receivc-d a letter fri:m ;, ; upp l i c: : • : o n : p l a in i n); about nn o l d 11nraid i11vu i<.:1" •
.
·

.: . The e n ti t y i s i n volvt-1: :n a kgai c..s � "' hi..: h 1: 1 n. y pu!->s i ti l y lu-;e.

c The e n ti ty k•�· 1�·:.t Y'-'I paid certain c.: ! a i 1 r·:; tmdc-· �.:.ilt·:. 1v:.irranty .

27. 1� 11 entity operates a chcmi-.:<il pla1h and has. " pwt.· �isl it:J pu l i.: y ur 1 1 1n k i 1 1 g goud any danfogc.:
· mused to thi:- �nvironm-:1.L Which 0 f the fcilio"' i 1 1 !� . w�uld g i w ris1: to a pru v i :·i i < 1n'!
<1. It is likel:" rnat a cl;�mical spi l l wh i c h would r-.:: ul t ''' pay pt'nalty w i l l occ:ur m: x l y1:ar.
b. Research suggt>sts that there i s a po��ihi l i t�· ;lln! !he enritv · s. m:tion 1m1y cause dnnH\1-!L' lo
• •
I i
surrounding w i l d l i fe . , I

c. The government has plan for a law r.:quiri np_ : d i l'.n v i ru11mcntal dnrnagl' lo b1: r1:d i licd. •
I!
. J/i
.i
cl. A chemical ::p i ll fron·! a r:hemic:il plant h:1:; 1: at::l!d harm tu thl'. st11T1 H indi11[! w i l d l i l l:.
.
28. Under PAS 38. wh i c h ot the fo l lo win � is a ,� ri·. e 1 i ( •II �hat must bc me t i n order !'or a n i t 1:lll lo he.: I·
!i 1
•

1�cognized as an intangible us:.;el other 1ha0n goodw . 11?

jl 1
flit.> l�u · \ <liue i:an bt measured rc.:liab l \'. I
!
<1.

h. The itet�! i�: part or th•.: ac1ivi tie:; ai n11:d a: 1r n:ning new scienti fic or tcchni(;al knuwledgL�
.

c. The i 1eni 1�: expectl.'d l o be •.ts�d in th1, 1'r(Hi 1 1 c l i < >t; ur supply u f goods o r scrvic1.:s
d. T1�c i'.en' is idcr,titiat k :wd l acks phy�.enl"•:1J h'tanc1:.

'.29. i\1 1 ·�nt11y i l ia t acq 1 1 ire�: a11 ; r.tani;.ible a-:�:t>1 m:1\ w;(' t he n::·1 : i l untion moue! ftll' subsl:quL: 1 1 t
1nl.'as urem e·11 o n l y i �·
The usetUI l i ! e 1)l' thr:- •;1t�� ! ;gible H'>Sei c;•n l.w 1-. 1:1bly deter rn i m:d.
I
<1.

h. An ac t i ve m;:rkct •:·�·. 1 .ts for th� i n ; �1r1;! i h : c ::u::v!

'" · rl1e cost · i f 1 !·:c i r1t:1n::,: b 1 c :.is�L·t 1�:.11 b•: r. il':.! · !11 · . .i :v l ia11ly i
cl The 1. nt an g t.' I)I e r.s;,r;t !:; a monetary nsset .
. I
.•
• • � • •:• I
I

3 0 . The reason gu;:,1i'l'.:jl: i s s-i 1 1 1e1im�:s refrrn.:u tu a s a 111i�stcl' valuat ion accu u n l i s lll'L'ause
I
i.
a . I t represel'ts tl11: pu n.::·1ase price 0L 1 bustn'.::.s t'.· <1t i s r.:hout t u IK sold. i
b. It is the di ff�rt:nc•; b1·1we-:n the fair value of I ! .• nd idert t i !!abk assets HS compared w ith th1:
purchase pr: c · c 0 !' I he �tC(j uircd bu�i nt!5:;
... . · 1 he vaiue 0 1 · a busiw·s� i s com puled wi tlluu1 l.1111:siLl1::1 l:lLio11 uf goudwi 1 1 .
d . l l i s thr� on l y account i n t h e tinancia! staten1e 1l!.; th:-!t i s h:·is:.:ti o n fa i r value.

:: 1 . Which of the fo l l owi n g. cosrs should be cxclu<lcd 'rum :·1.::scar-.:h an<l development ex pens1:'!
a. Modific ation o f lhe (ksign o f '.I prodLH:l
b . AL·qui sdivn of R and D e4ui p1:1 :!m f o r us-: •'11 . curr;!llt project only
c. Cost r J marke ting re·;carch : ".); " :1ew prnd1: 1:t •

d . Engi ne·: i ing acti vi1y rl!1.� u 1red 1 0 f.civa11cc lhe u�:sign ,11«1 product tu !he manulact u r i n g. » lagl'

:;�. Which of the fo l k•w! ng :; •atcments is trrH'

aL1011t :-. i:c.:nur.ti:'lg for development costs'.'
i�.�� t·<1 .
Dev elo1 nne r,! � ·)�.is r 1 11�t . b::: c-.{p
a. .
D eve I op1n ('.. ! .' l ,, .1. " ·" .: · : Na .ys c,: ."errc i!Prl c n 1.: n SCCI aQ<l ! fJ$1. l utllf'e rcvelllll'
. .

• • "· • � -

.
. .

�.:1w1blc <\:;sci 1n ver1" rcs t n c t 1 w -; 1t 1 ra 1 1ons .

b. . . • . .

.... L· ,··1p i·t· 1l iz1.; d -.i::. i::• :

r e 1 o p rn•:'1 • :. · .. t.•. • '· �'. , J '· )\. b,,
.

c. 1.Jc:v . .
· · ·
· ' '

1:.
.

. "" . .. 1n 01\·!c� Cl·f1li•" 1".'h-.:rr -1v� :ncom

•

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. .

t , ., ·e•'or c't'd
d. D eve I op1r H.' �1 ·
, .) 1-.t ! .....
· . • '·

l r.� �) inc urr� d : . . : d.. :· 1 � ; ?.;- . a nev.. entity

shnuld h1:
.D . Star t-up CuS ' '· i : 1 �: J d t 1 !� kgu
. •

....
a Cap itali :.:eJ <i'ld .w'1; ·r ?.P-.0
rt 1 zed , •
.
. .
"·
o. Cap iwli zcc! ci?l• ; l:\l1!0 flize d => ·1l·r year '> ·�'1
'\� ;1r.d an:c rtil.d ova ) yea
rs
c. Cap iwl izfJ
d. Ex pensed ci�; in;: i ; rre . l
5767 .
. • •
. . """' �1.
...

.";.
'
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....
 Page 5
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• • • ! ,,,,
J4. Wh
.
ich of the fol lowing s atements m relat i on
•

t
·
• •

io rl!:.: ove ry of i m p a i rme n t ! O r an mtang1'bl.e as se.t

. . . � ·

1s n o t true?
3 ·
P. tl er a reco v ery 0 1· 1· m p a 1m 1 ent • has been ·! ;:1 o �n ize d . the carry rn g amount o t he asset 1·
·
• · ·

bet wee n fui r \ Jl l1-.: kss cost of d i s posa l anJ \· a l ue in use.

repo rted would be the higher
b. No reco v e ry o f i mpa i r me
nt i s allo wed tor gtKa.1 · v i l l .
c . The rec o v ery o f .
i m pairm ent i s repo rteu as o!he i income. .
d. The amoun t of recove
- ig. amoun t of the
ry is l i m i ted to the carryi asset that would have been
reported had no imp airm ent occu
rred.
3 ) . U nder �>AS �9, what is th� pri nc i pl e for rel:ogni1io 1of a fi nan c ia l asset ':' •· .
a. A i manci a l asset is recognized when i t is proba )k t h a l futuP:' ec o n o m i c benet 1 ts w i l l flow co
the entity and the cost or value ofihe i n st ru men t can be rneas'. 1red reliably.
b. A fi n anc i al asset is rei.: ognized whe n the em icy o bt a i n s control o f the instrument. .
c. A li n an c i a l asset i s recognized when the emiry •)btains the risks and rewards qf o w ne rshi p ot

i
the financial asset ano has the ability to d s pos e the fr-.<.:11cial asset.
. � •
d. A financi al asset i s r e : og n i zed when th..; e!·;ti 1:: j�c om es :i pa rty l\l t h e c o n t racl u al provis!Ons
or th1:· in:>lrument.

3b. In ":hich of the following c i rrn mstancts is dereco� 1it ion u f a fim,ncial ass� t .n o t appropriate':
a. fhe co n t rac tu al rights t o the cash 11ows of the t� p�nc ia l asset!> have e x p in.:: d . .
b� The fi nancial asset h ::i s been tra n s ferred 'ar.d : .ub"stantially a l l of the risks :t n cl rewards u t
ow n er sh i p o f t h e tran�Jerred asset have also be·;n trnnsferred. • •
c.. . The financial asset has been transfer.n�d and 1�.e e 1;t i t y n: tai n ed substantial l y a l l of t h e
has •

risks anG rew ards or o v.. n er s h i p or t he 1rans1err·:J ::isSeL.

d. Th e financial asset has been t ra ns ferred '.lnd the ent it y has lost co1� trol or the t ra n s fe iw d
asset.

37. W h i c h of the following transfers of financi'al a sset ' \!Ould q ual i fy for derecogni tion'>
a. A sal e o r a financial asset where th<; entity ret?tins a n option to buy the asset back al
current fair v a l u e on l lle repurchase datt:.
b. A sale of a fin anc i al lSSet where the en1ity ag! ees to re purc h ase the asset in one year ror a
fixed p ric e pl us i n te re st .
c. A sale nf a portfol i•1 of s ho rt - te rm aCcCJUnl$ rccei'.·ab le whe re the entity g uara n tee s to
compem.ate the buyer ror any losses in the port folio.
d. A loan of a se c uri ty to a n ot he r entity.

J g _ Whi ch o f the fol luwilig i s not a rek\ ani cun ;i, lcrat1on when tl' derec(1 g.nizc a finam: i a l
liabil ity?
a. Whether t h e nbligation has been discharged.
h. Whether the nb l i g ati u ll has been cincv! .:: J .
c . W h et her the ob l i ga ti on has expired. • • ! •t:•
d . · Whether substant i a l l y a l l of the ri sks and r�wanb of the obligation have bee n transl� rred.

J�J. Wh i c h of !he following is not p rec l ud.e d from C!ass Jication as he!d to matu rity?
a. An i nvestment in unq uoted debt instrumenc
_;
h. An i n vestme nt in quoted equity instriJment
c. A q uote d derivative l i n an c i al asse1
d . An investment in q u o ted debt insrrument
},

40. All of the fo l lo wi ng are cnaracteristics 0 L 1 derivat; 1e. e:i.. cepl

a. It is acquired for the purpose uf ge ne n1 t 1 11 g ..:i prP!it from short-term t1uctuations.
b. l!s value changes in response to the change i n '' specified u nde rl y i n g .
c. lt re4uin:s no i n i ti a l i 1iv e st m e nt 01� an initi<ti �111:ill net invest1111.:nt.
d. It i s set tl ed at a fu1ure date.

4 l . Which e m be dd ed derivat i ve sho uld not b� J1:co u11 t:od ror � e iMra1 eiy?
a. An inve�tment in a converi iblt hond llut i:.. c: \ ;1•; , i l icd as available for salt'.
b.· An i nvestrn e m i n :.:i hrnd 'Nhos•.; i nt e r.:�t ·Ja ,:1: . c i•s arc: l i nl.:c:d iJ th� pri<:e of gold and the
. ·

bond is c lassi fied as a vailable for sale.

..:. An i nv e s t me nt i n a b,rnd whose i nte 11ts t paym:ms are 1 ; nk,�d to the price of silve.r and the
bond is l l assi lied as ::1; lair value throu�h pru l i l o r loss. .
'
I. d A call optio n i n an invc:sunent m an c:qui�) 111�.t i\.Lrnt:iH Lhat allov.s t h e issuer to repun:hasc
.•

the instr\1ment.
"
5 767 ..
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_ _

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•

42. It is a purchase or sale of a fi nanc i a l asset u nd e a 1 : -) nt ract whose terms req u i re d e l iver)· o•· t,h e
;
asset within the ti m e frame est a bli shed by r�gulation or"conventio n in t h e market pl ac e .

a. I
I
Re gul ar way comract
b. Fo rwa rd con tract •1
c.
I

I
Firm commitment
d . Forecast lransaction
·I
4 3 . Under l'AS 40, i nv estm e m property is defined as l
n. Property held for sal e i n the ord i nary course of business . I.
b. Property held for use i n the prod u c t i 0 n ar.d sup p y of goods or services and p r
ope rt y held or �
administrative purpose->
l' Property 11eld to earn r.:mal:; or for �apiu ! ::ppr::l 1au,111
·

d. ,Identifiable nonmonetary asset without physi-.:: al 5\Jbstarice.

44. An investment pro pe rt y should be mea s ured initial!:· at '

a. Cost I
b. C os t less accumulated i m p ai m1e nt lus5es. • . '!
c. Deprec iable cost less .:. ccu m ulatc;d imph!rmcnt l1 1sses. ! •
cl. r:air value less accumulated i m pa i rmeril lo�::.c::>.

45. Transfers from i nv est me nt property to proper1)'. rl am lnd eq u i p m ent are a pp rop ria t e
a. When th e re is change of use.
b. Based on the en t i t y · s d i sc ret io n .
c. Only when the entity udo p ts the fair v.111 11:' mvdc-: .
d. The en t i ty can nev er tra n s fer i n vesi m ent propert:1 into ano1 he r c l as s ific ati on .
I
I
46. Which of the fo l l ow i ng is not dealt with b) PAS .+J_)

; i.
:1. Tl, · accuunting for bi0!0gical clSS"·::-..
j
b. T he initial measuremt:nt of a!L ri c u l !u ,'.a i p roduv, harv ested from b i o l o gic a l ass et s .
•

L The processing or agricultural produ·.:.� dti.:r h..i1 \· est i n g .

d. The ac cou nt i ng treatment o f l,!Overnme1�1 �.! r.:1!ll ·eceived in re s pect of biological assets.
. . II ! �
\.\�hich ' '
•I
of the fo l l owi ng i s unlikely to b e u:-ed in fa11°'4'llue measurement
•

4 7. of biological asset? i
Quoted market p r i c e · ·
! i!
i
a.
•

b. The most recent markt:L transaction pr;i.:..:

,I
•

c. ·The pre se n t value of the e x pect ed n':!t t:ash fl<rn�. from the a� set ·1
'.,
d. E xterna l independent valuation
j

'I
4 X . Which of the following i n fonnation sho uld b!: ·.f �ci 'ised in relation to agriculture?
a-. Separate di sc l os u re of the gain or loss rnlatin1;( £\• biological asse t s and agricultural p ro d uc � .
b. The aggre gate guin vr loss ari si P. g ._11·1 t!;t..: ;!1:1ial recogn i t i o n o f b i o logi ca l as ;et s � nd
t I i
I

agricultural p ro d uc e and from the chc!nl!-e in t 1ir val ue less cost of disposal of b i o l ogi a l •
j i
I
!
assels.
The total gain or loss from bio l og i ca l a:;set::. and ag ri c u h u ral p rod uce . .
!I
c. :

There i s no requirement to d i s c l os e s ,p:>rate l y <1 iy g ai n or loss.

'
d.

!'
4 l 1 . :'\ n uncondi tional governmenr gra n t re!at.:d w niological asset should be recognizc::tl as
a. I 11con1e 1vh::!n t h e grant becom es rF-c.:iva ble.
! 1 . A ueferrcd credit whe,1 t he grant bl·coni o:: s. re·; l: i · ·able. I

I ncome when the grant applic ation has heen <.LJ�'. tn itted.
c
I
·:.:1pr• v e cl .
d. A deferred credi 1 whe!l the gra n t has be-l:n

) U . I r governm en t grant rclabl LO biulogi.:� i a�o ·.: :

;� r n .1.dil i o11.a L the gran qr:� u lc.I be rel:ognized ys
1·.i t�:.c ?r�i;t are met.
a Incom e when the cond ition s a ttach i ng
•
. •

appr o'.· ..:d

b. Inco me whe n the grar:l h as been
c. A defe rred cred it when the c o nd i t on
s at1ai:: h 1 r. �� t0 the gra n ! are met.
�
d. A d e te rred cred it when th e gran
t bias bc:�n <'µpr·� ed. �

576 ,I
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EN D i
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\_
 Cl 'A REV f E \V S l ' !-�O:J �
· · f't '. .�: P H I L I P P I N E S
.
M ;, i I a•
'
n

lli f:�O RY OF AC CO UN T�; PRE WEEK. \iALI X SIY YALIX

I . Un der PF RS 1 ho'" sl' . ·

p1 ese nt lhl' open in g PFP

"" .ou ld a t·1rst ll!ne udopt;;:r il PFRS re co g n ize the adJ UStments n: q 1 1 1 r ;:t , 1 0•
· .

.
·

. .
. ·
'
· 1l
'- S st atement o 1. f i lianc1a 1 ; 111-;:t 1011 ·>.
.

jml. '
a. A l l _ o1 the adju strne 11ts shou ld
i
1
. ·

be recu gniLe-i 1 1 1 p rntil or loss. •

�
b . A J USt ments that
are cap i ta l in n : ·Jre ·� h . uld be recognized i n ret a i n ed ean1ings
; j
natur,e shuulc be �ecognized in pro fi t or loss.
!/
ad_J ustments that are re ve nu e in
c. Cu rrent adj ust me nt s should
be rec0gnizcd 111 pro fi t or loss and n onc urre nl adju:;tm i.: 1ts
shou ld be recog nized in retained ea rn n
i gs .
•
d . A l l o f the adj ustme nts should be rt (•' l!nize·j Jirectlv i n ret a i ned earnings or. i i ' appropr i i tt:.
1

1I
1
!

- , . ,
i 1 1 :1Mtbc.:r ( at e gory •Jf eq uity .

U po n f ir st time ad opt i o . 1 o f PFRS. an t111 ity ni.1y �kct to use fair value as deemed cost for.
a. B i olog.ic a l asset re h1 ted to al!ricultun:: ! nc t i v i t \ lor wh i c h there is n o active ma rke t .
b. Intangible asset for which t l ere i s n o act i ,:e arket.

l
� 1�·
c Any indiv idual i te m of property. plam al \(l l!l1 : 1ipment
d. Financia l l i :.1 b i i ty nnt he l d for tradin�;

. . l indcr l'FRS 2. which , J f t he fo l lo w i n g i s H'uc rcg;.m:J i ng share-basc�•Myme nt transac tions'! 1'

il . P r i v ate entities are t:xempt. . •
•• •
e n t itie s <'.re en:mpt.
b. Small
c. Subsidiaries using 1heir parent .entity · s s11arc s as consideration for goods and se rv i c e s ' 1'e
lt
exempt.
I
d . There are no exemptions. l
4. An t:ntity has en te re d into a con t ract with ;.1t1C-!ho;:r entity for the latter to supply a range ! o f .
.
serv ice s. The pa ym ent . !or the serv ices 1�. cas n b � scd o n t h e p ric e o f the ordinary share:;.• w a t h
type of sh a re -ba sed payment transaction does tll> r�presenr?
a. Asset : ; ett l c d share-l 1ased p ay m e n t tn . ns<11.:l1u:
b. Liubil ity se tt l ed share- based payment 1.rnnse1c1 1on
c l'ash se tt led share-based paymeJH trars.:ii.: t i o 1 1
d. Equity settled shari; - oased pay me n t �ran:,ai.:ti1rn

:-1 . I l o w should an en t i ty r..: cogn i ze the cL.!1�(' 1 .1 1 1 :.: !atr rnlue oi' the liabil it) i n re s pe ct \ \ ! ' a L' 1�h
settkd share-bused payment transa�tior.
a. D i sc l os u re in the notes
., h. In tht: :;taterm:nt or drnnges in equit)
.. c. I n ulhtr cornprehen:,ive income
...
,. , d. I n profit or loss . .
0
6 . Under PFRS 3. which of the following , �1uld nw0L'Olll0ribute to negative goodw i l l ?
.•

l (I .:l.: • ! · •1 ;·,·-: s net !dent i fiable assets

•

:1. lrrurs in measuring the fair value , . : th.:

I. h. A° barga in purchase. . .

c'. A requirement to rn·�asure net asse t.s 1: 1.:.:! 1 1 i : t�- : :.t � value other than fa ir value .
'

.\ . u. Ma k ing acquisitions a t the top o f a "l;dJ" :<1a1 kt"l for shares.

i.
7. I n a busi n�ss combination, what i s the u�..:ourni :· � treatmem i i a n acq u i re1"s interest i n tile a 1 1•
• value of the net asse ts at:q uired exceed$ t.111: c�)Jt:.>:-.kration transferred·.>
R e c ognize the exce!;s immediate!) i:. ;Jr� f; ; . 11 1, 1;,s .
income.
:1.
·
p. Recognize the exeess i m medi a t e ly 11r oth r ; m re he n si ve
p 1

1
• co

t: . Reassess the rec og n i t ion and measu:":�rn·;:;nt the net assets acq u i red and the consicler<ltion
,.

transferred and then r e co gn ize the excess 11111 '. .cd!.ately i n profit or lo s s .
d. Reas:>ess the reco g r,ition an d measur� rnent " the net a sse t s acquired and t h e consideration
trrinskrred :rnJ then reccgnize t!i1'. e:<t:es:-- i m 1 1 .ediately i11 o r her comprehensive income.
�. Whit:h costs should be i n c l uded i n the co1 1� id-::r:1t1 . !1 transterred i n a combination')
a. Cost of maintaining an acquisition d·. x
; 1rn:·r:! .
Fees pa id accountan ts
·
b.
c. Bot h cost of maintaining a n ac q u i si u on depi�nment and fees· paid to acco untants
cl . N e i t her cost o f rnair:caining a n acq t • i � 1 t i u 1� Jc:\! ;ment nor iees p ai d r o accountants 6

5�68
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9. Duri ng the cunent yea r , an entity acq u ires an\.l lhe entity i n a t ran saction properly accounceJ for
as a b us i ness combination. A t ihe time 01· the K i -.ju isitiun, sume of the in form at io n for va lu i n g •
assets was incom1Jlete. How s ho u ld the acq u i re · accollnl !or the in com p l ete informa1ion i n ·
preparing the financial s ta tem e ms immed1att:ly a 1 1 cr the acquisicion?
u. Do not record the u 1 1ce 11 a i 11 ite:m until compli-te i n fo rm a tio n is available.
b. Rel.:un! a co n tra ncc• >Ulll lo the ;nvestment ace Jun! for the am o un t i n volved.
c. Rerord the uncertain items m tht· ca rry i n g am;nmt of the acquiree.
d. Record the uncertain items at a prov is i onal amo unt measu red at the date of acquisition.

I 0. When do 1 :� the 111eas11rr�men1 pe!·iod end for 1 h u s i ness · com hi na t io n in which there was
incomplek accou.1lii 1;1 n fr1rma1ion on the dar� 1>! �1c q uisi1io11°
a. W h e n the acquirer 1 :ct-1\•es the information (> ; one ,Y e ar from che acqui�ition date, whicheve1•
occurs earl icr. ' '·
b. On the final da:e when a l l conti ngen-:ies an: :•:snived .
G. Thirty days from th-: dat;: of acquis�ll on. •

d. At the cm� o f tLe re,·1ort i 1 1g period i n the year _; f ;icquisition.

I l. PFi�S 4 defines a re111s uram:;: c:ontract �s " ..:ontract i ss u ed by one insurer, the reinsure r. to
· campensate another in� urcr for losses L''l uue ur 1 .1ore co n trac t s issued by the ced an 1 . Wint is th�
meaning or "cedant " in :i reinsurr,ncc contra<: !:? •

• a. Policyh older e r a reinsurc:nce COLHrac :

und

b. Po! icy holder under an insuran-:t· con:rac t

c. I nsurrr lillder a n i n:,urunce ::ont ract
d. Rei n s ure r under a r-:insurance co nt rac!

1 2 . This i� (kfint�l as "the paym e n t s r.o which 'a pa;·1icu!ar

policyholder has an uncond itio11a! righ t
lh•1I .1s not sub.iect to t h : c untractu al J i sn et i o n of the in!.iurer. . .
a. (}uar:111tet:d beneiit:.
b. t Jnc\11 ;Jition:il be1h fits
c. Proceed�; 0 1 . po l i C )
d. Exec11 tur)' bt·1�·.· 1 i h

1 3 . It i s the insurer 's net

•
'=nntrac tual right unJ c"r a r insura;1ce contr�� t '. • t:•
,
a. I nsuram:e :·.s:;ei
h. Insurance l i a h i l i ty
c. Rci nsura1��e a::.Se!
d . Rei n�.urnm.:e l i a b ! t : « y

l 'I . Which of the loilnw:n g accou n tin g practices ha s been ou tlawed in relaiion . t
o rnsurance
contracts'.)
a. Shadow accou nt i n g
b. Catastrophe pro v i s io ns
L'. A test for the adeq1·acy of recog nizes insura1�ce liabili ties
d. A n i m pairment rest for reinsur<:r1ce asse1s
• I
1 5 . W h i c h ,-, r 1 '1'=' f o l l o\\: i ng l�ipcs l>f tL•nir.;cts \,.iult. p1«>babl) not be covered b} P F R S 4?
a. Motor insurance
I
b. Lite insurance
c. Med 1rn! insur::t11Cc
d. Pension plan

! 6. Under PFRS 5. hw.: ::h,11•ld the assets ::!nci i i a ; i l i i i t:s or a dispo sal grOLtp classified a� �eld fo r .
j. f� ., I . a.
1<1. fl<> : r ! lon .
•)

sale be repon cd irs 1hf $latc:m ent o 1nanc

off::e t :.i••c presem ed as a stng l e am ount
.
::i. The assei-> <1n,� k1 °Ji l i 1 ie� should be
d �epa1ratfe l y from o t�er �ssets and' the
b. The asset:; uf tht: ,·l ispusul gro:ip. :;houid t1: rep'ork:
te Y �·om ot her ia b t 1 lites.
• 1 _ .
l iab i l i tie,:; uf i;1e U • sposal group shou!J be
n�portc d separa
prcsentd as a noncurr� nt stn � le � moun
The a�sets a:·!d � ia b i l i tics sh o u l d be
\
t.
..: .
\
\

_, u rc l)r � r · :st'!.> and l i a b d 1 11es ot a dispo

·r1ierc s Iiuu I u' Ioe 1 10 s.,
. group.
.u.
sal
I .i l...-" a·1�c10--
... p ar' J •

. .
� ..'1
· -. .) �� � '(:
..
 . . . . . .. . ....
I 7 An entity ha�; an a:;s�t t Int ' was cl ass1· 1·reJ as 1�1 c.: l d ILir . .
sak. Ho we ver. the crrwnu as I ie 1•u• t 1·1 r ·s 1 l c.:
• '·
l r
·
no o n e appgl y . Wha t i'· the p 1 o p
··
r �1c.:counun µ t 1 \.'. . 1 1 111e11t ot 1he asset'!
·
t: · ·
•

a. Leave the nn1i 1 a"'"

..,,,1;:'l .-�t c rre nt l.'arr:vm )..!. unoun t.
'·
· cu rr-�n
·
u
b. Remeasure the non ctir
rent asset ai· foir v<ilu c.
.
at the lower ur .: . 1rrying amount before th e asset was c lassi tii:d
c. M easure t�le noncurrr nt asset
as held tor sale. adj ust ed for and t he
sul>sequ c.:nt dt'p1 -:c.:iation. amort i zatio n or revaluation.
recove rable amo unt at
the dat� of t he decis i.111 nut 10 sel l .
d Re ogn ize the noncur
� rent asset �It c.1rry i n µ ;11 nnunt p ri o r to c l a ss i ic a t i on a s he l d IC.r sak. f
·

ad.1us1ed for subseqllen t de preciation. amonlZi Iron ,lr revu luation .

i
1
8 . Which or the followit:!,!. s ta te mem � n!luung tu <: d i scontinued o re rn t i on is true'.' I
. .
t he operntron
I
'
a. When lhe disconti n ued c ri te ri a an!
met une: · the end. of reporting period.
shal I n: t rosp e c t i Vt'I) h1: prl'sented as a d i srnnt . mred upt:rat i o n .
b. The net cash flow� ul!ributab lt' · to the opt:•ating. investing and i nan c i n � act i v i t ic!s llf n t
c.
discontinu ed op'."nll!on sh al l be prc:i�nteu scpuruleiy .
To be clas:;i l'ie d as 11l'id for sate. thl! dis.: u 1 1 t i nued ope ra t i on must be sold wi t hi n t we l ve I
d.
months l'ro111 thc l:'n.i of t he report i n !-! perilid .
A l l o l' lhesL· st:i1e111L' ! 1 l :-. are true.
. .
I
.
1 CJ .· Does PFRS 6 require i
an en t t y to recoimize·e x p l l 1i·,\t-ion and c vnluation expenditure as asset'.'
a. Yes. but only t0 \he extem such expenditue ,.: recoverable i n future periods. •

Ycs. but only to t h e extent the tec h l) •1 l feusi J 1i l i t • a nd c � mmercial v i a b i I ity of' ex t ract i n t h e;
.

. q. k y g.
asso<.:iated mi n eral resource have been demonstrated.
c. Yes. bu t only to the extent req u i red by the entity's a�counting policy fi.ir rec.:og.n 1.ing., j
ex p l o rat i o n cmd evaluation "ss.:�.
ct. No. such e x pe nd i ture i s alway s ..:xpc11sc;:d �s i . 1.:u rred.

20, An entity is req u i red iu co n s i der wh i c l1 of (he toltowing in deve l o p i n g accounting pol i <.: y fur . .
l
cxplormiur1 and eva ua 1 ion activitie·;'?

a. The rt·1.1 u ! rcments und guidunc:;: i n P F l<.S dl..' ;. d ,ng with similar and re l a ted i ss ue s. •
b. The ddinitior�s. r•.:c·J gniiion uitena. and m eas u rem en t concepts for assets. l i a b i l i ties.
1ncu111l:. anJ expenses in the <. '011ce1111w l.·i:r<1111l.! wor k.
• c. Recent pro11ounce111cnts of :>tanduni-:>ell ing bJdies.
d. Whetht:r the aci.:011111ing pclicx results in i n lirm a ti o n that i s relevant a nd re l i ab l e .

2 1 . Which of' the !01!\i' .. 1 1 ' '.� ,.; not a disd1•sun.: 1'l�q .1i r•.:d i n relation to cxplurution and evaluation
'( •

expendi tures'!

a. l n formaliun J l 1uu1 . r n n me!·cial ,·cs n· ·: qu ..1 1 1 l 1 t ? t· s .

•.

b. Accounting policx for exploration and e'(al uaJ io n expenditures. ! '"'

c. The a mo u n ts llt. a �; set s . liab i l i t i es. i ncome : i nd expense. and ope rat i n g and invtsting cash
flow�; ari::1:11: frui't Lbc cxpiora!ion :·nd c v a l 11 .11 �on o f m i ne ra l resources.
J. l n li.rn11atic:n 1.hat ickmilies a:�d·l..'x p!.1ins tlw < mounts recognized in the li na nc i al statements.

22. Under l'FRS 7. th-: r • ::;ks :irising lrorr. rinuni.:;, l �

i11strurnents t ha t are requi red to be J i c.:luscd
include all of the fo l lo wi n g. e!ccpt
.
I.: a. Qualitative and quantita!ive informa t0n <:�bo; tl cred i t risk.
t
h. Qua l i t at i v e and qu;intita1iv� i n ionm1 t i 1J1 1 ,,bc,::i liq uidity risk .
'i
..
c. Qualitative and q n l i ta 1 i
uui n torm::nion nbo1tl market risk.
w
d. Qual itative and qu:mtitatiw i n fo rtnmior: <rbo•rl operational risk.
•
I.
23. Whic;1 of the following be�r describes i.:rcdit ri� ('?
a. The r isk r:!at •}n·: Hlt1)' 10 n fin::inr;i,d i :1:.tru m· nt would <.:ause a fi n a n c ia l loss for the other
party by foi l i n;; to . ! i :;-:harge m' l1b l i ��at1011
b. The risk th,11 : • n t:nu�y would a...:l'Uiller d1 lfa:ully i n meeting obligations ass oc i at erl wi t h
linan<.:ial ! i .:i bi � : : iv.
C. The ;·isk 1: 1r:: 1 ! 1r· :1ir vttll!c:: or •\m:r� -:<.��.11 lr•WS o r n linanc.:ial instrumetll would lluctuatc
beca11S1: C• r ! :r:···;.'t' i'l !liarket rriccc·
d. The risk triat ,, , ; e!: H) · � c red i t 1ac i 1 i; ie� \\·•.) !! d be w i t hd ra w n due lo c;r.-;h llov. s e ns i t i ' ii 11..' S. •

•
•
• t •

576�
·.
 :
I
,

4
Pa �-.1:
The compo nents of m a rk et risk are
•

2·1.
�1- C red it risk and l i '"1 t.i d . ty risk
C.. Currency risJt m : d :rdii risk
c, Int erest rate risk dnd -.urrency risk
ct. Liquidity risk and currency risk
25. Under PFRS 8. which of the following statements ·S true?
a. II' an . emi1y changes the way it is strucwred i n te rna ll y so t hat the reportable segments
change. the comp�rat1 ve info�·mation for earlier pe ri ods must be restated.
b. D isc l o sure is al ways ,·eq u i red of t he to Lal a s sets of each re p ortab le se gm e nt . •

c. The measurement of profit or loss for each repcriable seg me n t is defined in the standard.
d . . The seg ment prolit or !oss should. re l ate to the Dtal assets attr i b ut a ble to that segment.
26. Ar. entity shall disclose i n forma1ion about an operating segment when
<:. The segment e:-< terna l and in t ern:.J I revenue i� 1 0% or rn o re of the combined exterrn1l and
intcrnal reven u e oi" al I segme111S.
b. · The segment p ro fi t N loss is I 0% or mor� of the gr�a ter bet�e�H The combined. profit of
:

prohtabk � c gmen ts and combined loss of �npri>titable segments

c. The segment assets a re I 0% or more of the co111bined assets of a l l segments.
d. A l l of th ese are correi;t.
•

2 7 . A ri1�1 jor cuslomer is unc· pro v i d i ng r� v e n u e whid1 1s

a. I 0% or more- of the C•J1lsol idated entitv revenw.
b. 1 0% or mort' 0ftlv: combined e xte rna·i and inu:rnal revenue of all segments.
c. At ka st 90'% or the consol idated cntitv revenut·
J. I 0% or mor-. of the combined interna i re venue u!" all segments.
2 8 . In financial rcp•.1ning. for operat ing segment,;. an e11tity shall disclose a l l of the following. except
:.t. Ty p e ol' pmdm:t and servict> from wh1�11 each 1 eponable segment derives revenue.
h. The tit I·� or dll: d1id •Jperating dec ision maker of each reportable segment
.... Factors used to idcnt i (y a rep o rtab l e �·;gment
d� The ha$iS or measurement of segment pro tit 0r· 1oss and segment assets
�9. Which may be co n si d e rt d an o pe rat i ng se��mcnt' .'
a. Start-up operations t·efore e:::.rnincls revenu;:
b. Cµrporate headquarters that �am �·evenue
c. Functi011al Gcpart111e111
�- Po!;temploymem benefit p lan • ,

JO. Under PFHS 9., entities . are required to rr.easu:·e l�rnmcial a�sets either at fair v a l ue or amortizt·d
cost based o n all of t h e fol lowing. i:�;cer.t
il. lht bll':ines3 model for managing ll;l:\IH.:iai :i�.'. ;ds.
b. Whether the f i na nc i a l asset i s a debl or equit\· mvestment.
c. The wntracwal cast� flow characterisiic:s of 11": ! financ iai asset
d. A l l of these are •"lil.� ,:Je,·<:d in deterr.1i,oiing �ht me as ureme nt of the financial asset.

.3 1 . What is the cor;e\'i valuat10n a pp roac h itir i"i�Jan1 ial,asset'?

·a. · Not h e l d for col lcc t i a n at fair val u e anti h el d t;>r co l l ect i o n at fair value. II .
Not held for collct�tiun st a m o rt i zed cost and l eld for c ol lec t ion at amortized cost.

I /I: I
b.
Not held !Or eu l kct i :r n at fair va lue and heltl :0>r col le c t i on at amo rti zed cost
I
c.
Not held fr>r culkction at am o rt i zed cost and � eld for collection at fair value.
d.
l' j
3 2 . --Gains t rad i ng· · or --cherry picking" invol vcs-
a. M o v i n 14 i n vestment:: whose value ha� cie c rea 5e d since acquisition fro m nontrading rn he ld
f o r coll�ction in ord.;r lo avoiti repo11 ing l os se > .
h. Report ing invtsi1 m:1 1t.:i at fair v::duc bu I l i :ib i i i t ies at nmcrti �<.: cost.
?
. .
has !ncre:isd _
since m:qu1s1t1on_ .
while ho l d mg those whose·
c. Sel l i ng. investments '"' hose value
value ! ;as decreased :.inct a.::qt: !sit i\11�.
. o r ··ch�n -y pickin g.� �
d. All ;ire c.:on';1 dered rnetho ds or ··�a;n s trndin g I :•
derivativ e markets by at te m pttn g to luck
· · . r I l" "tt·....�n1pt to exploit ineflicie nc.:ies.i;, va;.ious
"l "
1 1 two or more market s are cal ll!d
..,..,J. [nt1L1e�
J . . •

in pro 1-i t s 1. 1y �.m1

- · L1 ltaneou slv
·
O'' into transac tions 1
. crHef'
• c

a. Aroi trageurs
b. Gambh:rs
c. Hedgers .:/;
!11 i !
� �. ,:�
d. Speculators
57 68
. t!
-· _________ ll!!!_.
!l"' ------===
- ·--· _J
 . .

. ' . Page 5

Under P F R S I O . an ·

. . .
-. . .
-� +.
I an . : : \·e�! et.: all ol the lol lowmg . excep t ·
tnve�.tor cont ro s
l he po we r 0ver h the .investor nas
a.
.
•
e .
b. Ex .. pos •
t
• • . .
rnve stee.
u re or rights t ° v .
ariable return� from the . n vol vem ent wtth the i nwstee .
c· · The ab i' l 1· tY 1o f - ·
I -·wvestee t< • arkct the a moun t o t he mvestor s 1etu1 n:.
--
. use. the
· · '·

cI . A l l o 1· these
power ne over ·
indicate control .
35. The noncontroll·mg mterest •
•
· should be rf' .xded at what amount?
<t. The fair valu e the ��hares not he ld ,,,.' the 0al'Q" ;. ... :
of . . ....
r
b. fhe rat. va l ue of the the fair
• '

� shares not he!(i b\· tht a·:quirer or the proportion ate share of
value of net ident ifiabl e assets of the acc uir�c
'

i .
· The propo rtionate sha r e of the carrvin·· umnun� of net identiiiable assets of the acqu1ree
c _
LL The fair value of the �;hares
y ;
held b th !"!o\i,;riwo l l ing interest plu:> goodwi l l
:i i i . Which ol' t h e l'oliow ing condit i ons art: ret1uired t o �xclude u subsidia ry from consolidati on'.'
'

a. The other owners do not object to the 11onconso lidation .

b. f he pawnt makes nn dection not to con solidate.
c. The oth·�r ow ners d o nor object ; ..:: the conso l i :f a r i o n am! the subsidiary does not
have any

publicly traded debt 1;r e,1ui1 • instru m<?n!'.' .

)
d . • The pa re nt must own I 00% of the sutsidiary.

3 · ;;. U nd er Pl<'RS 1 1 . it is as an arran gement uf whir!! t v:o or more p<!rties have joint control .
a. J o i n t operation
j' .
b. Joint v enture I
c. Joint arrangement
d. Joint undertak ing
I·
3 H . Which of the following i� a characteristic ,f :i jni!1: :irrangemen t?
·.i. The parties are bound by a contractual · 1rrang1:111c:: !H .
The contruct ual arrangem ent gives t\.v..:, or men- parties joint cont ro l
over the arrui1gem ent.
ual arra 11gem e nt gi \'·�S
b.
c. The part i e s are bound by :i contrac tu a l arrangem ent and the contract
tht:: parties j o i t)t cnntrnl o ver the an::mgcment.
,!. None or these

_; •.1 . Joint control is detined ::s

The powo:r to govern J1e financial anv uperat;n1: pol ic i es of another entity.
The power to pai1icip:11e in the financ: . .1 and op ;rating policy decisions of a n o ther entity.
�1.

b.
c 1 · 1,o;; ·.:oPlractual ly ag1eed sh:irin�� o : rnnrro! o > f an arrangement which
e .x i 5 ts only when

Lk1·isiun .. nbout rdev<int :icti vi tie� r·.'•1 u i re majo rity \:OUS<:nt of the parties sharing cvnt ro l .
d. The 0 r . i t a n rr e . .
con1ractually agreed ,sharing .:on:ro1 a a nge m n t whid1 exists only whcn
decisions about relevant activities req . ! i re u n a n i11\ ous con§ent of the parties sharing contro l .
•
4 1!. ii is joint arrangement whereby th e panie� ilw1 :1:n � - joi1�l .;omrol o r the arrangement have rights.
to the assets and obligations for the lial>ilities r-:1� 1ing t o th e arrangement.
J. Join1 0p1�ration
b. Joint venture
."; , . c. Joinl asset
. •.: .
d. J oint entit y
4 i . lt is a j o i nt arrangement whereby the par-ics �h«t ha've joint control of the arrangement ha1
·
e

i .: righrs to the net assets of the arrangemen:

-
!._ij. '' Joint ope rat ion
J •J b. Joint verrrure
l() Joint unde11aking
I '
<l. Joint entry
g:-�i
.. ,

1;:. . c.. 4.:: . Whal is the method of accounting for investment i11 joint venture?
�1. Cost me1hod
1:1.. -.4
b. Equit.v n1ethod
..-> . ,CJ
r ·-

Consul idation method

(; -,.;)
. c.

d
. . ! , ,, .
1-�e:-
fair valut method

x.· .8
w

r; - � ·
-::. if·· · z:i ·
..

-
1f' •. ••

-=·=====
= - -,,.--,,,_�= : .
-·� - ·.� ·- - .- - · -� ----..,.......
..
- ��--�-;��==; ->::�:i�::-I�:-�- -
 Pa�c h

43. When an investme!1t in j nint ven ture is he ld by a v�nturc: capi :al organ ization. mut uaf " tr ust (un<l.
unit 1.ru:,1 and insurance- l i nked fund
<1. l'he entity must appl ,, the equity mi:thod of a<.:�c:unting.
b. T11e e n ti t y must app l " the fair vaiue :nechod ol accounting. •

The e ntit y r.1a) 1.. :o.'!c1 !,) measure ;he !nvt:�tmc.-.t : n joint venture at fair value through prof
it
�.

or loss.
:J The entity may dtc1 m measure the : :w estmc � t in join( venwre at fa i r value through o t ht:r
comprehensive i1v.:·Jme.

44. A j o int arrangeme11t that is structured wiHwut a se�iarate vehicle i s a

a. Joint operati1111
b. Jo i nt vc:: n•.un:
� . Joint asset
� · J o i n t 1::r1tity • •

45. ft is the joint arrangement that invoi ves the •.:�;r:.'!h�ishment of H corporation in which eal:h pa n� ,
h�s an equity interest in the net asstts J)I° 1 h c: cor. lnrat"i on. •
••

a. Joint Vl:niun:
b. Join! operation
.. . Either j o i n t venture < 1 r j o int o pe rat i on
,d. Ne i t h e r jvmt venture nor j o i n t opcrati� n
I
46. � nder P Ff<� 12. an entity is re q u i red to ,d isc lt1sc ; n f orm ati o n that ena b les users of the tin a n c i al •

statcme:r.ts lo e v a l ua tL' .,

a . The 11atun.: of risks u .; · ;nciatcd with i 1n:rec:1" ; - othc:r entities.

b. The effects or 1nter:.sts ; n ot her �ri1 : , ; ,,.� M !inancial po s i t i o n . financial performanc� and
cash flc•w s.
c. The ni.ll un: c, I risk ... <t:.soc:ialed with ir.rer;�r ..; ;, . <Jiher entities and the.! dfocls of such i n teresls
on finan..: ial po:; i 1 io6. iinancial perforr.rnnct:! a11d tash flows.
u. None or i h-:�:.!

4 7 . Interests in other entitie� inc l ude

a. Subsidiari�s
h. .l uint :1rra1 1t:.enH:.11:; ·. 1 ·1.J a�so1:ia;1.: .
c. Structured entilics that are no1 contro l l ed ti�· t h () entit)' or unco1BoTiU�ed st r uc tured emi1ies
d� All o f these <!re i n c l t,ded i n intert�sts in :>tl'li:r ,. 1 1 i t ie�> ·

4�. A n i nt ere st in another entity reters c9 a l l :1f the ro;lowing, except

a. Contractual and noncontract:.iaf invol ·1emt:nt 1 hat expose.> an entity to variabi lity of re.turns
from the: performanc.: of the other entity.
b. I Jolding or equity (1 dcbi iri�tn;m('ntS cf lht: •2lht:r entity.
c. · Ot he r fonns of in vol vernent. such as pro �isio11 of fu nd i ng. iiquidity support. cred i t i .
11
. e,1kmci; rnent anJ g.u:iraatee.
d . . Typical customer su·Jp l k r rdatic;nsh!p.

1
;1
'+9. I L i:; an en t i ty thal has iKen '.1csig:1f'.d S•) t.ha! , . •ting rights are not t he dominant factor i n •
dec i d i ng w h o c..mli L'•� i . ·, �· ·.::: tity. suc!1 ?.S wht:i : .n)· voting rights re l at e to adminis1rative tasks
only and che re:ev:· :ni c:.·: 1 i v i t ics are d i rectt>d by m� ms of con.i ractual arrangement.
. 1 1

'
·i i
i
a. Structurrd c ; 1 1 i t y
b. Restructured � 1 1 i i t v
I

1.
c. Passivt c11r!1y
d. Uncontrot lt.:d t:ntit�'

i c asse1 L'r u l ia i 1 t 1 1 t :1 i�. measured as

50. U nder l'f'lt�; u. Ll 1e ra1 valw: � i" m !
1 th.� assd i>T l iahili i_1' .
a. · rhc appnw.d.l v.Ji u..- •.1
I
•

".
•

•
to acquir�· the as�e1 L"r rcceivc J to assume the l tabil1ty 111 an
. .
• .

b. The price (hat woulr.' bi: paid

•

ord�rl Y tran::-actior: l.i tl'W t::i :r:ar

l:et pc<.rH<: 1p�n
. .s.
· · th • an -as:;et or paid wh e n transte rrrng
a l 1 a b t l uy
. . . . . . •

Id rPc,�ivr ·c.J w h "n ·· ·

at wou
'·

c. T. h e price
b e .
·;e
�
l,
l t :-i
��.
··
• •
ant·. .
•

• in an ord erlv tran s3c tior; bt:t w·�c· n m:.r kel �)an up . •

or the carry mg amou nt of th e liabd ll) on .

-
· . . acc. u m u ·1 ared Jepr-:c1auo n
· ., · .
d. 1 ht· cost o f the asse t 1es�,
·
·

the date of �;1lc

5768 .
.
 . �. . .

_,1. Tl;e fa i r v lue at initi al

� recognit ion is
a. The pnce paid to acq uire the asse
t
h. The price paid to acqL i·ire t I1e asset ess.
1 transr...:: on co�t
s: .
.. .
f he pnc e paid to transfer
l
or se l the as.-;et
d. The carrying amount of the
asset :ic q ui red •

5 2 . Whi:h of the followin g i s an assu m

a. 1 he asse t mus t be in-•. 1se.
ption llSed �n f:· ir � alue measu rem ent'.l

h. -�he ass•!t mus t be cons idered in-ex chan

ge.
c. 1 h e mos t conservatiw est i mate must b e us1:d.
d. The ass·�t is in its h ighes t and best ust

5 3 . W h ic h o f t h\! fo l l owing oescribes a p rinc i p al m a r :<et for establi:>hing fair valu e of n .

i
a assd
.
a. The market that h as the greatest volume and lc:vel o f activirv for the asset.
b. 1\11y bruker l)r <leakr market tha1 'buvs or se l b 1 he ass·.:: t .
c. The m ost observable market i n whi �h t h e pric,� of tl�e as,;e1 i s m i n i n�ized. \.,: ' -f
d. The ma1 ·ke1 in which the amount n::ce1 ·•d \ l • > l· d b ,· . . . .1.rnniz•;d.
54. It .is defined as a market in whi c h transactions for · l'l: asset or l i abi i ft); m�e pl:lce w i th �ufficien t
frequency and volume to pro v i de p ric i n g i n1o rm au o n 011 an orcgoing basis.
a. Ac t i ve ma rket
b. Principal market
c. Global m arke t
<l. Stock m arket
5 5 . Valuation te c hn iqu e s for fair value that i n c lud e tlw Black-Scholes formula. a binomial m od.e l or

discounted cash flows are examples of \.\ hich val l �Hion techniq ue'.> ,.
a. I nco me apprnach

h. Market approach
c. Cost approach
d. Residual value appro$ch

56. Which lcvi.:I has the highest priority for H1 wu ti 0n 1

l 1puts?
" · Lewi I
•

h. Levd 2
c. l , cve l 3
d. Level �
:' 7 . Un<lcr lFRIC 2, memb�rs· shares in cuope nn i •. :s may g i ve die hold·.:r .ihe right to request .
t : .:ounte<l fo r as
r�dc111ption lor cas h or oLher 1inancia l asset. Such 1 ri110-1 !1ers · sli<:res sn . I I be u
a. E q u i ty
b. Liability
c. · E i the r as equity or l ia b i l i ty
d. Partly eq ui ty and panly l i ab i l i ty
5 8 . Members · shares in cooi;crat i ves shall he dassllic:« :is eq uir:.. ,.,, 1·..:n
{1. The ent i ty has tht: unconditional rigLH to refuse rcuem pt ion of mcn a lk-rs · shares.
b. The red em pti o n of members· shares i s UOf0111litip m1lly prohibitcu \Jy l.1w.
•

.,,�.· ,.-
..

r.:. E i ther the entity has the unconditiomll right to refuse redemption of member's shares or the
redemp t i on of memoers· shares is unconditio11ally prohibited by lav\ .
d. None ol' these
59. Under IFRIC 1 2 . this is an arrangement :vher�by a p u b l i c se ctor entity grants a private
� jor i nfr astruc ture.
conces s ion operator to p1 ovide services that gi\'e cl i: pu b l i c access to m�
<1. Se rv ice concession
b. Loan
c. G overnment grant
d. Government assistan•;e
•.iii. The rrivatt: concl.'ssion c111era1or s h a l i rel'•':· ni::-1· .'i• i n fra')rr•1d�H'e :•;;.•.l'I ::
••
! ••:•
a. I nt a ng ible asset
b. • F i n an ci a l asset
c. Either intangible asst"t or financial asset
d. Neither an intangible asset or a financial asset.

E N D 57 68
 •• ! ••:• .

.
C P A RLV I E W S0.HUUL Ur I H E P H I LI P P I N ES
M a n i '. ::
.

T: ! L< W Y OF ACCOUNTS SELF-'!"EST V A L. I X SIY VAUX F E R R. E K

' ! h.· lllOSl re l e v· :m t meaSL!r:

ment oi " liahilities at i n itial reco gn i t ion and fre sh start measureme nt
shou ld alwa ys reflect • .

a. Th1: t>xpe ctatio n of the managem ent

b . H istoricnl cost
Tlw c red:t stand i n� ol' th•: ent i t y
d. The sing.le most l ikely m i n i m um or 111 ;1:\ imum ,,. ,s:.;iole amount

. 1
l .! nuer roya I ty agreemen t for the a��.;�nmt'n i •.:· I
<i _ ..i p a t e n t 1·01· three year s. t h e
.
roya l tie:, p<tid

�:hould be reported as expt·nse . .

I n the period paid
•
a.
. '
1,1 ln lhc period i ncurred
c /\1 lhc date the rnyalty ag.re.:: rn enl kg.an
ll. 0 At the date royalty ag ree m ent expire(:.

3. 1·t·
l t 1 t 1 s 1 mpract1cnbk to d�te1mine the .:- u m u la t 1 v1: 1 · ect o1· an accou nting chan ge to any of �he
. . · · · · · ·

prior periods. the accoum111g c ha n ge shou.,1 ht.· ��1:L·1 .. unkd t'or

a. As u p ri u r adjustment
b. On prospccti\'C b'1si:.
ii
• •

C'. As '1 cumulative e ffec t change in the 11-.corn�· statemcl11

d. As an adjustment to re t a i ned earnings in the t i !· � t pe riod p rese nted .

i.IS
4. Cash ild\'tll)C•.!S and l oan s from bank O \' erdr:tfts -;h >tild rero r1 e d
:1. O pl' l'i1 t i 1 1 g. acli\'il ics
t· . Im est in� activities
1: . 1:inancing. ac1iv itics
cl. Other significant noni.:ash activities

., \V hich L>I' the t'ollmvin g i�; not true abnut ;� . . :1!Li11 : i , : �·

. !'o r invenio ry'1
;,, 1:11:< ) is :dhlwed
l 1. I nterest rnsts should 1 1ot bi.:: capitaiiL.c,;. • •

·
! •I:•
c. • Thl· weighted avt·ragc method is accl';)t;1h!�
d. Inventories are always valued at net re:diz:.tbk · 1��1ue.

t) . \\.'hen accounting for property. plum :1J1d :qui�1111'.:r. 1 . illl emit)

a.Must use the cost mmkl i'or presc n , ; n�· �he .�:-o:d'
h. t'v1a) elec:t to use thi: cos\ mod e l or thl· rr;\';,1lu:i1 i o n mo d e l 0 n any individual as�el.
c . May ekct to ·usi: t h e cost model or t!�c: !'�'.·<tl1:m:un model on any �•sset class.
d. Must use the cost model for land

I. 'Which 1 : f the following siatements i s I ru,· ab(1L!l hi ilog,ic.:al assets?

:1. L l iol 11gi•:al a�,sets arc 1m l y found i n Biorech en · 1 : -:s.
1) . l �i u l ogi..: al assets are li ving ani m oi l , 01 piant� " h.1 must he J i sciosed as a separate item in .ht:
statement of l lna nc i a l position. .�
'

•:. 1 3 i o logi-:al a�;sets rn u .t be v al u e d .:it t:\ , i

d. Biological assets do i 101 genera l l y h::i�1•• · r'tm11·� t ,:onomic benefits.

i
. :
�. l !' a lon g-te�-111 Licht hea.:0111es cal l �1bk Ud� 1 . . d ;1: " ,. 1�1llon o f a loan Cl)\'cnant
Thi.: Jcbt may con1in .1c t o be c.:las, 1 l;el; I. 1;:: 1crrn i i' the .:mity h c l i c \. e � the covenant 1:a11 he
' '
1. . 1 ·.

renegot ictted.
·
. .

h. I he Jebt 11111st be rec lass1 Liec! as cum J' i . •

Cash mus\ he reserved to pay the det. . .

. '

d. Retained ea rn i n gs must he:: n:stricred ; , , 1�v.'. �1!11r>1.!l1t ot the dct-ir.

5773 �
 . '

·1 •

'.l
A ClH1 t i ng.cn1.:y is dest:ri h�·J ::i:-.

a. An i;:!;timated l i a b i l i ty •

h. /\:1 ..:vent wi1ich is not recog:1izcd because ii : : ; net probubk that un L)ltlfloy,. \vi i i be n:qu1 r.:J
(;r the <amount cannot he reasonably e�ti
.
m&teJ.
c. :':.. pdential ly smull l iabi l i ty
.

.d . A potent ial ly !arge L a b i l i t )

I U. What 11h.:th11J may bt· u�eJ to report the bonds payable at yer. r- en d '!

<J . Amo rtized co!;t

·
b. Fa i r v a l ue through m her comprehensive itlcon e .
c. Amort izt:d cost :111<l .air rnlue Lhrough other Cl•tnprehensive income
d. Amortized cnst and l�.1i r value through prolit o · loss

1 1 . What 1s tlw i n ierest n:te used by a' Jessee to ca�·italize a finance lease when the imi1licit rah:.' •
rnnnol be determined'-'
<I . Tht' prime ;·�:tL·
b. The k:-.sot"s published rate
c� The kss ee · s m·eragx bo rrow i ng rat�
d. The k�.see ·s inert:mental bo rre w i n g rnlt

1 2 . Which o i ' the:· fol l o w i ng is not a met�wd thm ma�· �e used to account for treasury shares'>
a. ('oq lllt:thod
b. Par vu! ue method
c. Ret<tim:J earnings 111etl1nd
<.I . ( onsiructive ret ireir.ent method

! .l . Any investment ma:.· he i:lCCC'lunted tor at fair v:ihw through profit and l oss when
<l. It is trnde::d i n an . . c l i ,·e J !1:�1fa:t
b. Jt is an e4Ui < y instnnne;ll
c. I t is a cld1 1 i 11:-;t n1n-.c-n!
d. The i 11�.tr:.1rnent mat ure:-: within 2 years.

I 4. I-or segment n!!)Ori ing. purposes. which ·1e�ts must be :ipplied 10 dete rm i ne i f n unit or corn pt)neni
is a rcpmw h k op.: rn t i 11g scgme111'!
u. Rc·venw� lt::-:1 a n d as�.ct te:;t
h. RcH·11uc t:.'.:;t. <:S:·:•.:t < :st a 1 1d profit or j._ ,,,::,. tc:-.i
e. Re\ enuc lt:sl. a::.sc1 t ·: s t a1�d c.xpcnsi; le:;1 • •,
li. Revenue test. <is:;et i ·:s< ;md •.:as h llcw· test

1 5 . ·q1e s umrn;1ry cit' significant accuun1ing pu l i c ies s � oul d° J i sc i o�e the

u. Prol<.mna effect o f n:1.roact ive applicut ion o: <• 1 1 accou n t i n g. c h a nge .

_b . . Ba:> i s of' proJit rec ogn i r i o n i.r n !01�g lerrn COl1Sll".1Ction contracts.

c. A d �'qu;ic; d' pe1i:; i u 1 1 plan ns:>e!:; in rela!ion l< · vested benefits .

1:ut un: rninimum k:i:;e payments i n tlr.;: aggn:!l H<.: and for each of t h e succeeding li!ical .\'L'ars. ·
• d. .

;
1 6 Which of tne f o l lo1..ving . s not true anout-!he resent�t i o n of financi a l statements?
. •

·ii. !\ se arate s t a1cme:1! o f ' comprehe n si w i11co 1T e and separaLe s t at e m e n t of changes

p in eq u i t y
arl' rl.'q 1 1 ired.
b. The l . I FO r. ·:st f'. l ' I" · 1 ::;s u l l1 p t i un is not rl i•YheJ for invemori t!s.
c. Presen 1a1io11 o : · c.\ ! :·;i.,i d i : iar:: items i s ;·�q 01ired
J. J m pa i n n1'm i•.�:.. �•::: n·. . iy be' rt'vers ed in futur..:- µ :riods.

i 7 Which liw ii.i l i 1 1 \">·; ;·1: · t'<1h:g�1rics. are u5ed i n u ming.ovcrn mental nonprofit organiza1ion · s
0:-
.
.'
s l a l c m e u l ol fim rn::e p 1 . -.;i 1 ion'
a. '" asse t�:. i n.._·o·11 � · 1 ; , J r.'
N"I , pl'.1 1::'.c'S

h. l n•:o 11 1..:· . C '·r· : : , -:· · .. ; 1 ' " � l!! l 1 t s. 1 .1 .·IL ,. . , i, n·-· 1 ,.., ,, .; .. 1
· , ••.
�

1· ' <' t -
•• ! , •
• , •
c . :\ss d�. l 1 a11: !i1c.·�, J ; : . i i•d ;.. s.,e
· ·> •

•
' .
s
.• .

l)' resmcted and

.

d! ('. hanges ·m ui1 1.e·'Lr· � '' ''nincrari

·, 11..· 1. r>d
•
permanent ly restricted net assets.
•" 1' ·

S773
 . '

1 11. i 111
' 1ri;ll �ulnrn:e
:1 . Is '1
H..:cou 1ls and th e i � hal,w1c .:s i n 1hc onkr t h e acco unls a p pear n lhc
! i s l i n g o l' u l l t l il·
; _i
s1<1l c1 11c:n l o r lina nci al posi t
i on .
�
t1. ' ! as as its p�·imnry pmpo s e
�
to prove tha t ·'d i jo 1rnal e tries were made for the period .
�
(. an be: u st· d to u11c()""
·

· I' 1.:, 1. 1.01.s ·111 .1oumu

\: · ·
·
"' · 1 �
1..'.111� .1111J ! >Osting.
d. l s llSed to prepare the statemen
t ot' timmc 1ai po -; i t i on i'h i l e the ge ne rn l ledger is used • 0
prepare t h e 1 ncP mc stntn l1\.'n
t.

i IJ l -' i nanc ial uc c o u nt i 1 1g staml<ird-settin

g
5ociul process whi.::11 re!l �c!s po l it i c al actit)ns of various intere:
; . . Can be described as n ited
us1.•r groups as wel l as a p roduc 1 ot' resc ..1rch :•n· ! J. ,�1·::.
b. l s based so l e l y on research un d empi ric•�' ti nd i nµ' .
-

l s ii l qrn l i �:tic prnccss bas1.·d u n ruks prl .;-. :,1 : �:<11 .,i !" go n: rrn n c nta l agencie s. -.

, ; _ I s dcrnocr:1 1 i c i 1 1 the si.: 11 -;1.' 1h:11 :t rnajMl l \ , , 1 ·!·:, , 1 111 1:111ts niu�I <1gree \' i 1 h a s t a nd arn hc l u i c
, .

• • •· ••
•h
,el·nmcs enforc eubk. • • ·

20 . \Vhich of the 1'ollowing is nor a be ne fi t asSll ·: wt�l• ' \ l · h 1he C once pt ua l Framework'?
.mJ
.
a. i\ 1.:onceptun l l'ramework should in�reas.: 1·1 r <ll c i al statement users' understand 111!_!
•
•
conlhknce in linuncial reporti nt'.
Practical p robkms shlluld bc mmc qui.: ' , i y �,1i \ ; h i e b ) rc t'erence l u a n e x i s t i nf
h. 1..· 011cc::pti ,:! •
fra 11 1cwo1l.
c. A <.:ohcn:nl s�t u f accou11!i 11g stand:.!rd::; and ruks · :hould resuit.
d. Husincss ent i t ies \vi ii need for ks:-. ;:issi�t:i :m: l t\)m accountants bec a use the financi:i!
reporting procc-ss wi I I bt' qu i t e easy lo <ttirih .

21. 1\ l l or !ht> r'o l ll)W i n g represent Cl)Sts of 1m1v ?J i r,� :i: !.: 1..:wl i nti.)l'mation. except
;1. Prl'paring
L'. Uissc111i na1i11g
c. ;\cccssin� c a p ita l
d. Aud i t i ng

., l \\ '.1ich \)r !he IOllll \\·ing. is L benefit or prm 1,'. t t 1 :c ,-. I �.: 1.:1:.tl i 1 1 r'ormution?
.l !'Oll'IH!al i i tigation .
.
h A uJ i t ing . '
· Disclosure to competilil>n
'
c.

d. lmpwvc<l a l l o1.. ;.11 i 0 n ot resources

2.--:. . dne criticism not normal!) aimed m a statelf •;:>1;; l; ! 1 • :ancinl po s i t i on i s

n. Fa i lu re to reflect currenl v al ue i n formation.
t i . The ex tensive use of sc: para le classiii cahin :> . '
..: . • 1�n cxtcn�ive use of estunak: .
J. Fa i l ure t o ii:dudc item:, or tinarn: i ll i ' u!u.· tlu�t ..::i.:n-tt h e recorJed object ive!) .

2...! Fn!itit's should separately r�porl a l l nf thc ; ' ·li,l'. . i : · ;'. 1..' \l!Cpt
" Assets and l i a b i l i ties with d i ft�rent genern! ! : ' ii"' · : y characteristics.
! 1 . Assels !lnd l i a b i l i t ies tha1 have been ti n,ll1·�1'.i , . i t i d i fferem types of inslrumems .
..: Assets th[1t d i f1er i n tht:· i r expected 1i.mci1l�n �P � h , . -:a1 i1y · s c en r ral operations.
t! L ia b i l i t i e�: that J i lfer in their amount � . t i1 � : i 1 1· .w , n:.Hure. __

2 .'• l.. i 1 11i1<1 t i n 1 1 s of lht.• illCOlll\: -;t:Hemcllt in<.:!L·�1c ail •.l t 1; : : 1 ·t 1 1 lO'v\ in!,!. except
'·• · Items thal �annot he nll:asured rel iabl) . . re l�l'! rl' .)uned.
\1 Only actual amounts a1 e reponed in deter · n i 1 · i ! ; .. · i:et income.
.. Income mcasuremcnl 1 :iv�>h cs .i udgni.. .
J . .I ncome num bers are a tfrcted hy the account r n �t t ·'lo:thods employea. • •1:•

i •
 •II •
• •
!

Page 4

26. Which of the fo llow i n g. is true about jntraperiod t::i: ailocatio1;? , . .

a. l\ ari ses because cert.:iin revenue and .:: x pensc: 1t>!ms appea r in the i n com e statement ci �hei
before or after t hey are i nc l ud ed in the tax ren11·! 1'.
It is req u i red for th e cumulative effect of accounting changes but not for prior pcn m�
. ,
b.
adjustments.
c . Tl�c purpose i s t o a l l oc ate i ncome tax expense e v enl y over a number of accounting peri'.His.
d . l 'ht.� ourpose is t o relate the income tax ex pe n se t o t h e items which affect t h e amount of tax

'2 7 . E nt i t i e s use int r:-ipcn,1d t . . :, allocat ion for ::s ! ! o i' t h ;;: i.illowing. items. except
u. D isconti n ued �11x�rnt;ons
n. Prior peri o d ::1dj ustmr_:1ts
c. Change:; in accoun t i n g estimate
<l. I nco me from co nti nui n g operation!:

28. A change in i..! C (•lllliting po l i c y ri;:q u i re s tha(

!he c um ulati v e effect of t h e change for pri or p•� ri ods
be sllll\\·11 a:, an <1d_i ust111c111 ti"1
a. Beginning re tn i n d c 1rnings for the ea r l i e �; t •xriud presented.
'? · _Net i ncome kir \he pe ri od · i n which tht: change ·;>�cuo-ed.
•:. Com p rehe nsive income for th� earlies: pe ri od presented.
,

d. Shareholders· equ it y for the period in which tli� ::: h�nge occurred.
. . .
:'.lJ. IJ..' hat is thl· preferahk pi esentauon or· a1.:\.. 0 unh rl'•:ei v<ible from 0 flice:-s. employees or a!Ti l 1 ated
entit ies in a stntemenl ol linancial position·'
a. J\s olls·!t:-i io equity
·h . 13y me a ns of footnoks only
c . A s assds but separately l rom other r::c;!i V<l��!c: •

'd. As trade note s a n d account�• receivabi--..: i f they .ithcrwise 4 ua l i l 'y a :. C l1rre 11 t assets

.W. Hm\ is a signific:mi amount or consignment ;ri.,·1: nwry re ported in the statemen t of tinanc: ip l
pl1si t io11·:1
a. The i nv1�ntory is rep:>11ed se parat e ly on ti� 1;011sig.nor's sta t e me nt of linancial posi ti on .
b. Tlw i n v "·n!IJry is rn:11bined with o ther inven : ory on t he consignor's s t ateme n t o r tinarn.: i ;i l
position.
c. The i nv e nto rv is reported separa1dy un tt11.: ct1.1signee;:'s s ta tem ent of financial po s i t i o n .
d . The i n venh)ry is combi ned with o t her invc1Hll)' on ti1e consignee's st a te m en t of linancial
pus i 1 iu11.
•

3 t . W h ic h or the follovving is not an accurate rep1:esc:.1,tation.concerniR� �11Y:� nue recogni t i on ·:

ii. Rewnue from selling. pruducts is recognized at the d ate of sale. usually i nt e rp reted to mean
the dale of del i very to cu:�torners.
b. Re\'t'nue from sen· ices rendered is recogn i7e•l whr.n ca sh is recei v ed or when services han:
heen pe rform ed .
i.: . Revenue from p�rrn i t t i n l!, ot hers t o use: en i i t : _ . assets is recognized a s time p as ses o r s tht: �
as!;d" Jre used.
d. RcH�nue from d i sposing of a�sets other than r·roducts is recngnized at the date of sale.

1 2 . When activities invoh·e production 1hr0L1�h natur.ti i;.ro,\1h m aging of biological asset!>. rev enue
i s earned as the p!ant 01 l i v i ng nnimal gru\\ s.
a. Co m p le t i on of proh c t i o n basis
b. Percentage of c,11rpletion appnJach
c. Accretion appniacl·
d. Cost reu>vc:ry 01 D�ro-protit apprunLh

3 1 : Under P F R S . an '.:11\ity
u. Should c 'icdlWk t>v· · ry i 1wesir.1ent !er in�pai ri .1e.11.
A cc o 1 1 n l s li>r <}I) i i npai rmt:nt a:. �·.!i �lll'.".: ::: 1
b.
L.cd lc1SS. :.md i nc l u des it as a p�rt ur other

C0!1lp "ehen �;i \'I.' llK< >l1 IC Uni d l'l.':ll i:Lct'. ·

.
i1l\·'-' -:f11t�1H s as the d1 I kre111 .: 1: bet \\t:l!n th e i.:arr' mg
. . • . • •
.

(. ;i I cu I ates t l le ·1 1 1.1 p ,.. 1 1.1 11 1.:�111 i ,""" on 'kbt

• • • •

e:q·1c•:1ed t uture c ash ll<w.s d i s c ounted at the

c. . •
•

3111tll!11l plUS JCCl'Ul!l!· ·I nt c, l·est and 1he

·
· ·
•

i n w strn·.'nt · s h i stnrn :nl e ff;;c t i ·• e - i n t c il.'. �t :·,�tc

·\· tl. A l l of' the !�hoiccs me correct.
5773
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i'

J./. l'la n t assets purchased 011 l n ,

1 _o g- term credit <.Ontr<Kts
.
lould be accounted for at
The total val ue o 1. t 1e
'.>
a.

h
tuture payments.
l h� l uture amo unt
.. .
o f ihe future pay m ems.
. v al u
' · I he pre�e111 e o t. the future pa y m en t
'.; .
d. N o n e ot these

:1 5 . \Vhich .o r t hv fo l l o w i
y n:lkc1� lhe
in
n g • nos1 accuratel conc�pt or depreciation as used
.IC\.:O Ul\tl ng?

dec l i n e in •:alue 11°!' an eco no m i c resource 10 iocomc

.1. Th�
process of chargin g the in thl.'
penod in whi ch the henctit occu
rred. •
·

b llw pron :-;� ll f ' al lucat i 1 1g

the COSI of ia!l:.! i h k �1·: · c l. ' lo expens�· in ll 'i y � l e m a l t l' and
rutiun.il
tnan 1 11: r to l l10sc p e r i od � expec ted 10 be.1-.: i �t
t'ru111 d1 1.· use ot the assel.
/\ method nf a l l oc a t i n g asset cust I<; i.ln ; \ per. . . ...- . •:coum in n mann e r which closely ri1atrht:s
;he ph ysi ca l <le1erioratic1n of,he tangible ;,isst:l i n , �,�\·t:d. •
. . .

d . t\n accou1 1ting c o n c e pt t hat allocate:; the pl;rt ivl! - i r ' an ussl't used u p during t h e ) �ar to i h. . ·

contra asse t account ro. pur

the ot' prnpL·rl� "r�· ellrd ing the fa i r 111ark1..·t value
ot tangibk
pose
a sse ts .

16 ( )pera1i11g. l osses i11cu1Ti:d d ur i ng the start-up years ot a nev. h us i n e s s should be

•1. A c c o un te d for ;inti r1;•po rtetl like the n pt: rnt i ng los ;es nf any other b usi n ess.
b. • Wriltt:n off d i re c tl y ugamst retained carnfogs. •
l'.. l'apiializi:d m. <l dcti..· 1Tl'd l' hargc •llld amor1i1.uJ l l ' cr.li\'l' � 1..·ar�.
d. ' l 'api1ali1.i:d as an int•ln!!ihll' assel and :m�ortizi:J , .ver i.l period not to e:-;ci:i:d 2 0 years.
I
3 7. Whid1 111' the li.lllm'fing. is :1 d1aracterist ic of :i curn:n l iability hut not a noncurrent liabil ity'! • i

a. l t 11arnidahlc L)bligu1io11 .
Ii. Pn.'Sl'lll ohl:�ation that entails settle1111:n1 h� ·prol1 .1 hk fu t u re transfrr or use of c a s h . gouJ� ""
�Cl'\ ll'.CS .
l'. s�·uk·ment is expi:cteJ ,,.· i t h i n the normal opa. tti ng. cycle or within 1 2 months at'tt:r tl1t:
rcpor1i11g Jalt'.
1.I . l'rnnsac1inn 11r 01hi:r e\'cnt crea t i ng. the 1 iani l i t y h ts a l read y occ u rred .

>X . \\ 1a1 1� Ilk' relationship be. wce11 pre:;e11 1 ' t .1c :.u :d ti �· cmKept o f � I iahi I it;.''
' '1 1'
•.
••

rl'\'Sl.'111 \'alue is USl!d 10 measure ce rt a i n liabili1 it- ·;�

•

a.
t\. Prl'SL'llt \ uluc i.; rwt used tl1 meusurl.' liabi t i ti�·s.
1'. . PrcS<11t \';.aluc is USl'O t� measure all l iahd i 1ies.
J. l'rc�·nt H l lUC is llt1ly U�CU to measure !llll'll'll lT:'lll liabi l i ties .

.N. Wllich uf the foll u\\'lllg t!> not considerea ''hen t:\': iw.1tinµ '' hether nr not to record a l iahi I 1t , . • .·

f�H pcntl mg l i 1 igat1 011'.'

• ·

:1. Ti111c period in \\hich t 1 1e under!� in� c�11se of uct1,111 occurred.

b. t lw ' ' pt• or l i t i !!a 1 in 11 iri, . . l \· .:J
'" I ho;: probabi l i l � o r an 1111fa\'l1rahk O.l lCOtll-.'.
J. l"he abi l i 1 v to make a n:asonable e st i m u t e of the : 1 rn0unt of the loss.

40. t nder IFRS all ot' lhe following. an: true n.:,'.:1r,i111� 1 ! 1o;: presentation ot' c u rrent l i ab i l i t i es . ncep1
.: Thi.' 110111.:11rren1 liahilil iL'� l i.1 t lo\\ !he L'ur·,·111 i 1 .1h1 1 ' .L'S.
h Current lilbi lities ma� he l isted in orde1 .,,f n�a1 u·w, . in descend ing order of magnitude or 1 11
ord..:r of ti4uidtty pre t 'erc:"nce. .1

<.'um.·n1 l i :ibilicies are �L'nera lly recorJee .:it thttr "11 1 maturi1� value.
Current li.ibili ries shou!J 11ut be offsl!I .1v11in-;1 1h, .l'i�eb that w i l l he useJ Ill li4uitlatc lhL'a1.

...J I \\ iw11 the dk•c1in·-in1erc!>t n11.:H10J is usl.'u " ' •ll�M 1 Vf bvnJ prL'mium or Jis::mmt. the ix·ril•u i L'
•

.11fl11ni1�111on "ould
•

lnn...·a-x: it 1he bond-. '-\ ere issued al a <.ll !> rnu111 . •

�l. v�'Crl'� it' ltll· bonds were issued Ill a men11u11 1 . .
lncrt'asc i i' the hoods v.ere issued at ; 1 prenllU!tl.
.I lnnL'aSt' i f 1he h<1nJs \\ L 'fl' i !>sucd al ci1h ...·1 ;1 Jhc . . u11t ,,r a pn.-mium .

• ..
..
 . ' Page ·6
..\:?.. Bontl issu;:mce costs s h uu l d k
:.t b-.rcnsed 111 the pe r i od \d1en 1br: debt 1 s. i s:-.ucd.
h. Recortled as a rc·drn:titrn in the c a rr � 111g amount ( ! ! h,1nd�, payoibk.
i.:. Accumulated in a deferred charge accoum and an- crt ized o\'er the ll 'e of the b0nds.
d. Repo11eJ us an expense in the period t he bonds •n 1ture or are 1 etired.
.

for property whose fa i r n1l ut· i s

.

43. A deht instrument wi t h r.o ready m:lrke( is �.-.: c.·1anged

cuffcntlv indeterminable. When such u t rans.i c 1 i oi1 laL6"pla-:e

8. 1'111�· present \ aluc or t l te debt ins1rumen1 m us t tic -.ppro:rnnnt ed using an i m puted i nterest
ratt-. •

h. The debt i nstrument should not be reco rded on Me books of e i th e r party u n t i l the fai r val u e
o f the property becomes evident. •

c. The hoard of d i recto rs of the ent i t� rt:ce i v i 11g t i e pro pert y should estimate a ,-alue li.ir tl1c
proreny tlrnt w i l l serve us a basis li.1r t h e 1ra1N1cr .0n .
•

d. The d i rec to rs oi' bo th entities involved in the 'ransactitrn s ht)U l d negoti ate a vnlue ' I' • be
<Jssi�ned to the proper!)'.

·H. When a note payable is iss�1ed for property. the pres':l1l value o f the note is measured b\
a. rhe !Uir v a l u e ,lf the prnperty. • •
• • II •
b. fhe f a i r value of the nd•te
L' .
Using an imputed int dest rate w d i scuunt u ll .!u t ur..: pa\' ments ,in the note.
d.' An� 1) f t h•:se I

4 5 . Nute c' isdusures for long+:rm debt gen�raJ ' v i•· ,·l u,J .� J1 of th,� f'n l l c)\\ : 1· g. exce11t
a. Assets plt.:dged as scc�rit; .
b. C a l l provisions �nd cohversion pri\'ilege•;.
c. Restrictions imposed tiy the c red i t tH.
J. N;m1cs ol �;pee! lie c reJ i to rs .

4< > . In computing depreciation of a ieased asset. the lcS�i'.e should subcn:cc
a. A guaranteed resid ut1I i a l ue and dczprec1..i1e o\·c:r t h e term \ll. the lease.:.
·

h. /\n u nguaranteed residual value anJ depreciate ,'. vcr the term of t he le<lsc.
1. ' . .'\ guaranteed r\.'sidual \ · alue and depreL·utt• < ' " e ! · ihe l i fe· of'. the asset.
d . !\n u nguarantctd residual \ al ta: and dqxec i<Hl' ."\ er the l i k oi. thc assel.

4 7 . l he interest on the deli nccl bendit ohligatiun co;11rl nenl oi" ;ier�si,:n exp.�nse
<l R..:fkcts the incremen!,al b or ro w i n g rate of the c1 11ployer. '
b. Reflects t h e r<ile at which pe m i on bcne1!ts cou liJ he dlc-:1 1 ,·e1-,- :>ettkd .
..:. ls the sur,1c <IS <he .:.\ pt·1.· ieJ re t u rn .>n pl.1 1 1 .i:;.;1. .. ,
d . . May be stated impl il: i t l y or explicicly \�hen report•·�!. •
"
I
48. \.V hich o f the fo llowing St!terncnt:; about propeny �Jividcnds is !'Ot true''
a A property d i v i d en d i� usually in the !�rm 01· se •. uri ri"es t)f 0;her c:ntities.
. •
I
b. A property d i v i d e nJ i� also called a divde11J !:1 ,;ind.
c. The accounting fm a propL·ny d i Y idend shou'.· i r::• bused un the carry111� amount
non mon e tary asset transferred.
or •.he ,I
c.i.. Al I of t he se statement:; are true.

4t;. At the d ate of dec laration of 3 smal l ordi n4lry sh an dividend. tht' entry should not i nc l u d t·
<1. /\ cred i t t0 ordinary sl 1are d i v i dend payabie.
h . /\ credit t o share premium · ··· ord i na ry .
c. /\ d e h i t tn retaine d e:.i rn i ngs.
J . /\ I I o(t hi:se are accep tab l e .

the one that should be used tirsi to

SO. When there are two d i l u t i ve convertit1k scctm11es.
i t h
n:calcu late earni ngs per saare i s the sc:cur rtv \'i
t � c

:1. C rl.'a t c r earnings :idj u:;um:nt.

'\, b . l.1rea 1er earni ngs per < l1an: adj us1n1 ent.
c S m a l l e r earn111gs ad j u -,t111l.:'nt.
••
J. S m a l l er carnings per .:.hare adjus tmen l. ! •t:•
• i

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E· N D
5773 .
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CPA REVIEW SCH001.. OF I H E P H I L IPPI N ES

M :l II I l i

rH£ 01( 'J'. OF ACCOUNT S

· .
.
TRIVIA QUfSTl'ONS VAUX S I Y V A LI X FERR ER

U11dcr the Philippin e Accoun1 ancy Act

of 2004 or R .'\ )298. 1he Profossi onal R e gul at ory Beare' of
se d of
Acc oun tancy sha ll be co m po •

a. �ha rman � �m?

six membe rs to be appoink d by
tht r:reside n t of the P h i l i p pines.
h Cha nnan, V 1 ce Chairman s
� and six members co 0be appointed by the P re s id e n t of the P h i l ippire
c. C,ha � rnum and s x members to be p
�
� a p o i nted by Pf C f ' .<\. •
d . Cha1 rm:111 and six mem be rs to
be appo inted hy PRC

Tlte quali lications of the m em b e rs o f BOA inc.: l ud t all .� ! ' t he fo l l owi n g . except
a. i'v!ust be a natural -born c i t i zen and
�1 resiclt11t 0 1 ' the ) h i l i ppin es.
b. lV! usi be duly regi:;tercd Cl' A with .ice
at kasi ll:n r.:�;-:; ol work exp.:rience i n any scope ot' pra•:
•t: c
•
!
of accountanc y. •

c.: . Must b e o f good moral c:iaracter and mus1 no01 h::t\'e bee n con v i c.: t ed o f c r im e involving rn•iral.
turpitu de.
u. Must have a n y pecuniary interest. d i 1��ctly o r i n d i r·:ctly, i n any school con ferri ng an acade �l i e
deg.ree nec.:e�sary for adtrnssion to t h e p rn c ; i ce u f ::ti.:�ountoncy.
.
3. 'W'hich o f the 10\lo\·V ing sta t en1ent s is true t"egarJ i n � the te rn1 .of office of the �hnirn1an and
mem bers of BOA?
a. The Chairman an<l rnembcrs o f BOA shall hold ortice for a t e rm of three years.
b. Any v ac anc y occurring within the term of a membt r shall be tilled. up fo r the unexpired portion
of the term only.
c. No person who ltas se rv e d two succ"ssiw compk te terms shall be e l i gib l e for renppointnient
until the lapse of one year.
d. A l l •J l"the st;llements are ' rue.

4. The qualifications of app l ican cs for the CPA.exuminati ·)ns i nc l ud e ali of the fo l lo w i ng, except
a. Filipino cili:�en
h or goud morn I character
c. Holder of the de gree or BSA conferred I··:-• a S•:h >ol recognized a nd accredited by G'HED or
. .
\)ther nu t hori zed governntent r.fftce
d . C o nvicted c-f any crimin::I o ffe ns e im olving 1hor:1l tJrpiiucle.
•
'.i. W h ich of the fo l l owing statemems is true regard ing th� rating in the CPA l i ce n s ure examinations'> ·
0
he qual i fied a s havilig passed t h e: i i n:n:; 1rc exami ni1tions, a c a n d i d a t e must obt.�in u
•

a. T� ci,r\
general average of 75% with no grades lower t h an 65% in any su bjec t. i.
b. Jn the event a candidate obtains che r::11 1 11g of 7 5 ·! o �md abo\'e i:i at least a majority o r subjects
[at least 4), the cundidatc shall rece ive a ··�011ditio1 al credit"" for the subjeccs passed.
c. The "'conditioned" candidate sha l l take an exa1i1 i r. ation in t h e remaining subjects failt!d w i t h i n
Lwo ye ars from the preceJing exa m i nati ori
•

d. A l l of the statements are t rue .

fi. /\ny candidate who tails in two complete CPA Board e�;aminations shail be
Jisqua l i fied from taking another CPA B0.1rd exan1ination.
:1.

i" Oisquali lied from takins a no t her CPA B�urd �.\am ination, unless the candidate suh1m i ts
1�vide11c e to the sa t i s fac t i o n of BOA tha1 he enrol led in and co m p l ete d at least 24 un i t s of the
.;ubjects given in the l icensure examinn t i o ns.
l . Qualilied hl take another CPA Board exurninmio;1 upon proper recommendation of BOA.
(: . Quali fied to take another CPA Bo�rd ex:1 m i nation l�1r humanitari:rn re a so n .

7. ,\I! of' the following arc kg�.i bases r'o r tt1c i 1 1:,)itn1e1:,.1tion \>t: Cun:inuil)g. ['rofessio nal Cduc�itiun
• • · • tic 01
CPE.· Which is the primary legal basis? • •

<1. The P h i l i ppine Constitution of J 987

b. The P h i l i ppine Accou111ancy Ace of 2004 or RA 9 !98.
1· .
The Professional Rcgulntion Comm;::.s ion rvloJ�rnization A<.:l of 2000 or RA 898 1 .
J. The Executive Order Ne. . 220 issued by PRC ::ind i1e various proks:-.ional regulatory board ;.
 . - - ___...---

111 •
.. f

8. How rnall y CPE L· n:d i1 units 1 v CP[ credit hours an! re,pi red fu r 1he renewal o f C P A l icense?
a. 60 crl'dil units each year ti 1r t h ree yea1•.;.
b. 20 credit units each Yl'Ur for th r ee year�·
I
•

i
• r

c. 60 credit units \(.)r three Y'··ars, proviJcd tlrn1 a 11 1 i 11 i i 11um of I :5 cred i t units shall be earned t:ach .
•

'
'

year. ,
d. 1 S u n its each year !'or t h re e year�

9. Which of the following is created to impkme111 th(: CPL provision of RA J 298 ? 'l
.

a.
h. PRC'
PlCPA
. I •
I

SEC
i

I
c.

d. PRC CPE C•Juncil l'o rAr ·:ountancy and P I C P A C P : Council•

I 0. The J>RC CPE Co u nc i l for Accountancy i s composed o•, 1, .r
a. I
I
Cha i r and t'Yvo mcmhers
b. Chair. Vice-Chair and thr�·e members I
1:. C h ai r and eight members i
d. Chair. V i ce-Chair and fiw rnemb1�rs

1 1 . W h il�h ol' the following statements is true regardi!1g. tl1•� �1j-<.G'. CPE C o u n c ,i l for Accountancy?
a. The Chai r s ha l l b e chose11 from anion>?. t h e 111cn1b�1 s o ( tll•! l3oard of Aecountancy.
b. The first mt:mber shall b;:· the preside�1t 01' P!CPA u:· itJ l 1 i s absence, any onicer chosen by the
0
•
•

botml of di rectors of' P J C P A .

\:. The second member sha l l be the president 01· tne t rganization of deans or department heads uf'
schools tha1 ofter Bacht lor or Science in Accou11tancy o r in his o��;cnce, any o fficer of ·he ' I

�1rga11izatio11.
d. A l l of t hes e statements 3rc true.

1 2 . Whith of the following· statements is true r� g a rdi n g the term of o ffice of PRC CPE Council for •
1\ ...: e oun tancy' J

;1. The lerrn ot' o ffice o l' t he Chair i s co-1ermi 1rns with his i n c u m benc y in the PRC.
"'- I· . The term o!' o ni c e or the fi rst member is cu-termi n u s with h i s i ncumbency as o ffi cer of PIC0PA .
I =- l' . Th\� term o r office ot' the sec ond member is l!! 0 -1e:minus with his in c u mbenc y as o ffi cer of the
urgunization of deans or c.k partment heads.
1.L t\ 1 1 of' the s t a t e men t s arC' true.

1 3 . · :-he J > J C P A CPE Council i s com pose d of

: .. Chair.. V icE·-Chnir a11J ei ght members.
1 1. ChJ i r and l'i ght member :
c. Chair, V ice-Ch.m a11J t t n rneinkrs • •

d. Ch<iir a nd ten members.

! •J: •

1 4 . The PlCPA 1wtional board oi' d i rectors appoi111s tht Chair. Vice-Cha ir and eight mem be rs
of tne
�>rCPA CPE Counc i l for a krm of •

_ .

: 1. Three years
1J Three years. renewable lor anot her three years
,:. One year, renewable ev1.:ry year for t hree years
d. One year
i. :.
1 5 . W h ich of the f o l lowing statements is true
l'\!i_! arding ihe fRSC>
a. The FRSC is created b :; P R C upon recornmencla.ion of BO.A to assist B O A i n carrying out i t s . 1
I
b.
c.
power s and fonc1i o11.s u. t d e r RA 929 S .
The FRSC sha l l be composed o f 1 5\vith a Chctirr r n n and 1 �� represe ntatives.
The Chairman ::ind 111e1nbe�· s ol fRSC .ire :.lppu nted l1y l'RC u po n recommendation o l· BOA
I
: l
!

d.
and shalt have ;:i term O '.. threc y ears renew able f';i; anothe term.
'
A l l o f t h e stntements ar.! true.
r
I· I I
I
I

f.RSC. exce pt
1 6. A l l of' 1he fo l l owin g are repre sente d i n
l
'
i
'

IJ oarJ n f, \c:cou nianc y !

1 of Imern al Reven ue l
a. .
0 · · ('l)il1m issit�n ancl ! � we�.
� ".
:., " ll''
. .
L). '\CCI lrJ l!CS '111cl l'vcll"
·

�;
� .

Comm issio n o n Audit ;md lh111 gko Sen ra

c.
t l 1;i;
P i l w a�

d . • Departm ent o f Budg et · md Ma n agem e nt

•
£ N I) •
'\_ .
 CPA REVIEW SCHOOL Of !'HE PHILIPP I N E S ·i
M ani la I
I
.
.

I
SIY V ALIX
I
THEORY OF ACCOUNTS - PREWEEK LECTURE VA UX FERRER

·
1. U nder PAS 1 7 , which o�· the follow.ing �;nuation� would prima facie l ead to a lease being
c lassified as an operating lease'?
a.
I •

Transfer :> f ownership to the lessee at tlk ellll 0 i ' the lease term.
b. Option to purchase at a v al ue below the fair val��� of the asset.
c. The lease term is for a major part of tlle asset" s : ,1�.
d · The present value of the minimum lease paymt:r ts is 50% of the fair value of the asset.

2. T he classification of a lea:;e is normally carri ed out

. .
a. At the end of lease tera1 •

b : After a "cooling off' period of one year ·• '

c. At the inception of Liu: lease
d . • When the entity deems it necessary.

3. The concept that is principally used to classify leases into operating and finance i s
a. S ubstance over form
b. Prudence
c. Neutrali'y
d.. Completeness

4 Where then! is a l ease of land and buildin g and rh e title to the

la nd is not transferred,

generally the lease is tre::ned as i f

<>. The land is finance le:ise and the building is <t i'. nance lease.
b. Tht: land is a finance tease and the buiiding is :u operating lease.
c. The land i s a n operaung lease and the building i s a finance lease
d. The land is an operat mg lease and rhe building 1s an operating lease.
5. For lease o f land and bui1ding, the minimum lease J a y me nts should b e split
it. /\ccording to the rela1ive fair value of rwo elen ents
h. By the c:nrity based u:1 the useful lite •. , the l\\· clements
c.. Using the stun of the d igits method • ! • i:•
•

d. /\ccording to any fair method devised by t11e e11tity.

( .. The profit on a finance kase for lesst>rs who are manu facrurers or dealers should
'.l. Not be recognized se p aratel y from finance income
b. Be recognized in the normal way on the tran:m ;tion
.;. Only be recognized at the end of the h::ase tern ·
.
d. Be allocated on a straight line basis over the l i fe of the lease

' Which of the foilowing · Jest describes cu1Tent prat tice in accounting for leases?
a.
·

Leases are not capit�iized.

b. Leases similar to insLallmem pur�hases are c•11•italized.
c. All long-term leases are capitalized.
d: All lea:;es are capita: ized .

..'\. Which of the following staternents ll1 r�c�tion lO iILitial direct costs is correct? •

a. (n a direct financing lease, initial direct co::;ts : re ad ded rn the net investment in the leas . e
b. In a sales type lease. i n i t i al direcr co�!s are t-:pensed in the year of incurrence.
c. For op•:rating leases. initial direct costs art: de erred and allocated over the lease tt!rm.
d. All of the statemem:. are torrect.
. '

'J. Which of the fo1lowing would not bi: induded rn .the kase rece:vable account?
a. Guaranteed residual value
b. Un gua rantc.:ed residual value
c. A bargain purchase 0ption
d. All would he includo:d
 • I Page 2

l 0 . The lease receivab l e in a direct financing lease i s be;t de fined as

a. the amount of funds the lessor has t ied up in 1 he a:c;set which is the subject of the d i rec:t-
financing lease.
b. The d ifference between the l ease payments rC"ceivable a nd the fair value of the leas�d
property .
c. The present value of minimum lease payments.
·
•

d. The total carrying amvunt of t he asset less. an) a�cum u l ated depreciat ion recorded
by the

· lessor pri or to t he l ea se agreement .

l l . Which of the following is not one of the ways to acrnmplish the goal o f avoiding leased asse:
capital izati.on?
a. Ensure that the lease does not specify transf()!' of t itle of the property to the lessee.
b. Set the lease term at ! es.,; than 75% of the estimatt d useful life of the property.
c. Write in a bargain purchase option.
d. Use a third part y to guarantee the asset's res idual val ue .

12. U n der PAS 18, which of the fol lowin g criteria must not be satisfied before revenue from the
sale M goods sl10uld be:: re1 ·ognized?
a. The entity has transforred to the buye r s igo i fa;a nt risks and rewards of owne rsh i p of the
goods .
,.
•

I
b. The amount of revenue can be measured rel iab l ) .
c . The costs incurred o r t·.> be incurred can b e measured rel i ab l y .
d. Ownershi p has been transferred to the buye r.
I
I
I
1'3. Which of the following co ndit i ons does not apply t ) the recognition of re ve nue for transaction;
I
·

i n volving renderin g of services ?

I·
a. The amount of rev en ue can be measured reliabh . I •

b. It is proba ble that paym e nt for servi c es shall be ·, eceived .

c. The signi ficant risks and rewards of ownership r ave b e en transferred to the b uyer .
cl. The costs incu1Tcd and the costs to.co mpl ete can be measured reli ab l y .
•I
.
1 4. Oil! and hold sales, in which delivery is delayed a . the buye·r·s re q u est but the buyer assumes
title and accepts invoicing. should be recognized wi-..en
'
a. The bu y er makes an order.
b. The sel l er starts manufacturing the goods.
c. The ti tle has been tran:;forred but the good s are � ep t on the se ll e r' s premises.
d . I t i s pro ba ble that the Jelivery wi l l be made, pa yment terms h ave been establishe
d.. and the
buyer has acknowledg·.:d th � delivery i .nstruc ti ons . . .
' I

1 5. A11 entity h a� come out with an offer to refund the: .:o;t of p u rchase within one month of sale if
che customer is not satisfied with the pr od uct . When should the entity recognize the reven ue ?

a. \vhen go<)ds are sol d t• .> the customers �

b. After one m onth of salt:.
c. Only i f goo ds are not rnt um ed by the cu sto mers lfter t he period o f one month .
cl. At the time of sale al ou g with an offset.to re�enue of th e liability of the same amount fer the
•
possibility o f the ret urn .

1 6. L:iyaway sales are sales

J. Wh e re the goods are d·�livered only when the buyer makes final pay ment .
b. In which the buyer is wt ye t ready to take delivt-ry but does take title to the goods .
c. With the right to repur-:hase.
d. On consignment

l 7 The accret ion a p proac h of recognizing revenue mt ans

a.
. .
The activities involve nroduction through natural growth or agmg of b 1olo g1cal asset.
.
.1
b. The sale price i s reaso;1ab ly assured, no s i g n i fica nt distribution cost is i nv olv ed and the units
art: i nterchangeable ..
. t:•
Th e outco me o f rende1 1ng sen ices cannu t bi:: •
� .
m� asured .reuab ly · . • !

d . Jhe outcome of rendering services can be n:eas lied reliab ly.

it \1:r ''
5864
 , Page 3
• .
•

. If' an entity ' bl Y th e ourcom• e (If

canno t estimate rel ia .
/8 . servi. ce, _It sh uld recogruze i
·

• •
. . a transaction mvolvmg -the prov1d'ing of a
'•

� revenue
Stra1ght lme over the period of the serv
•

ice contnet
a.

.D
.
B Y. usmg th e percentage of ·
completion method based on costs incurred compared to t,ptal
estimated costs.
By reco rdin g an equ al
amount o f revenue tor ea:h service performed.
c. · .

d. Only to the extent o f the expe

nses recoverable.

1 u . For whi�h of the following prod ucts

is it appropria e to recognize revenue at the comple tion
of
production even though no sale has been made? : -?
a. Automobiles
b. Large appliances
c. Singl e family residential units
d. · Precious metals

20. W hi ch of the following is one of the conditions that must exist for an entity to recognize
·

revenu e on separate units under a mu itip le deliver::ibles arrange m en t?

a. The delivered item has value on a stand lone b.1'5is and can be sold separately.
a

b. The delivered item is not returnabl e .

c. Collection has occ urre d for ali of the se parate u 1 its.. . •

ing penod .
.

d. The separate units must be del ivered wi thin 90 1 lays of the end of the account

2 t . The m i l es t o n e method o t' accounting may be used to recognize revenue for

a. Multiple deliverable products or services
b . Research and development arrangement
c. Long - te1rn construction contract
d. F ranchi se arrangement

2'.!.. The milestone m e th od of revenue recognition provides that if substantive

milestone is·

achieved, wnat :i mount o; revenue is recog;1ized'?

:1 . Revenue is re c ognize. .! up to the amount of cast col lected
l'. . A prorata revenue ba1 ed upon the perc�'ntage d i \ ive red to date.
'
.
.

c. C ontingent revenue i!: recognized in its entiret y , . •

c. A percentage of total revenue based or: the sep� rate units delivered
.

23. An entity contributes to .m industrial peosion pl<1.1; th a t• proviQes a pension arrangement for the .
en;ployees. A large number of other employc:rs dso contribute to the pension plan and the
entity makes contributions in respect of each em Jloyee. The only obligation of the entity i:; to
pay the annual contri butiuns. Under PAS i9R, this pen sion scheme is a

i. Multiemployer plan and a defined coneribut�n plan.

b. Multiemployer plan and a defined benefit (:'Jan.
c. Defined contribution plan only .
cl. Defined benefit plan unly.
.
\

24. Which o( the foliowing i:; not a characteristic of a 1 l efi ned contribution plan?
<L The employer's contri bution each period is bas !d on a formula.
b. The benefits ro be re ;.;ei ve d by employees are 1sually determined b y an employee's highest
sal ary d�fined by the terms of the plan.
c. The at:counting for a defined contribution plan is straightforward and uncomplicated.
d. The benefit of gain or the risk of loss from the assets contributed to the pension fund are •

borne b_v the employte.

25. ln accoumiug for a uefmcd benefit plan • · ! • t:•

. •
a. An appropriate funding pattern mus1 be. esta )[ ished to ensure that enough money will be
available at retirement to meet the benefits promised.
b. The employer's respu nsib ility is �imply to make a contribution each year.
c. The expense recognized each peri�d is equal to the cash contribution.
d. The liabil ity is determined based upon variuble ;' that reflect c urrent salary level.

5864
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l
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26. The comp utation of pension xpense i nc ludes all ot the fo l lowin g except ,
a. Current service cost measured using current salary level
I ·
•
b. Past service cost
c. Interest on defined benefit obligation
d. I nterest income on plan assets

,
27. When the fair value of pla n assets cxceed3 the defi n :d benefit obligation, PAS 1 9R
a. Requires recognition or an asset. .
b. Requires recogn iti o n of an asset if the excess r:iir value of plan assets exceeds the comdor
amount.
c. Recommends but doe� not requ ire recog niti on c1 :·an asset •

d. Does not pem1it recognition or an asset.

28. Which of the following disclosures of per1si0n p lan : nformation would not be required?
a. The maj o r component:; of pension .expense
b. Th e amount of past scn:icc ccst ch arged in prev;ous years.
c. The fu nd ed status of the plan and the amo uncs re cognized in the financial statement s
. .
d. The rate used in measuring•the benefit amount
•

. .
, • •

29. An entity has decided co improve its defiu.:e.i bi:nciit pepsion scheme. The benefit payable will . •

be determ ined by reference to 60 years of serv i c e ra ther than .80 years of serv i ce . As a result,
• •

there is an i ncrease in tht: defined be !lefi. t pensio i l i ab il ity . How should the increase in the
pension liability be treated in the financial statemen .s'?

a. The past service cost 5hould be charged against :etained earnings.

b'. The past service cost should be charged against )rofit or loss for the yea r.
c. The past service cost should be al l ocat�d oYt!r the rt maini ng service period.
d .' The past service cost should not be recognized.

3 0 . W hi ch of the following is taken into a ccoum when determining th e discount rate?

a. Market yields at the end of reporting period on high-quality corporate bonds
•

b. I nvestment or actuarial risk

'
c . Specifi c risk associated with the entity s busine� s
d . Risk that future experiences may d iffer from actuarial assump tions

3 1 . Unde r PAS 20, a governll!ent grant shall be recogni zed when

a. There is reascnabl e as:;urance that the c: n tity w i l l comply with the condition s
attaching to the
government grant. . . • • .

The entity has comp l i e d with all the condi t ions a itachin g to the gra� :.
"'
b . •

c. There is reasonable assurance that the entity will c ompl y with the conditions attaching
10 th�
grant and the grant wiil be receive9 .
d. · The entity has complied with all tbe conditiom attaching to the grant and the grant will be
·

received

32.. Which of the following st.:ltemcnts is incorrect in rd at ion to governme nt grant?

a. Any adj ustment needed wh en a go ve rnm en t grn· H become s repayable is accounted for as a
change in accou nting ·..:stimate.
b. In res pec t of loan frnm the government ::!t z�ro i nterest rate, an imputed interest charge •
should b·� made in profit or loss.
c. Where conditions app l y to a gov�mment grant it should only be recogni zed when there is
be: met .
•

reasonable a ssura nce 1 hat the cond itions will

d. A government grant ,hat beco me s rccc1vable
�s co ��
ensation for losses al ead y incurred
; 1

th� i 11 bec omes receivabl e

should b·� reco gn i ze d . is income of
I
period n whic
,
1

J::.. Which can be cons idered " gove rnm

ent assi srn�1 cc ? .
pr0v isw .1 ot guarantee
.
a. free ted111ic:..i 1 or marteting advi ce and .
l tn. nsp o rt and commwucaUM network . .
.
b . I n i.rastru;;wrt by 1mprv
· ·'\' e111enL l'' v o
v tl1,,. -
vcnera
\
C. Improved facilities, such as irrigation or water I,
snl'p ly
\ ct. Impos ition of tradi ng .;onsrraints on comp euroi �
5864'
'"' .
 Page 5

34_ Which of the following statements is true about government grant?

•
·
a. G rant related to an as:;et is acco unted for e1the:· as deferred income or deduction from the
carry i ng amount of asset .

.b. Grant related t o income is presented s

a other income, separate l i n e item or a deductio n from
the related e xp ense . •

c. A forgiv able loan from govenunent is treated as overnml!nt grant where there is reasonabl e , .
g
assurance that the entit y will meet the terms for 1 he forgiveness of th e loan.
d. All of these stateme nt� are true about governmer.:t gr ant. •

·
3 5 . U nder PAS 21, where . 1 foreign o p eration func tions independently from the parent, the
fu n ctional currency i s
a. That of the parent. •
·• •

b., Determined using the guidance for determip.ing a1\ �n�ity s functional currency
'
.
c. that of the country of incorporation.
d. The same as the presentation currency.

36. Whi ch of the following considerations would not be relevant in determini ng the
entity' s

functional curren cy ? ·
a. The currency that influences the costs or the em ty
b'. The currency in wh ich finance or fund is genera ed
c., The currency in which receipts from OP.erati!ig actit1ities are retained
d. The currency that is the most internationally acceptable for trading

3 7. An entity has a subsidiar�; that operates in a c o unt 1 y where the exchange ra�e fluctuates
wil?ly
and there are seasonal variat ion s in the income and !xpenditur e patterns. Which o f the following

rates of exchange would probably be used to translate the foreign subsidiary ' s income
st atement?
a. Year-encl spot rate
b. Avcrage for the year
c. Average of the quarter-end rate
.• cl /\ vcrage rnte for eac h individual month of the ' · ·ar .
.

38. At .which rate should noncurrent assets be translat� wh en the functiblla' currency figures are
being translated into a different presentation ctirrency?
a. The historical exchange rate
b. The closing rate
c. The aver age rate
d. The spot exchange rat!!
'

39. U nde r PAS 2 3, borrowing costs can be capitalized :is part of t he asset when
a. The asset is a qualifying asset.
b. The asset is a qualify 111g a sset and it i::. not prc b abl e that the borrowing costs will result in
·
future economic beneiits to the entity.
c. The asset i s a qualifying asset and. i t is proba b ll that the hon-o wi ng costs wil l result in future
economic benefits to 1 he entity but the costs cannot be mepsured rel iably .
d. The asset is a q ua li fyi ng asset and it is probabk that the borro w ing cos ts will result in fature
economic benefits to the entity and the costs caJ°, be measured reliably.

40. Vv'hich of the following statements is true regard in� capitalization of interest?
a. Interest cost capital�zed in connection with the )Urcha�e �f land to be used as a building site
should be debited to the land account and not to the building a ccoun t. •

b. The amount of interest CDSt capitalized durir.g the period should not- exceed the acrual
• • '. •
. ·
i nterest cost incurred .
c. :W
hen excess_ borrowed funds not immediatt•v � eeded for con structio n are temporarily
mvested, any mteres t earned should be recorded as 1flterest rev en ue . •

d. 0The minimum amount of interest to capitali\ed is deteri-nined by multiplyin g a wei o hted •

be
average interest rate by th e amount of avera �e accumulated expendit ures on qualifyi ng
•

assets during the period.

 Page 6
. '
'

4 l . Which of the foliowing costs may not be digible l�>r capitalization as borrowing costs?
Interest on b onds issut:d to finance the construc ti on 'Of a qualifying asset.
for capitali z ation.
a.

h. · Amortization of d i sco unt s or prem i um s relatin i to borrowings that qualify

'
lmpull.:d cost of equity
to the extent the:;e are
i.:.

d. Exchange diffcrcm:c·: aris i ng frnm fore ig n c:.menc y borrowings

re garded us an adjusti 11cnl to i nten:st costs perta i ni ng to a qua l i fying
asset.
. . . .

costs as part of th e •
42. Which or the followin g stateml!nts about th� cap i tal i zati on of borrowing
l:ost of a qualifying nssel' is true?
:1. I r fund�: come frum genera l borrowings, the amount to be
cap ital i zed is based on the
weighted average co�t of bonowing
h. C ap i tu l i l.Uti o n alway!· continues until the asset · s brought into use
c. Capitnlimt ion alwa y�· commences as soon ·as e �:pend iture o f the as set i s i nc urred
d. Cnpitnlizat ion a l ways commences as s oo n as interest. on relevant borrowings is being
incurred

•13. I Jndcr J> AS 24. k ey management personnel compensation includes

�1. So1..:ial s .:c ur i t y contribution
l>. l'ostcmptoymc11t hen :lit
! ' 11'
c. Share-bused compemmt io11
• •

•
•
d . · S o ci al security contribution, postemployrrttnt renefit and share-based compensation

44. Which of the fol l o win g i:; not a rel ated party?
:;. A director of the t: nt ity
b. The parent of the entity
1..: . A shareholder of the •.:.ntity that holds I% stake i n th e en ti ty
d. The son or th e chief executive officer of the en• ity

1l· S. Wh i c h of the following d isclosures is not a manda. ed disclosure?

:l. Relationship between parent and subsidiaries irrespective of whether there have been •
transactions bctw1..�1..'n thosl! related pani e s.
h. Nam1.:s of al l the associates th at ru1 entity has dt:alt with during the year.
'

c. N ame o f the entity ' s narent and, if difforent, th•: ultimate 'controlling party.
d . I f neither thl! entity '� pare nt nor the ultimate r..arent produces financial statements available
.\ \
for puhl ic use, t hen the name of the ext m ost � e ni or parent that does so.
•

� •

4<>. I C ha · c been r l at( ·d party transactions dun 1g the year , which of the following i s not a
tli�rc
� . �
required m1mmu1n disclos ure'!
a. The amount of the re l ated party transa c ti ons .
h. The amountof the o ms tandi ng balance along " jth tl\e terms and conditions.
<.:� The amount of sim i l ar tran s ac t i ons wit11 un ·el:lted parties to establish that comparable
related party transactions have been entered at �mu's len gth.
d . • Pro v i s i o ns for do u b t fu l debts relate.Li to the
rnno unt of DUtstanding balance and expense .
recognized during the:: yt!ar in respect of bad de:>ts due from related parties.

47. Un der PAS 26, the repcw of a defined contribution plan shall co ntai n

:J. A statement of net assets avai l ab l e for bt:: n dits

b. A descrip tion o f the fonding pol icy. • •

c. Ei ther a statement of n e t assets available for benefits or a description of funding policy

d. B ot h a s tatement o f n ;! t assets available for b e n. ! fit anJ a descriptio n o f funding policy

contain
48. The report of a defin ed benefi t plan shall
I. A sta.tcment showing the net assets ava+labk for benefits, the present value of promised

bc:ne t i r s and the resu lting excess or

defic it.

le for bendits inc lud i ng a note disclosi ng t he present·

11. A �.tatement of ne �L<>sets availab
t
valui! of promis1.:d benefits.
,....
a. I only .

b. I I only •
• ! •t:•
'·,_ \:. Eitb cr I or 11
.
� .,_ d. • Bof h 1 and I I
5864.
 • Page 7
,i!). fn 1-mt� circumstances, when a r eti rement
.

. . benc fiit. pi�u

.
•
· ..11, . i defined benefit P 1 . . . ·
nas attri butes of both defined conmbut10n
' .c
an, It 1s d eemed
·

a. Defined benefit plan

�. Defined contribution plan
c. Neither a defined ben e r · .
-1t P1an nor a defimed con1;·1b .
ut1on plan
d. Botb defi ned ben efit pl·Jn
and defimed cu ntri1m t i � n pl an

S O . W hic h of the foli o w in g ntay

be d is cl o sed m the ft iancial report of a defined benefit plan but
woul d not be shown in the fi
n anc ial report r·f a ddi11 �d con tri buti on plan?
a Clovernment bon ds htld
b. Actuarial present vakc of promised re!.rc m �r.1 ;�nefi ts
�- Emp loye e contributions
d. · Employer contributions

5 1 . W hen an enti ty holds between 20% and 50�0 o1 the uut stand in g ordinary shares of an inve stee,
which of the foll ow ing statements appries?
a. The i n v estor should always us e the �quity meth o J iO ac co unt for the investment.
b. The inv es to r should ust" the equity method c o accr · llnl fo r the in vestment unless
•
circumstances indicate that it is unable to exercise si gnificant influence over the investee.
c. The inve�;tor must use the fair value meth od un i.>ss it can clearly demon strate the abil i t)• to
exercise si gni fi cant influence over the i nves t ee .
d. Tht! i nve sto r should al'.vays use the fair value m;:t ho d to account for the investment .

5:2. If the investor o wns 60CJI,, of the inv.este:e:·s ou1sta :lding ordina ry shares, the investor should
ge neral l y account for th is i nvestment under the
a. C o s t method
b. Fair value method
c. Consolidation eq 1ity method
d. Consolidation me'(hod

5 3 . How is goodwill arising on the acq u is it ion of an =ts .. 1 1-:: iate dealt with in t he financial statements?
. .
a. ll is amortized.
.'
b. It is impa i rme nt tested individually.
c. lt i s written off against profit o r Joss.
d. 9oodwill is not recogn ized separatel y �rnhin th� �aiTying aIJlOunt of the investment.

54. How is the impairment te st carried out for an investuent in associate?

a. The goodwill is se pii rated from the rt!St of 1 he investment and is imp ai rm ent tested
individually.
b. The entire c aJTyi n g amount of the investm ent is tested for i mpairment by comparing t'.le
•
·
•
recoverable amount with the carrying au1oui.l1.
The carrying amount of th e inve!..:mem :;hould bt -:: ompared with the market value.
,
<..: . '

d. The recoverable amounts of all i nvestmems ir asso ciates should be assessed to ge thet 10
,
•'
determ in e whether there has been an imp::iirmem on all in\'estments.

55 W h al should happen when the financial statem;ms ·� i an as soc iate are not prepared at t he same
date as that of th e i nvestor 1
a . The associate should p repare financial Statement ; tor use by the in vest or at the same date as
t hat of the investor.
b. The financial st atemem s of th e associatC" prepare :I at a differe nt date is used as normal.
c. Any major transaction: between the dak C•I t!1� ! nancial stat e ment s o f the �nwst0r and t:i:i:
of the associm:: should be ;.iccoluneJ fu L • •• • •
d. As J ong as the gap is not greater than three m'o nus. there is nc proble'J1�

56. Which of the following st:-iLements be st describes tht term significant influence ·:
a. Th e holding of a signif!cant propor·tion n f the sh�r� capital in J.nother entity
b. The contractuailj' agre.:J sharing o r comrol ove1 �·.n economic .:!nti t y
c. The power to parti c ip a t e in the financial and ope ·;,iting policy decisions of an eQtit v
·

d. The mutual sharing in the ri sks and \Jendi ts of ;:i combined entity
 Page 8

57. An entity has several subsidiaries that operate.i°n u hyperinflationary economy which w.se� the
. .. ' • •:•

zloty as the local currency. Management wishes to ! how the fi nancia l statements in US dollars :
Many o f the operations are within couptries that arc not hyperinflationary and these subsidi aries ·
use the euro as the fw1ctional currency. Under PA�. 29, what currency should the en ti ty u:;e to
present the consolidated financial s tatement s '?
·

n. The US dollar
b. The zl oty
c. The euro
d. The entity may use any currency

58. An entity ha s subsidiat") that operates in a hyperinflationary economy. The subsidiary· s

financial statements are measured in tem1s of local currency, which is the zloty. The pa re n t is
locat ed in USA and prepares statem ents in dol l ar ;. Which ·procedure is correct in tem1s of
consolidation of t.he subsittiary' s financial s tatemen t.;?
a. The subsidiary's financial statements should be retranslated to USA dollars.
b. The subsidiary financial statements ·should be restated in accordance with PAS 29 and
retranslated to USA dc,llars.
c. The subsidiary ' s fi n an c ial statements should b� remeasured in USA dollars and reJ>tated in
accordance with PAS ::9.
LI . • The subsidim·y ' s financial siatements shouW be dec.ortsolidated.

59. Which of the following should be considered nonm Z1neta.ry?

a. ;rrade receivables
b. Deferred tax liabilities
c. Accrued expense and other payables
d. Taxes payable

60. AJJ of the following are munetary items, except.

a.· Trade payables
b. Trade reo.:eivables
Administration costs paid in cash

I
c.

d. Loan i:epayable at par value

61. J�n �1.1t ty is reponing in a hyp �rinflationary e�onorr .y. The monetary assets exceed the mone.tary
_i
liab1ht1es. Which of the fo ll ow mg statements 1s tnu:?
u. There is a Joss on the uet monetary position.
b. T here is a gain on the n et monetary position.
c. The gain or loss on tlw net monetary position is recognized in other comprehens ive income.
d. i\11 of thc:se statement:: are true.
. •
• •
' • t: •
62. Und er PAS 32, whi ch of the following would not b· ! classified as a financial liability? •

n. A preference share tha t w i l l be redeemed by the i ssuer for cash on a futu re date.
b. A c on tract for th e delivery of as many of the en:ity's ordinary shares as are equal in val ue to ·
a fixed a.mount on a future date
.
c. A written call opti on that gives the holder th ! ri ght to purchase a fixed number of th�
entity's ordinary shares in return for a fixed prke
d. An issued perpetual d e b t instrument
. 1
i
63. Which of the fo l l o w ing is a financial liability?
a. Deferred revenue
b. A warranty obligation
c. A constructive o bl igatio n •

An obl i ga t i on to deli v·.�r own shares worth a fixt·d

amoun t o f cash
d.
.

64 . Transaction r;osts that are directly attribu �

able to tfa issuan ce of new shares shou1d be
a. Expensed immediate!�'
\
b. Charged to reiained euning s
c. Deducted from equir y . . .
_

d. of any r e l ated mco m•: tax beneht

. . '. .
D1:<lucte cl from equ ity . net

5864
 65. c�)<;ts of pub lic o ffer in g Page • 9
or stock ma rke . .
Expensed immediately i
t hst mg of. � hares shoul d be i
,I
;1.

t d � as componen of th
b . Co nsidered t
0 er comprehen .
·
.
c. De uc e trom equny .
d s1\ 1 · mcome
•

d. Deducte d fro m equity, net of

any related income
·.ax bene fit.
66. Transaction costs dir ect l
Y a nn· b utable to the issuan ct of new shares include
· a.
Documemary stamp tax . .
b. Un den.vri t ing fee
c. SE C registratio
n fee for new shares I \..-. '
d. All l1f thc:;e >i.
. .
0
67 Costs of public offering or
· listing of sha res int:ludP. · ' ·
a. Road s ho v·.' presenta
tion
nt fee
b. P.ublic rebtions consulta
c. Stock l i stin g fee
d. All of these

68. W,h at is the pri nc i pal of accounting for a co 1ppo und i nstrwnent'? !
in
a. The issuer shall classify a compound stru m�nt :1s either a liability or equity.
b The issuer shall classify the liability flnd �qui1y components of a compound instrument
. •

separate ly as li abi lity o r equity inst rum e nt . ·

c. The issuer shall classify a compound in strum ent as a liability in its ent irety until convefied
into equity.
d. The issuer shall dassi(,· a comp o und insu-urvem .1s a liability in its entirety.

69. How are the proceeds from issuing a compound ins nunent allocated between the l iab il i ty tmd
e (i uity c ompo nent s ?
•L Fi rst, the liability com p o ne nt is measurtd at !air value and then the remainder is all ocat e
d
to
the equity component

.•
b. First, the equit:i compo n ent is measured at fair , ::Jue and then the rem aind er is a loc ate d to l
the liabili1y component. . • .
! • I :•

c. :fhe proceeds are al lo cated to the liability an.cl eq 11 ity components based on fair value .•

d. The equity component i s measured at intrinsic v: l ue and the l i abil i ty component i s measured ·
at par amount less the i ntrin sic val�e of the equit / co mponen t

l
.
70. W hat are the co n d i tions for offse tti ng of financial a� �ets and financial i abili ti es?
l
a. A egal right of set-off .
b. A legal right of set-off and an intent i on to settle 11et or simultaneously.
.\
c. The existence ::if a clearing mechanism for r.et sertl ement
.I
d. A netting agreement a,1d an expectation of ner <.c:rtlement

7 1 . Under PAS J3, the wei gh ted average number of ;hares outst and i n g for all periods shall be
adj usted for
a. Any change i n the number of ordinary shares without change in resourc es
b. · Any prior peri od error
c. Any issue of shares for cash
d. · Any convertible instruments sett led in·cash

72. Earnings per share is calculated before accounting fr r which of the following i tems?
'1. Preference di vi dend for th e pe ri o d
b. Ordinary d i vi de nd
c. · Taxation
. '

d. Minority i n tere st

.73 . ff a' bonus i .'.;s ue occurs between the ye�r-end an.: the date that the financi al statements are
a uthori ze d
a. EPS j
botn for the cum:nt and the previuus yea:- ; . 1 e 3.d us ted .
.b. EPS for the current yl.:ar only is ad us t d. j i;
: c. No adjustment is mac� to E P S .
fP�.only i s adju'sted.
 . ' Page 10
74. All of the following items must be disclosed in re l aL1 01• to earnings per s hare , except
a. Forecast earnings per share for the fo llo wing finan' ial year
Instrument that could po:entially dilute asic e arni ngs per share in the future ut
b
b. b were not

included in the diluted EPS because these are antid, lutive in the current period
The weighted.average number of ordinary shares u: ;e d to c al c u ate earnings per share
c.
l
d. Jhe earni ngs figures used in calculating h'!sic and diluted earnings per share

75. When applying the treasury share method ior di utcd �arnings per share , the market
price :>f i :
the o rd inary shares used for the purchase is th"e
.

a. Price at the end of tht: ye:1r

b. Average market price
c. Price at th e beginning of the year
d. None of these

76. When computing diluted EPS, convertible bonds are

o. ignored
t . /\:ssumed converted whet her dilutive· or antidilutiV· !
c. Assu med converted i f dilutive
c . .'\ ssumed C•)nwrted if ar tidi l uti\·�

77. In COl]lputing weighted average shares ou tstandi ng, when a stock divia�rtd1oc share split occurs,
.
the additional ;..bares are
:.:<.

b.
Weig hted by the number of days outstanding
Weighted hy the i1urnber of months rmtstanding
I
i\
c:. Considered outstanding at the beginning of the year
cl. Co ns idered omstanding at the begiIU1ing of the ea1 l iest year rep o rted .

7 8 . An o rdin ary no nvoting share which is entitled to a th ed dividend should

a. Be included in EPS calculation after adiustrnent o ' the fixed dividend.
b. t
B e included i n E P S calcLtlation withou adjustmer t of the fixed dividend.
c. Not be included in E P S calculation.
d. B e i n cl ud e d in t h e calcu lation o f dil1 1ted :-:: P S .

79. Under PAS 34, which of the following t atemems i s I rue? ;

..1. An interim financial report may consist o i a c.:omi: le
•

te set of financial statements.

o. An interim financial repon may consist of a · complete set of financial s}atements
or
condensed set of financial statement wi-t.h selectea not es .
v· A complete set of fi n anc i al statements is requlfed at interim reponing date.
d. A condensrd set o f financial sta tem e nts with selei :ted notes i s required at interim date.

80. Which of thi.: f o l l o w i ng stakments 1s true regarding interim fi nanc i al reportin�?

a The discrete view is required for interim fin1J,ncial•st:atements.
. •
•

b. Interim reports are r equ i red on a qw:1rterly basis. .

c. Interim reports are not required.

cl. Ii1terim re p orts require the prep arati on ' of only ft statement of comprehensive income and a
statement of fina nci al position.

8 1 . Which of th e fo llo wing describes requireme!1tS rcgar·iing interim finan cia l s tatements ?
a . . lnterim financial stateme nt s are required. •

b, If i nter i m financial stati.:ments are presented four basic financial statement s are re qui red .
. •

c. . If i nte rim financial s t at e me nt s are presented, at l east a statemen t of financial positio n and a
statement of comp re h ens i ve income are required.
d. Interim financial statements mu st be presented W !th the most recent annual statements.

82. Public ly traded entities are encouraged to p r o

v ide ini erim fi nancial reports

a. J\ 1 ieast ;it the end of half year a

n d with i n 60 da) s o f the end o f interi m p e r i od .

b . With in a month of the ! 1alf year-end.

i '
On a quar terly basis .
i
·�. '
'

d. Whenever the entity w · shcs.

i . I r an t:mity du·.:: � not prepare interim financ i al repor t�

'
\n
· year-.:11Ll l.manual1 �·.t.." t e.
'[ ne
· · · L· 1r··
,'.11e1i t J � dt",'
licLI Ji . l to complv wnh PFRS.
, :
·
Lt • � •

b l'he year-en 1manc1al statements ' compli anc e w�th PF RS is not ftfiefMd.
· •
.
,
�
d · ·

0"
·

under IocaI 1eg1s

· lauon.
1 lle yc �.r-e ts will not be ac( eptable
·
.. · l stat emen
nd fimanc1a ·
.
e d fi anc1aI statements .
be included in rt.e ye ar- n m
l.nte rim finane;ial repons should
...

5864
 Page 11
84. fbcre is a presum p tio ? _tha_t any one reading. I
ime;im 1 i nanc i al reports would • i , ·

a. U nderstand all Ph1hppme Financial Repo rt i ng S1 andards. j

b. Have access to the records of the entity.
c. Have a_ccess to the mos t recent annual repo
rt.
d. Not make deci sion s based on the re on .
p
8 5 . U n der_ P
.
A� 36, w hich of t he following stateme nts is incorrect with regard to impairment?
. .
a. It impamnent indicators are present, the entity 11 .ust conduct an impairm ent test.
b. T�1e impairment test compares the. carrying am..:: unt with the lower of fa i r value less cost of
disposal and value in use \• •
"· . -:
,c. ••

c If the recoverable amount is lower than c any i n �'. amount, an i!11painnent loss is reco gniz -e d
d. I f rc cov e: abl e amount is higher than catTyi1;o no impainne.l)l loss i s reco gnize d .
0 � ount ,
•
. ••:•

8 6 . An ent i ty is co n si d er i n g to apply an impai ent est to an individual asset or to th e cash.

·
� ;
generatin g unit to which the asset belongs. Which o; · the following statements s true? �
a. If the individual assec does not generate cash inflows that are largely mdependent
from

other assets, the cash generating unit should be i .ientified. .

entity as �
b. If the individual asset generates a significant r. roportion of cash inflows of t.he
whole, the cash generating u i t should not be id.:ntified.
n . .
errtity
c. If the individu al asset generates an insignificam proportion of the cash mflows of the
as a whole, the cash generating unit should not tie idenlified.
d. A l l of these statement�: are true.

8 7 . When an emity determino..:d that an equipment usd in operations has suffered impairme
nt in

value, the entry to record the impairm �nt should

a. Recognize extra depre;;iation expense for the period.
b. Include a credit to accumulated depreciation
c. lnclud� a credit to equipment
d. Not be made if the equipment is still being used.

8 8 . Whe calculating the estimates of future cash tlows, which or the following cash flows. should
n
not be inc lucl!d? • •
• 1
..
a. Cash flows from disposal
·" •

b� Income tax p a ment s y •

c. C ash flows from the sale of assets produced by .he a.<>set

d. · Cash outflows incurred to generate tht: cash infbws from the continuing use of the asset

8 9. When deciding on t he discount rate to be used in cd culati ng value in use, which factor should
no t be taken into account?
a: The time value of money
b. Risk specific to the asset for which future ca!ih frow estimates have not been adj usted .
c: Risk specific to the asset for whiclffunire �ash t: ow estimates have been adjusted.
d. Pretax rate

90. An impain:nent loss that relates to an asset that has been revalued should be recognized in
a. Profit or toss
b. Revaluation surplus tha t relates to the revalued asset
c. Opening retained earnings
d. Any reserve in equity

9 1 . Tne allocation of an impai1ment loss should reduce 1he carrying amount of which asset first?
a. Property, plant, and cquipmem
b. fotangibk assets
c . .Goodwil l
d . Current assets

92. Which of the following impairment lo;ses should nl!ver be reversed?

a. Loss on property, plan! and equipment
b. Loss on goodwill
.
c. Loss on business segment .
d. Loss on inventory

58 64
 Page 12

93. A c.ash--gener2.ting "1Ilit is , , 11, ••

a. The small est business segment.

b. Any group of assets that generates cash flow·s.
c. Any group of assets that is reported sep arate l y to management. . .
d. 111e smal le st group of assets that geqerates indep1·ndent cash flows
from contmumg use .

94. Where cash generating unic is dispo se d of, any good Ni ll associated
a. Shall not be written off to the income state ment e nti_ rely .
b. S hall not be inc lude d in the ca lculatio n of gain or loss.
c. Shall be included in the calculation of gain or los:;.
d. S hall be written off against retained p ro fits

95 . Which is the best evidence of fair va l ue less .:: ost of d isposal?

a. An asset that is trading in an active ·market
b. The price in a binding ! al e agreeme nt
c. I nformati on available that determines the displ'lsal value of an asset in an .arm's len gth
transaction
d. The carrying amount of the asset

96. Under PAS 37, a "provision·• is recognized

a. When there is a kg al (• b l i g�tio n ar i sin g from a past event. the pro babil it)' of the outflow .oi
.resources is less than probable, and a reliabJ.e estiirmte ·can be made.
b. Wh en there is a constructiv e obligation as a result o f a past ev e nt, the outflow of re sourc•! S is
probable, and a rel iable estimate can be made o{ he am o unt of the obl igat i on .
c. When there is a possibl(! obligation ari sing from > a s t event. • i I ,

d. When man agemen t decides that it is essential tha'. a provision be m ade .

97. Which of the following shc•uld be disclosed in the fir ancial statements as a contingent li �bi l i�y?
a. · The entity has accepted liability at year-�nd for unfair d i sm issal of an employee.

r
b. The entity has received a letter from a s upp l iu C< •mplaining about an old unpaid invoice.
c. ' The enti ty is involved in a legal case which it may possibly lose.
d. The entity has not yet paid certain claims under sales war ranty .
.
98. An entity opcr::ites a chemical plant and has a published po l y of
ic making good any damage
caused .to the environment. Which of the fo ll owi ng v1ould give rise to a provision
a. lt is likely that a chemi\:a l spill which would resL It to
?
pay penai ty will oc cur next year.
Research sugge sts that there is a poss i b i li ty thn the enti ty ' s action
b.
surrounding wildli fe .
may cause damag
�
; to
c. The gowrnment has a ulan for a law req uiri n g all envi ronmental damage to
be rectified .
d. I\ c hemi cal spill from : i chemi cal plant has caused harm t o the su rround in
g w i l d l ife .
99. For wh i ch of th e foJlowing shoul d a p roviswn be recognizt!d?
a. •Future operati n g losse.�
· •

b. O b l igat ion s under insurance co nt racts

c. Reductions in fair value of financi'11 instrument�
d. Obligations for plant oecommissioning costs

1 00. Provisions shall be recognized for all of the fo l lo wi ng , except

Cleaning-up costs of C•.rntaminated land when ar oil entity has a published pol cy
that it will i
a.
undertake to clean up al l contamination that it c :rnse s . •

b. Restructuring c osts after a bi ndi ng sale agreement has been signed

c. Rectification costs relating t o defecti v e product� already sold
d. Future refurbishment co sts due to introduction c f a new computer system.

1OI. What is the relationship between present value a.1d the coijcept of a l i abi lity?
a. Present value is t_1se d t( J measure certain liabi l ir i c s
Present value is not usc;d to measure liabilities
•
b.
c. Present value is used ro measure all liabilities
d. Present value is only used to measure noncunen . liabilities

. \ END
.. \
..::
-
.;;
\ 58 64 . .
°'-... . '

f! ... . .... l.9 • .

,
\
__ . \.
 L.
""'L
CPA REVIEW SCHOO
L OF 1 .HE PHILIPPINES
Mani la

Y OF ACC OUN TS - :1REWEEK LECTURE

11fEO R V ALIX SIY V ALIX FERRER
. Facto rs that shape an_ accounting informa
J tion system i nc lude the
a. Nature of the bus me ss and size
of entitv
b. Size of the_ ent ity and vol um . .
e of data t� he han tJ!,·d
c. Vol ume ot data to be hand l ed
and natw-e of busi 1 css
d . i'>l ature o f busin ess, size o f entity •
and volumt·or d<lta t o be hand le d . . ! •:•

2. Basi � steps in the recording process incl ude all of 1 he following, except
j
a.
•

1 r 1 fer the j ournal i aformation tQ

� � the appropriate accoun t in the statement o f financial

1·
·
pos1t1on.
b. Ana l yze each transaction for the effect on the ac • .ou nts .
I
c. Enter the trai� saction i n fo1mation in a journal.
d. A l l o f the c ho i ces are correct regarding t h e basic steps i n the recording process.

3. The failure to properly rec ord an adj ust ing entry to c .ccrue an ex p en se results in
a. Understatement of expense and an understatement d f liability. ,.
b. Understatement of exp e nse and an- overstate me n t of liability.
c. Understate m ent of ex pense and an overstat eme n t of asset..
d. Overstatement o r expt:nse and a n understmeme1�t o f asset.

4. The fai lur e to prop erl y record an adj usting entry to accrue a revenue results in r'

a. U nderstatement of revenue and an understatement of liability. /'

b. t)verstak�ment of revenue and an overstatemen: o f liability. l

c. Overstat·�ment of revenue and an overstatement o f assd.

U nderstatemen t of re\ ' c nu e-and an understaterne nt of asset.
. .
d.
. . '. .
5. An entity mu st make adjusting entries
a To ensure that the revenue recognitio � and exp�-nse re c og n i ti on principles are followed.
. •

b . Each time it p re pa res :111 i n come statement and . 1 statement o f financial positio n.
·

c. To account for accrua l s or deferrals.

d. All of the choices are correct regarding adjusti11g entries.

6. l Jnder Philippine Fi nan cial Reporting S t �dard s

a. The cash basis me th od of accou nt i ng i;; acct!ptd. •

h. Events are recorded in the period in which the event occurs.

l:. Net i nco me will be lc1wer tmder the cash ba sis 1 han accruai basis accoun ti ng .
d. All of the choices are correct.
,,
. .::
.,
• t

7. lf en ding bulance of accc.unts receivable ex ce�d s t h e beginning acco unts rece i vab le
a. Cash col lec tions during the period exceed the � mo wit of revenue e arne d .
•). Net inco me for the peri od is less than the amot nt of cash basis i ncome .
·�. Nu cash was coll ected during the, per i od.
d. Cash collections duri ng the period are less thar. the amount o f reve nue earned.

�.. When convert ing from u s h basis t o ac c ru:t l basis. ' ' hich o f 1 h e fo l lO\.ving adj ustments shc·uld be
made to cash receipts from customers to detennim� tlccrmll basis servi�1.1evenue?
_
a. Subtract ending acccunt s rece i vab le
b. Subtract beginning unearned service revenue
c. Add ending account�; receivable ·
d. Add cash sales

'). When conve11ing from c- ash basis to accrual basis. which of the following adjustments sh o u l d be
.
made to cash paid for expenses to determine accn.al basis expenses?
.

a. Add beginning accrued liabilities

b. Subtract beginning p repai d expense
Subtract ending prepaid expense
Subtract i nterest expense

5863 .
 ·Page 2
1 C·. R eversi n g ent ries
a. impact the income statement on ly . • '

b. I mpact the statement <•f financial position and u�e income st atement.
c. Are not allowed under Philippine F inancial Rep ming Standards.
d. ·Change amounts reported in the financial stat err. e nts of the preceding period.

1 1 . The IASB declared that the merits of proposed stan d ards are assessed
a. From a posi tio n of neutrality
b: Fro m a position of materi al ity
c. Based on poss i bl e i mpact on behavior
·

d: Based on arguments of lobbyist

1 2. What is the chronological order in the e valu�t ion of a typ ical standard?
a. Exposure draft, Standard and Discussion paper
;
b . Expost re draft, Discu�sion paper and Stan d"ard
c. Stand ard Discussion paper and Exposure draft
,

d . Discussion paper, Exposure draft and Standard

.

1 3 . What is a po�sible danger if politics plays too big a 1 0le in d eveloping fFRS?
a. ·financial reporting standards are not truly gen eral l y acc ep ted.
b. Judivi dua l s may influe111.:e the st andards .
! ••: •
c. Ust:r groups become ai.;tive. •·

d . ;r'he IASB de l egates it� au thorit y to elected \lffic.als.

I, •

14. IFRIC Interpretations I

a. Are considered author i tati ve and �lJSl be follow1:d.
b . Cover newly identified financial repo rti ng issues hot speci fi call y add ressed l·
I
.

c . Cover issues wh ere unsatisfactory or conflicting interpretations have developed

I
d. A l l of these are correct regarding IFRIC Interpretations

1 5 . What is the authoritative siatus of the Conceptual F ra mework?

a. The Conceptual Framework has the highest lew1 of autho rity .

j- -- b. I n the absence of a Standard or an Interpretation that specifically app l ie s to a transaction, the I

Conceptual Framewod. should be wllowed.
I
.l
In the absence of a St:mdard or an Inte rpret atic
I
c. n that specifically appl i es to a t ransaction .

managem;!nt should cc•nsider 1he applicabiliiy o f the Conceptual Framework in d evel o ping
and app l y ing an accounting policy that results in°information that is relevant an"d reliable.
J. The Conceptua l Framework applies orrly when n·�w or revised standard are dev elope d .

1 6 . What is the objective of financial statem ents?

a . . To provide i n fo rmati o n about the financial po siti on performance and changes in iina11ci:il
,

positio n of an entity th<1l is tisefol to a wide range of u sers in making econ omi c decisions. ·
.
.

b To prep are a s tat em ent of financial po si ti orr an i n� "rn"e statement, a statement of cash flows
.
•
.

and a statement of chaiiges in eq ui ty.

c. To prepare comparable, relevant, reliab l e and � 1der�tanda�le information to i n vestors a nd
.

cted i t o rs.
d. To prep are financial statements in acco rd ance with all app l icab l e Standards r:nd
Interpretations.

1 7. What is the objective of fmancial reporting? 11

a. To provide information that i s useful in r:nak.i.ng i1 1vesting and cred it decisions.
b. ·To provide information that is useful to managem ent.
v. To provide information about those investing in me �ntity.
J. All of these.

1 8 . The te rm "assessing cash flow prospects" as an a bjec ci � of financia reporting means

v l

a . Cash basis is preferred over accrual basis

of accou n� mg
.
cash re�e1pts and cash payments is co ns id e red the
.

b. Information about the financial effects of

n erate fav orable cash t1 ows .
best indic ator of continuing abilit y to ge .
e. 0ver t he I ong run, tre 11ds in revenue and
expenses are generally more meanmgful than
trends in r.ash receipts and payments. .
1\. All of thes•! :lre correc t regardi ng assessm g cash <
..
�w
pr�spect::. . . . . tt=•
. _

'5863
-

...
 Page 3
1 ,1_ \\.'h icb of th1� foll owing bas
ic
•

1 accoun tmg
·
S 1s thrc,·at enecI l1y the e xis
. . .

1ni auon rn l Ile econom y?

· · · . umpt l<1H
.is:s · ·
• te nce ot severe
a. Mo nctar�1 unit assum ptio n
b. Per iod icit y ass um ptio
i,
c. C1o ing concern asstmi ptio
n
d. Economic en t i ty ass uin
pti on
.
. . .
2ll. D urin g, the . tim . .e or · 1· t::1.1 t"1ty, accoun
'' • •

. . a
'
, life
proct ce
•

fimmc1al s tatements at arbitrary po111ts in

· · · · ·

tm�c .m ac co i d anc e wit h wlu ch

, • . •
tants .
•

... bas ic acc oun ting co1 1cep �?

a. Co st and bend1t �
cons�raint •

b. Periodic ity assumption \,, ·

c. Materia lity constraint
9. Expense recognition p ri nci pl e

.
2l . Which of the foll owin g terms best describes•fin<tncfal statements whose basis of accounting •

recognizes transactions and o ther events �'hen t he y occu r?

�1. Accrual basis o f accuu n t ing
b.· Going concern basis ..if accounting
c. Cash basi�> o f accouming
d. Invoice basis of acco1mting

2.2. Whid1 of the fo llowing is a fundamental quality )f useful accounting informat i on?
�l. Comparabi lity
b. Relevauce
_ . (\)nsistcnc�
LI. Materic:ility
..
• • ! 111•
.
:�3. To achieve faithful rcp1·csentation, the lin:mcial ;tatements
a. Must have predi ct i w and co nfi npat orv value.
b. Are complete, neutral and free frQm bias and ' rror.
..

c. Arl� comparable. understandable. verifiable aid timely.

.. .

d. t\ll o f l hese

24. Which of the followin:� 1s an enhancing q u a l i ty that re lates to b oth relevance and faithful
representmion?
a. C om para b ility
b. Confirm ato ry value
c. Predictive v alue
.cl. Freedom from error "
, !
.
25 . What i s the unclerlying concept that supports esti m ating a fixed asset impairme11t charge?
a. Substance over fo1m
•
·

h . Consi:;tenc\'
\.'.. V
! h:ttching
d. h:1ithLd representa11011
. . . '
26. What is tl1e concept th�,t supports the is:; u;:inc:.: 1i." i n terim repom? •

a. Re levance ·

�>. Materiality
c. Consi stency
d. Faith!Ul representai ion

2 r. W hich of the following is not a qualitat!ve characteristic of fin ancial statements?

a. Mat eria l ity
b. Understandability
c. · Comparability
d. Relevance
 Page 4

28. What is the requ irement ti'>r i ncorp orating an item intO th e income statement or statem em of
fi nanci al position?
a. It meets the definition C•f relevance and faithful r� presentation.
b. It meets the d efi ni t i on of an e lem en t and can be measured reliably
• '
•

'
1t satisfie�. the criteria of capital maintenanct:
•
c.

d. It meets the requi remen t of comparability and cc.-1sistency .

.

29. Which of the following is uot a b as ic elcn;ent of fin ; ncial stateri1ents?

a. Asset
b. S tatement of financial position
c.· Equity
d. Liability

30. Generally, revenue from sales should be recognized at a po i nt when

a. Management decides i t is appropriate co do so
b . The product i s avai l ab l e fo r sale t o the ultimate: consumer
c. The ei1tire amount receivable has be n collect�d from the customer and there remains no
e •

fu rt her warranty l i ab i lity

d. None of these

3 1 . Where is materi al i ty not used in provid ing financia� information?

i. Applying the revenue recognition principle
b. Ddennining what itc1 .-is to in dude in cbe financial statements
c. Applying the going concern assumption
d. • Determining the level of d isclosure •t: •
· '
!

i
1- -
�- 32. The Concep tual Framework includes which of che ; allowing constraints?
•

a. Prudence
b. Conservatism
c. Cost
d. All of the choices are constraints in the conce� tual framework

3 3 . Which of the fol l ow ing i ·; true regarding the cost-benefit co nstrai nt?
a. Benefi t!; are more di!'ficull to quantify than coses.
b. The IASB seeks input on costs and be nefits as part of due pro cess .
..:. Bendit:> to pre p arers may includ� access to capital at a lower co
st .
d. All of the cho i ces an: correct.

:1 4 . All o f the following represent costs of providing L·nancial info rmati n, exce
o pt
a. Prepar ing •

b. Disseminating
c. Accessing c�pital
d. !\ uditing
.
1 5 . Which of the fo l l o w in g is a benefit of prov iai ng t rnc,pcfal information?
a. Potential litigation
b; A u d it i n g
c. Disclosure to co mp di t i o n
d. Improved allocation of resources

3 6 . Under PAS 1, of the following statem ent s .s t rue about PFRS requirements?
v1hicb
a. Prior year comparative financial stac�mems are requi red.
b: Incom e statements f or three ye ars are req�med. •

are required.
c. Statements of financ ial positi on for three yeai s
regardin g compara tive financial statements.
d. There are 110 specific requirements
\.
nt or noncurrenl is conversion to cash within
'
' 37. The ba.sis for class ifying assets as cune
cheve · is shorter.
.
a. The acco unti ng eye le or one year, whi
�
b. The o perating cyclt: or one year.
whic ever i: ; shorter.
_
�
··.
. whic hever 1s l on ge r .
c. fhe a•.:countmg eye 1 e 01 one year ,
. •

n; l1ichever I i longe r.
.

d . fhe oper ating eye l ·:· 01 one y c�ar, ..

�'\.
. .
.

I '
•
5863 .
 - -.....··-- ..

Page ·s
l. ..
.. ,. i: .i[l e
ntity us::s the mod ified ·cash .
. b as1s ot ace't) um ng .
.·

:•N S snou Id h ave substantial support

· • the mod"fi
1 cations from the pure cash
which rcqu.
.
. . The financial state m e nts have onl), .
u� s • lat
·
mmor mod1ficat1ons from GA AP.
i '. The m odifi catio ns mus t be th the same as those requ : r
ed by tax law.
L The mod ifications mus t be ·
e same as GAAP anc not 1· 11og1cal
.. No modi fi c ati o ns are all, ,wed. .

39. An ept ity is req uire d to prenare a th. .

beginning of the
. . .
ird s emenL ot tr nanc1 aJ pos1tiotr at1tte
�arti es t iv � t
per od w he n t he e nt1 t)
.
comp arat e i •

..i. .'\pphes an account i ng roli cy

retrosp .: :· .:;.
.
ecti�·e1y .
'.1. Makes a retro s pective rcs 1ate
crl ttem s m t he : mancial statements.
· .
_

. . ment
Recl ass ifies items i n the- financi al
sta
' tem ents ·
� .

J. All of the s e

?.
40. W hic h of the fo l lowing 1· s n o t require
·
·
· d to be present· ! d as a mm1murn mfonnat1on
·
.
· ·
·

:i. l nv e stmen t prope rtv ; I

I
I
I �

b. Investment ac c� un�ed for under the equity metho1l

i I

c. Biological assel
d. Contingent l iability

4 1 . The statement of financial no s i ti on is usefui for all oi the following, except

:1. Assessing r isk
o. Eva l uati ng l i q uidi ty
c. E va luati ng financ ial flc xibility
d. Determining free c ash lows ..

4:?.. The correct ord..:r tv p resenl current asscls i!

a Cash, accoW1ts rece ivaole, prepaid i tems, il\vemcrit!s
. • •

b. lnventories, ac coun ts r•:ceivable prepaid items. -: 1sh0

I
. I
c . Cash, invcntories, accc unts receivable. prepaid ii�ms.
d . Inventories. prepaid items, accou nts reteivable. t as h
•

43. A l imi tat io n of the statement of financial positi"n that 1s not

a limitation of the income

statement is
-a. The use of judgment and estimate

b. Omitted i tems •
empl oyed
c. The numbers are affected by the accotmting m:thod
d. Valuation of items at histor ical cost
..

44. Enti ti es sh9uld separately report all of the following except

a. Assets ar.d liabilities with different general Jiqu1 foy chaFacteristics.
b. A ssets arid liabilities that have been financed "' 1 h different types o f instm m en ts.
c. Assets that differ in th-:ir expected function in the entity's c en tra l op erations .
d. Liabilities that d i ffe r in amount, timing. and nature.

pe ri od frc m a 1 2-momh pe rio d to a 1 5-month period.

4 5 . An enti t y dedded to e x tend the reponing
not req ui re,j . asc: 0r· v 1�mge in reporti n g peri o d?
\Vhich of the- foll 1nving i� in

should disclose the reason for using a fo n ger peri od tnan!<f�riod of 1 2 months.
a . The entity
repo rti ng pe1 iod on l y if other similar entities in the
h. The entity should change the •

geographical area in which it ge neral ly operate:; have done so in the current ye ar .

c a m. nmts used in the fi nanci al st atem ents are not ·
c. The enti ty should di s l o s e that cornpar:nive
•

entirel y co mp arab l e .
d. The entity should disc l ose the pe rio d covered b: · lhe financial statements.

ation is not specifiCJlly a required di scl o s ure?

46. Which of the following ir forrn !

ng t ity or other m e an � of identification , and any c han ge in that

a . Name of the re p o rti
e n _

s r
information from the �ire v1ou yea
s of the emi ty
b. Names of maj or shareholder
c. Leve l of ro und in g ust. d in presenting the financ . al statements
statements cover the indi·.ridual entity o r a group o f entities
d . Wh ether the finan c i a
l

5863 .:
 Page. 6

4 7 . The income statement provides information that is u>eful for all of the following, except
a. To evaluate future performance of the entity
b. To provide a basis for predicting future perform; 1nce
To predict the :imomn. tim i ng and unc ertai nt y 01 future.cash flows
·
i:.

d. ·To assess the risk and u ncert ainty of achievjti.g f.1\ure cash flows
. . ' ....

48. Which of the following components of OCI will be reclassified to profit or loss when specific
.;onditions are met?
•

a. C hange s in revaluation surplus

b. Remeasurements of ddined benefit plan
c., Gai ns and losses from investments in equ i ty inst ruments measured at FVTOCI
d. The effective portion of gai ns and losses on he d�ing instruments in a cash flow he dge

49. For financial li abiliti es designat ed as at fair value: through profit or l os s, the amount of the
change in fair value that i:; attributabl e to change in the credit risk is
a. Component of other comprehensi,�e income
b: Incl uded in profit or l<•ss
c. Recogni zed directly i11 retained earnings
d. All of these

5t1. An entity recognized a l arge restructuring expens•: in the curren t year and had exper i ence d a
constantly rising earn i ngs since that time. This wouid most nearly represent an example of
Cookie jar rese rve
•

a.

· ,
. .
b, Creative acquisition accouining
c. Big bath accounting
d. Using transactions to increase reported earning;

5 i . Dete rri ng the recognition of revenue for which the !amin g process is complete is an example of
a. Big bath accounting
b. Stratcgi e matchin g
c. A change in accounting estimate
d. Cookie jar reserve

s:�. Which of the following is not an acceptabl e \"ay of d isp l ayi ng the co mpo nents of O(her
com pre h en:; ive inco me?
a. Combin ed statemer.t of retained earning s
•

b. Second income stat-:!ment

c. Comb in ed statement of comprehensive income
d. All of the above arc- accepta b le

SJ. What is the purpose of the notes to financial statements?

a . To provide disclosures req u ired b y GAAP.
b. To correct improper presentation in fi n anci ;il st:ueme�ts . . • •

c,. • To provide recognition of amounts not in�ruded in the total of the iA t' kcial statem(!nts.
d. To present mana�em•!nt response to auditor comme nts

·
5 4 . The full disclosw-e p rinci ple is best de.scribed by \\hich of the following?
n. All inform ation related to
business and op eratiirg obj ectives is req uired to be d isc losed i� the
financial statements.
balance appearing in the financial statements is to be
b. lnfonnation about each account ·

cial sra1e mems.

included in the notes to finan
sclose� � n th� financial sratements so a person w ishi ng to
c. Enough information should be d �
. i nvest in the entity c:m make a
wise d�c1� 10n.

d. Disclosure of any J i nan c i

al facts s1gruficant enough to influence the judgment of an

i·
informed reader.
j
I
 Page 7
_.;:; . \ppltl:atio n 01° �he lUJl lJiscli)SUre pri ndplt: _ .

Is theoret1cally . desi rable b ut not praot1ca1 because

the costs of complete discl sure excee
a.

the bl.!neli1s . d �
h. I s vinl at ed when i mp ort ant financial
in the notes to the financial
statements
in�ormat
. .
110 is .
.
. buned

l·: demonstrated by the llse .

o f supplementa
�\ 11�format1on presenti11g the effects of
c. .
. .
changi ng prices.
J. Requ ire:; t hat the tinan ci I statem
� •
�
ents must h e , o n is te nt and comparable .
•
.-\6 . .-\:: or lhl! folL)\vin g, s· tatcmi.: nts :tre true reg<trd11· 1g m:enm financia
l repo r1 ing except
• · • ·

.
· ,

a. . )
" S requ ire s a comp! i;;·te set of fimu . :
m :ia
. . I statemt : nts at the mtenm
. PI'l .
�1- Pl·RS requires entiti e·s to expense ·mtenm ·
, •
reportin g date.
. . . •

. .
.
amol nt like adve111smg expenditures that could
benefit later mtenm periods
c. PFRS does not mention the in tegral and indepenctent view of interim reporting
'
•

<l.
.
• No accruals or deferral s in anticipation c;>f future � ven ts during the year should be reported .

57. Under PAS 2, which of th,: following inventorv iter.1s is not valued at the lower of cost and net I

r-.·alizable v a lue ?
· ..

J
•

a. Manufactured i nv ent ot y
b. Retail invc:.ntory
c. B iolog ic a l invento ry l ·

d. Industrial i nwntory
i
SX . V aluatio n of inventories requi res determination o f a· I of the following, except
�1. The cost� In h·:· inc l udnl in inventory !
The physic :1 l goods 10 ie induJcd in i n , cll!vr\
• t: • /·
b.
from· �tht•r ent i tl es
• •
! ,.
c-. .The cost of goods held on con s ignment
cl. The co st flow assumption to be ado pted
•

I ...
-/.
I
!
59. Which of the fol lo wing statements is i'hcorrcct regarding LCNRV?
NRV is estimated sell i ng price less'estimated co�t to co mp lete and co t to make a sal e. s f •
:r'

J­
a.

b. in most situat ions, entities price inventory on a !Jtal inventory basis. i

.•

c. Two methods may be u sed to record the income e ffec t of valui ng inventory at LCNRV. i /
I ,/
d. Entities can use an allowance account in reducing inventory at NRV.
. .
6(1. When the co st of good s S(•ld method is used to reco,d i nve ntory at NRV
a. There is direct reduct i u n in the selling price of lite inventory.
b. A loss is debited direcLly and c rediced t0 invem � r) .
c. Only the portion of the l oss attributable to inventory sold \s recorded.
cl. The NR \! is sub s ti tutc J for cos t and tht· loss is t uried in _cost o f go o ds so ld .

6 1 . lf a material amow1t of inven tory has b�en orderd

thro ugh a formal purchase contract at the .
•

n date for futur e deliv �ry at firm prices

statement of financial po:-:itio

a. This fact must be disclu sed.

b. Disc losure is req u ired only if pricc-5 ha · e deciin �d since the date of the order.
c. Disclosure i s req u i red only· i f prices have since en �ubstam ially. A
d." An apprn priario n of reta i n ed e�in gs i s ry .' necess:·
.

62. Gitµations i n which net realiza ble value is used to , nea�ure im�entory include
a. Agricultural inventor�·
b. M inerals and mineral products
c. Commodities held by broker-cradc·rs
d. All of these

ed to. app1'oximare inventory at LCNRV is

63. An inventory method which is design
a. LIFO
b. FIFO
c. Conveniional retail m ethod
d. Specific identificatio 1 <
 Page 8

.
64. Lower of cost and net realizable value as it applies l•> inventory is best described as the
a. Reporting of a loss when there is a decrease in the future utility below the original cost.
b. Method of determining cost of goods sold.
c. Assumption to detennine.inventory flow .
..!. Change in inventory value to net realizable vaJbf:.
•

. 65, .What is a LIFO reserve?

a. The difference between the LIFO itiventory !n1d the anrount used for internal reporting
purposes.
b. The tax saving by using LIFO
c. · The current effect of using LIFO on net income
ct". Change in LIFO inventory during the yea r •
66. Which is not a common disclosure for invt!ntories?
a. Inventory composition
b. Inventory location
c. Inventory financing arrangement
d. Inventory cost method

6�1• How is a significant amount of consignment invertory reported in the statement of financial
position?
a. The inventory is reported separately on the con:;ignor's statement of financial position.
·

b. The inycntory is combined with other inventc ry on the consignor's statement of financial
positio11
�- The inventory is reponed separately on the con:;ignee's statement 01�n11ancial position.
d. · T e inventory is combined with other inventc ry on the consignee's statement of ·financial
h
position

d
6.). During the year, an entity transferre . inventory tt another entity and agreed to repurchas�
the
merchandise early i n nexr year. The transforee use..t the inventory as collateral to borrow from a
bank, remitting the proceeds to the transferor. \.V hen the transferor repurchased. the inventory,
the transferee used the proceeds to repay the bank loan. This transaction is known as .

a. Consignment
.

b. Installment sale
c.. Assignment for the benefit of creditors
d. Product financing arrangement

69 . An entity purchased a building and the seller J1 .cepted payment partly

in equity shar('s and
partly in debentures of rhe entity. Under PAS 7, this transaction should be
treated in the
statement o f cash flows 2.s which of the following·;° •

a. The purchase of the building should be investing cash outflow and the issuance of
slrnres
and the debentures fi.1ancing cash outflows.
b. The purc h as e of the building should be il lvesting cash outflow and the issuance
of
d e be n tures financing. cash outflow while the i�: ;uance o f shares investing cash outfrow.
c;. The transaction does not belong in a statement .Pf
ca.5h flows and shoul d' be disclo sed ortl y
in·
•

.
the notes to the financial stateme
• •
nts.
d. Igno re the transaction totally since it is a nond.sh t�ans ac ti o n .

70. Most entities imerpret that significan t �oncash i nvesting and financing transactions should.
be reported
a. In the statement of cash flows.
'>. I n the note s ro the financial statemen
ts. •

;�. · In the statement of finan cial � ositi on. �

• •

ol the statement o f cash flows.

·i. In a separate schedule which is part

· a '' Vould affect both financ ing and operating activit ies?
, i . Which o f t·] 1e to 11 owmo
�. ·
·
·

\ a. Issu ance of equity shares

\
\ o. Coi lecr ion of Joans £..) other
entitie s
'�
·· !.>ay ment of dividencs
d. Redem ption of debt
58 63
 Page 9
r:.. Om:_ l�I: the
l i e.ne fits of the statemem
of c.::ish flov is j ts· th t .Lt help .

lkx 1b1h ty . W luch of the foll o wing e x pl

ru
. � s users aluate finano1al
. tton of financial fl ibility?
Tltc nearness 10 cas1
1 at 1 o n s is a . e sc n. p
'
I 01 assets and l iab i l Ities r:
a. ·
,

b. The enti ty's abil ity to respon

'
. . T
d and adapt to u n ancial adve
•
rsity and unexpected needs and
opport uni ties.
c. _T � :
he ent ty s ab lity to pay de � bts 011 maturny .
d. fhe entity s abi l ity t0 i· nvest 111
· · a number of.proj • • · • • •J • ·

i:cts with different ob1�ctives and cos1s.

73. To arrive at net cash provided · g acu · ·

bY operatin
•

v1ttes, It
·

· ·1s necessary to repon revenue and

expe nses on a. cas h basi s . · rhis is d
a.
one �y
Re-recordmg all inco111e Statement
tr::insactior.:; 'hat directly affect cash in a s eparate cash �.· '-.
al .
. ·

•
flow ,1ourn
Estimat i n� the percemage of income statement tran .!
sacti ons chat we re origi nal i y reported on
b.
a �as� b�s1s and proj e(.:t in g this amount to the /.

I
entire array of income statement transactio1"is.
s that did not result in a
c. Eltmmat111g the effects of i ncome statemt·:1t transaction
corresponding i nc re ase: or decrease in .:ash. !
J. E l i mi nat i ng �1\1 Lran�;actions that han· no c urrent or future effect on cash, such as
deprecia tion, from the net income'computation.

74. An entity other than a ti 1 1anc i al institution receiv.:0 di v i dend s from investment in shares. How
should it d i sc lose the d i vi dends rt:ceived .in the staHment of cash flows? I. ,.
I
a. Operating cash inllov !
b. Either :i:; opt rat i ng �·:Vih inllow or as investin� , ash in flow
· !
Either a:; oper a tin g c:· sh inflow or as ti11:111c1ng :ash inflow i
/,
c.

cl. As an adj ustme nt in the c+ perat i n g activities'" � ection of the cash flow because it is i nclude d • • "T
I

I •
" I

in the n�t income for the year and as a cash i 1 1.ffow in the "financing activities" section of
' f'
the state ment o f ca sh flows. l
. .
. . ,/
.

75.
'
How should an unreal i:zed gain on foreif!n currci-. cy t ransaction be p re sented in a statement of
cash flows?
·

a. As an intlow unde r "financing act!vities . . because 1t ari ses from a foreign cu rren cy
t ran sact ion .
b. It should be ignored as it is an unrealized �in.
c. It sho u l d be disclosed in the not es to t'he finam ial statements by way of abundant precaution.
d. As an adjustment to 1he net i ncom e u11der .ope rat ing activities".
.

'!6. U nder PAS 8, which ot the following i:' the firs r step within t he h i erarch y of g ui dance wh en
sdecting accounting policies?
a. Consider the mos t recent pronouncements of ..: t her standard setting bodies.
b. Apply a stand ard from PFRS if it specific3 !ly re late s to the transaction, other event or
condition.
c. Co nsider the app l ic ab i lity of the de fi n it io n s . · eco gnit io n criteria and measurement concept5'
·

in the (onceptu:ll F1 nmework

App ly the requirenll'ms in PFRS de :.il i n � ,., it!. similar• anJ related
• • ! • I:•
d. issues.
• •

77. A vo l un tary chan g e in accounting policy ma y onl y' be made if

a. A new standard mandates the c h ange in po li c :'

b. Ma nag eme nt prefer:: t he new polj cy

c. The new policy provides reliable and more re �vant information
d. There is no prohibi tion for the change.

78. An entity changed t he method of valu:nion ot i nv ento ries from weighted-average method to
first-in, first-out method. The entity should accornt for this change as
a. . A change i n estimme and account for it prospectively.
b. A change i n accour: ting policy and a.:count i i 1 r it prospectively.
A c ha nge in accounting policy tmd H
< .:coum ll1r it retrospectively.
A co rrec t io n of' an nror ant.I a c co unt for it retrospectively.
 Page · J O

?<>. Chnngc in accounting polic y does not include

a. Chan�c in use fol lite or a depreciable asset.
h. Change of' me!hod of , alumion of invt!mory fron FirO to weighted avera�e.
Ch•mgc of nH::thod ot v al uat io n uf invemory fror;J weigl}ted average ,t� IFO.
c.

ct. Change from the pra..:tice of pay ing as C:lirist m as bonus one thontn salary to
J t.tie new
practice o f paying one half month salary.

80. When the residual value o1plant and cMchinery hac.i dras tic al l y changed, the entity should
a. Retrospectively chang;; the depreciation charge :>'ased on t he revised residual value.
b. Change the dep rec i ation charge and treat it as a ·;cirrection of an error.
c. Clumge the annual dep rec iatio n for the c urr e nt year and future years.
<l. Ignore the et1ect of the change on annual depreciation.

8 1 . U nder PAS 10, which of t.he fo llo w i ng events after :eporting period would require disclosure?
a. Ret i rement or th e en ti· y president
b. Set t le me nt of litigation when the "event that ga'te rise to the litigation occurred prior to the
rt'porting dak
c. Strike ol employees
d. ls::;uc or \urge number o f ordinary shaJ·<.:;

8'.'.. An entity deals extensively with foreign \!n !itics. and the financial statements reflect these
foreign currency tran s ac t io ns . Subsequent tc tl1(' end of reporting period, and b�for� the
i�:suancc of the l inanciaJ .,tatements, th ere ,,vere abnormal fluctuations i n foreign c u rrenc y rate s . •
•
• .

How should the entity account" for this event? . • , •

•

u. Adjust till' forei gn c::x change year-end balance:- to reflect t h e abnormal adverse fluctuations
, in foreign exchange rate.
b. year-e�d balanc ; s to reflect all the abnormal fluctuaticins in •
Adj ust the foreign e:•change
foreign exchange rates and not j ust adverse mo'1ements.
c. Disclose the post-reporting period event as a nc nadjusting event.
ct. Ig nore the post-reporting period event .•

8 J . l\t the end of the CW'rent rep o rti n g pe ri o d.. an entity carried a receivable from a major customer. •
The customer declared bankru p tcy after the end of reporti ng period but p rio r to authorization of
!inanciaf statements. How should the entity ac co u1 1t for th i s event?

a. Discll).se in the notes the fai.;t that the customer declared bankruptcy.
h. Make a provision for chis post-reporting pe"i-iod �vent
c. Ignore the event
d. Reverse the sale p e 1tai ning to this receivable in J1e comparative statement for the prior p�riod
and treat this as an error.

S4. /\ co nstru ct i o n entity

signed a conu·act t0 build : theater over a period of two years and also
�:igm:dmain tenance w,nracr for ii\'e ye.H's. 13ett c on trac t s are negotiated as a single pa,�kage .
a
! • 1:
•
•
•

Uuder PAS I L how should the two contracts be areountea for?

�

a. Combirn!d and treatec as a si n g le contrn�t

b. Segmented and considered two se:p arate contracts
L:. Recognized under the cost recove'y m e th o
d
•

d. Treated di fferently, th� building c on trac t under :he cost recovery method and the maintenance
contract u n de r the p er ce ntage of compl etion metho
d.

XS. Co ntra ct revenue in con�:truction contract

comp ns•:s

a, The iniLia.l amount 01· revenue agreed in the

contract
b. in contract work, claim and incen tiv:: payment .
. .

m
Variation
the c: vanati on
The initial amount of revenue � r
a eed in mtract , contract work, claim and
c.
incentive payment.
•

.
. .

· I am ou n 1 o 1· re,, ...,.. nue agreed m the co,1tract ,md progress b1llm .

.
d . Tl · · t1a
1e 1111
gs

5863
·,
'
'•
 Page l\
°
�, in a con
.
struct ion contract, lhe tenn "variation" mean ;

c The i nit ial amount of re venue agreed in the comract .

b An instruction by the c usto me r for a change in ti ··· scope of work to be perfon
: ned.
<: . An am ount that the contractor seeks to c o l l ec t tr»m the customer as reimburse
. . . ment ,or
" ·�ost
not mcluded m the constructJon contract .
d. ·An add it io nal amount paid to the contractor·if spc"cl.fi ea performance stand 'ards are met.
87. When it is p ro bable that contract costs exceed conm.ct rnvenue, the expected loss should be
"set off agains t profit of other contracts where a'hilable
•
a.

b. Recognized as an expens e immediately. unless :-�venue to date ex ceed s costs to date

c. Ap portioned to the years of the co ntrac t accord ii 1g to the stage of completion
d. Rec ogni zed as an e xpen se i mmediate! Y_

88. All of the following could be va i i d reasons •Wh} the expected revenue from a fix�<l price
co"nstruct io n contract has increased from tfie originLI contract pri ce , except

a. The costs in the contract have increased and the ; ontract i n clude s cos t e sc al atio n clause s.
b. The contractor has i ncurred additional costs due to errors made by its employees.
'

c. The co�tractor has agre ed variations to the comnct with the client.
<l. The contractor would receive an i n centi ve paym :nt if work continues ahead of schedule.

89. In re l ation to constructio n contracts, all of the follov;ing s ha ll be disc losed , except
a. The method used to determine the stage of comr·letion
b. The metl10J used to determine the cont ract revenue in the perio d
;: . Advance) rec l! ived in .:ash analyzed according . , tach mate ri al contract
<.i. Tota.! amount of contract revenue recoguize� in •?e pe1 io d •. •la
/.
! I

90. U nder PAS 12, which temp orary difference would 1 esult in a deferred tax liabi lity?
a. In terest revenue on municipal bonps
b. Accrnal of warranty expense
c. Excess tax dcpreciatic·n over financial depreci:it.un
d. Subscription reve nue �eceived in advance

9 ·, . Which t em p orary difierence would result in a defe1 red tax asset?

a. Tax pen al ty or surcharge
j •
b. Di vi dend received on share i nves tmen t I

c. Excess tax depreciati<m over ac co unting deprec.:u ion

d. Rent rece iv ed in ad vance included in taxable in :ome but efe rred for financial acc ounting
?
.!
I
92. Ta xable income of a corp orat io n
a. Differs from accountin g income due t.O d iffe rences i n interperiod all oc at i o n between the two
methods of income de:ermination.
I
I

/
b. D i fters from accounting i ncome du e to differe:1ces in interperiod al l oc ati on and pem1anent
differences betwe e n the t wo methods 01 incom e determination.
ls based 011 imernatio11al tina.ncial reponmg :>ta uards.
..
c.

d. Is rep orted on the i nco me statement. • I

. . I

93. The deferre d tax expense: is the . .._'(

a. · Increase i n d eferred tax ass et minus the increa�e in deferred tax liability.
b. Increase in deferred tax liability minus the inc:r �ase in deferred tax asset.
c. I ncrease in de fe rred tax asset plus the increase in deferred tax liability.
d. Decrea�;e in defen-ed tax as s et minus ihe increJse in deferred tax l iability.

94. Which of the follo wing is correct abou t tl1e p�se1,tation of deferred tax assets and liabi lities?
a. Current d eferred tax assets are netted against c .ment deferred tax liabilities
b. All non current deferre d tax assets are nened apinst n oncurren t d e fe rred tax l i ab il it ie s
c. Deferred tax assets a re never netted against de: erred tax liabi Ii ties
d. Deferred tax assets are netted aga i nst def�rrec tax lia bil i ties if these relate to the same taxing
authority.

5863
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9 5 . All o f the following woulJ result to a deferred tax ...lsset, except

.
a. I nterest expense is acc rued but inc luded in tax.a l.le income on a cash basis . .
deprec iati on . 00
The financial accumu lated depreciation is grearc r than tax accumulated .
m "'
m e
b. .
. hzed and 1mort1ze d but were 1· nc l u t 1
Development costs hr1ve been cap1ta
. de rm
c.
. de d
.

taxable income in the perio.d inctll'red

• •

d . · The tax b ase of an asset is greater than carrying aihount

.

96. Wh i ch of the following statements is true about int rapt'l"iod

tax allocat ion?
st ateme nt Cith er b efore
.

e the incom e
a. 0It arises becau se certain revenue and x p ens e s ' 1ppear in

or after these are included in the tax ret tll'n. .

b. It is requi red for the cumulative effect of accouLtmg chan ges
. . d en-or�.
but no t for pnor peno

is to allocate income tax expe nse o ver a numbe r of penods

_
c The pu r
f;ect the am ounr o f tax
rnose
·
·

whi ch af
•
•

d� The purpose is to relate the income tax expense to th e items

. . .

97. Under PAS 16, which of the fo llo wing is r{ot a maj or characteristic of a plant
asset?

a. Possesses physical substance • ·

b. Acquired for use in operations

c. Lon g-tt!rrn in nature •

d. All of these are major characteristics of a plant <1sset.

98. The reval uat i on surplus resulting fro.m initial revaluation of property, plant, and equipment
should be
a. C redited to retained en rn i ngs .
b. Released to the incom:: statement.
c. Deducted from curren t assets and added to the Fl'Operty_, plant, U1.1P r�WJpment .
d. . Credited to revaluation surplus •
· '
99 . The activity method of depreciation
a. ls a vari abl e charge approach
b. Assumes that dep reci a tion is a function 'of pass3 ge of time
c. Results in constant charge to depreciation exper se
d. Re sults in a decreasing charge to depreciation e::pense

l 00. Which of the fo l l owing disclosures is not required for property, plant and equipment?
a. The ex istence and amount of restriction on title
b. A narrative discussion of future capi tal expendi1 ure plans
c. The depreciation method used
d. The measurement b asi s used for determining tht: gross cru.r ying amount

I 0 I . Which of the following most accw·ately reflects th·� concept of depreciation?

a. The process of chargmg the dec l ine in value of an economic resource to income i n . the ·
period in whi ch the benefit occtll'red.
b. The process of al lo car ing the cost of tangibl e r.sset to expense in a syste matic and rational
manner to tho se periods expected to b ene fi t fron the u se of the asset.
c. A method of allocating as�t cost to an expense. acco_u nt in a manner wh1ch closely matches . .

• the physical deterioration of the asset.

• '·

d. An acc ou nti ng concept that allocates the portiC"n of an asset used up dur ing the yea 10
r the
contra asset account for th e purpose of properly. recoi'ding t�e fair value of the asset .
•

1 02 . Which of the fo l lowi ng statements is correct?

a. Assets are depreciated even if th e fair n l uc exc:.:eds carrying amow1t
.'
b. Land and building art n t accounted f�r sep rn .dy when acqui red together
? �
c. ? �
A no curre t asset acquired as the result of an t :xchange of assets is not
recognized ·
d. A gam o n disposal o f a noncurrent asset is clas!:ified a s revenue

E N D
5863
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