4 c Ne The Review School of Accountancy First Pre-Board Examination 08 February 2014 10:30 AM - 12:00 NN WV Theor, of Occounits ISTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer for each item by shading the box corresponding to the letter of your choice on the answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 2 only. SetA 1. The objective of general purpose financial statements, according to “the Conceptual Framework, shall be to provide financial information about the reporting entity that is useful to all of the following, except a. Lenders b. Potential investors Prospective customers d. Existing shareholders 2. A cash short or over account a. Is a contra-cash account b. Is not an accountable account title ©. Is credited when the petty cash fund proves over d. Is credited when the petty cash fund proves short In a single statement of comprehensive income total comprehensive income a. Always b. Only if expenses are classified by nature c. Only if there are no reclassification adjustments d, Only if an entity has no item of other comprehensive income profit is equal to the PAS 10 covers adjusting and non-adjusting events after the reporting / period up to a. Date of financial statements publication Js. Date of authorization to issue the financial statements “c. Date when financial statements are approved by shareholders d. Date when financial statements are filed with the regulator 5. It is a method of accounting whereby the investment is initially recognized at cost and adjusted thereafter for the post acquisition change in the investor's share of the investee’s net assets. a. Cost method _ b. Equity method ©. Fair value method d. Consolidation method 6. “Freedom from error” relates to which qualitative characteristic of / the Conceptual Framework? a. Relevance b. Verifsability c. Understandability f# Faithful representation 7,,When accounts receivable are pledged, in addition to the disclosures “ required, total receivables will Remain the same 0. Increase “C. Decrease Gd. Increase or decrease depending on the circumstances i eigerccreemaeicer rae argrrmer-mmcreveronemtnrsesnepspceeiiee ieee co© 8. PAS 1 precludes an entity to present or classify this account as » Gurrent in the statement of financial position. Provisions Prepayments Deferred tax assets Available-for-sale investments B +¥ under eas 9, changes in estimates that result from new information "7 nade available to an entity shall te treated as a (an) Extraordinary ite Normal recurting adjustment G. Correction of errors rectified prospectively 4. Correction of errors rectified retrospect ively Cy 20.Under PFRS 13, fair value is defined as “the price that would be received to sell an asset or to transfer a liability in an orderly transaction between market participants at the measurement date.” Which of the four measurement bases mentioned in the Conceptual Framework is essentially used te mean fair value? 4. Historical cost bd. Current cost ©) Realizable value d. Present value A ttelhen the carrying amount of a non-current asset classified as held / for sale under PFRS 5 is lower than its fair value less costs to sell, then a: No impairment loss occurs b. Impairment loss shall be recognized in profit or loss ©. Impairment loss shall be recognized in other comprehensive Impairment gain shall be disclosed in the notes to the financial statements A. }2-Under PAs 24, all of the following are not necessarily considered / related parties of the reporting entity, except #. Post-employment benefit plans . Providers of finance cc. Public utilities d. Trade unions D 913.The following statements pertain to the provisions of Conceptual Framework on the concept of Capital and Capital Maintenance: Statement I: The principal difference between two concepts of capital maintenance is the treatment of the effects of changes in the prices of assets and liability of the entity. Statement II: The selection of the appropriate concept of capital by an entity should be based on the needs of the users of its financial statements. Statement III: The concept of capital maintenance chosen by an entity shall determine the accounting model used in the preparation of its Financial statements. a. Only statement Tis false b. Only statement IT is false >. Only statement IIT is talse None of the foregoing statements is false 4 a (CL A4- Inventories under PAS? do not include 2. Raw materials b. Finished goods g Construction=in-progress 8. Goods held for resale * a eceusnunurspmpminasiiie ten spej First Pre-Board Examination (May 2014 Batch) 8 February 2014 « 10:30 AM to 12:00 NN Page 3 Bas. reontity the (1) pervasive constraint and (2) underlying assumption “mentioned in the Conceptual Framework. a. (1) Cost (2) Accrual basis >. (1) Cost (2) Going concern c. (1) Timeliness (2) Accrual basis d. (1) Timeliness (2) Going concern D ie.tne presence of “cost of sales” account” in the income statement ‘7 signifies that an entity classifies expenses according to r a. Nature b. Amounts co, Maturity # Function ® 17. the percentage-of-completion method for construction projects under PAS 11 suggests that any anticipated excess of contract costs over contzact incone is a. Not recognized b. Recognized as soon as it is anticipated ©. Recognized based on the percentage completed d. Recognized based on the cost recovery method (J Witnere there is a continuous range of possible outcomes and each point in the range is as likely as the other, the provision is measured based on Expected value method Probability-weighted method Mid-point of the range of possible outcomes Estimate of the individual most likely outcome f} .19/pas 1 requires the Allocation of profit or loss for the period “between or among I. Profit or loss attributable to owners of the parent II. Profit or loss attributable to subsidiaries of the parent III. Profit or loss attributable to non-controlling interests a. I and It bt I and 111 “c. IE and TIT d. I, IL and IIE a. Accrual basis (royalties) b. Date of declaration (dividends) A Straight-line amortization (interests) id. Percentage-of-completion method {rendering of services) B + 2ielt involves the depiction of the items in vords and by a monetary “amount and the inclusion of that amount in the financial statements. a. Realization : 3. Recognition ¢- Disclosure 3. Presentation C + 2@. which is not an acceptable basis of recognizing revenue under PAS 18? A Bes which is usuatly considered as a type I event (i-e., adjusting event) “ander PAS 10? 3” Receipt of information indicating that an asset was impaired "at the.end of the reporting period b. Abnormally large change in asset prices or foreign exchange rates ¢. A decline in fair value of investment a. Enactment of tax laws that significantly affect current and deferred tax assets and liabilities