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BALIUAG UNIVERSITY

CPA REVIEW 2014-15
THEORY OF ACCOUNTS

JACF
__________________________________________________________________________________________________
1. The overriding criterion by which accounting information can be judged is that of
a. Usefulness for decision making
b. Freedom from bias
c. Timeliness
d. Comparability
2. What is the quality information that gives assurance that it is reasonably free of error and
bias?
a. Relevance
b. Faithful representation
c. Verifiability
d. Neutrality
3. The conceptual framework
a. Includes conservatism which means when in doubt, choose the solution that is least
likely to overstate assets or income and understate liabilities or expenses
b. Excludes conservatism because it is inconsistent with neutrality which
encompasses freedom from bias
c. Includes conservatism as a required quality of accounting information
d. Includes conservatism as a desirable but not required quality of accounting information
4. Proponents of historical cost ordinarily maintain that in comparison with all other valuation
alternatives for financial reporting, statements prepared using historical cost are
a. Verifiable
b. Relevant
c. Indicative of the entity’s purchasing power
d. Conservative
5. When economic benefits are expected to arise over several accounting periods and the
association with income can only be broadly or indirectly determined, expenses are
recognized on the basis of
a. Cause and effect association
b. Systematic and rational allocation
c. Immediate recognition
d. Realization
6. Adjustments are often prepared
a. After the statement of financial position date, but dated as of that date
b. After the statement of financial position date, and dated after that date
c. Before the statement of financial position date, but dated as of that date
d. Before the statement of financial position date, and dated after that date
7. The postclosing trial balance
a. Consists of statement of financial position accounts only
b. Will balance if a transaction is not journalized and posted, or if a transaction is
journalized and posted twice
c. Shows that the accounting equation is in the balance at the end of the accounting
period
d. All of the choices are correct regarding the postclosing trial balance
8. Reversing entries
a. Are normally prepared for accrued, prepaid and estimated items
b. Are necessary to achieve a proper matching of revenue and expense
c. Are desirable to exercise consistency and establish standardize procedures
d. Must be made at year-end
9. Which of the following statements regarding reversing entries is incorrect?
a. Deferrals are generally entered in statement of financial position accounts, thus
making reversing entries unnecessary
b. All accruals should be reversed
________________________________________________________________________________________
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The asset must be actively marketed for sale at a reasonable price in relation to the current fair value d. Failure to reflect current value information b. The entity expects to realize.Which of the following is not a criteria for the sale of a noncurrent asset held for sale to be highly probable? a.One criticism not normally aimed at a statement of financial position is a.An entity shall recognize any subsequent increase in fair value less cost of disposal of a noncurrent asset or disposal group classified as held for sale as a. Gain to be included in profit or loss but not in excess of the cumulative impairment loss previously recognized 17. Management must be committed to a plan to sell the asset b. b. Deferred gain as component of equity b. When an entity makes a retrospective restatement of items in the financial statements c. Adjusting entries for depreciation and bad debts are never reversed d. In all of the above cases 11. except a. The sale should be expected to qualify for recognition as a completed sale within one year from the end of reporting period 16. entity must disclose comparative information for The previous comparable for all amounts reported The previous comparable period for all narrative and descriptive information The previous comparable period for all amounts reported.An a. When an entity reclassifies items in the financial statements d. The component must comprise a separately reportable segment ________________________________________________________________________________________ Page 2 of 14 . Reversing entries change amounts reported in the statement of financial position for the previous period 10. An extensive use of estimate d. and for all narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements d. An active program to locate a buyer and compete the plan must have been initiated c. or intends to sell or consume it within normal operating cycle b. Gain entirely to be included in profit or loss d. Failure to include items of financial value that cannot be recorded objectively 12. Must always be presented separately in financial statements b. Deferred gain as component of liability c.Which of the following is a requirement for a component of an entity to be classified as discontinued operation? a. The asset is cash or cash equivalent restricted to settle a liability for more than twelve months after the reporting period 15.An entity shall classify an asset as current under all of the following conditions. The entity expects to realize the asset within twelve months after the reporting period d. Must not be presented separately in financial statements c. The extensive use of separate classifications c. Must be presented separately in financial statements if material d. The activities must permanently cease prior to the financial statements being authorized for issue b. c. When an entity applies an accounting policy retrospectively b.Items of dissimilar nature or function a. The previous two comparable periods for all amounts reported 14.A third statement of financial position at the beginning of the earliest comparative period is required a.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ c. The entity holds the asset primarily for the purpose of trading c. Must be presented separately in financial statements even if immaterial 13.

Additional disclosure in the accounting policy note d.If the cash balance shown in an entity’s accounting records is less than the correct cash balance and neither the entity nor the bank has made any errors. A major customer is defined as one providing revenue which amounts to 10% or more of the combined external revenue of all operating segments b. To determine the honesty of the employees d.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ c. Disclosure of financial information for the latest and comparative 12-month period in addition to the interim report c. Deposits in transit 24.Operating segments that do not meet any of the quantitative thresholds a. No additional disclosure 21.An entity owns a number of farms that harvest produce seasonally.Which of the following statements about major customer disclosure is true? a. Additional notes should be written in the interim reports about the seasonal nature b. All of these statements are true about major disclosure 20. As offers to equity ________________________________________________________________________________________ Page 3 of 14 . Cannot be considered reportable b. The identities of major customers need not be disclosed c. May be considered reportable and separately disclosed if this is the practice within the economic environment in which the entity operates 19. Statement of comprehensive income for the current interim period and cumulatively for the current year to date with comparative statement of comprehensive income for the immediately preceding year c. The asset must have been classified as held for sale in previous financial statements d. Statement of changes in equity cumulatively for the current year to date with comparative statement for the comparable period of the immediately preceding year d. May be considered reportable if the information is for internal use only d.Which is incorrect concerning presentation of comparative interim financial statements? a.What is the major purpose of an imprest petty cash fund? a. The component must have been a cash generating unit or group of cash generating units while being held for use 18. What is encouraged to be done if the business is highly seasonal? a. there must be a. Deposits credited by the bank but not yet recorded by the entity b. Statement of financial position at the end of the current interim period and comparative statement of financial position at the end of the immediately preceding year b. Bank charges not yet recorded by the entity d. To effectively control cash disbursements 23. The entity shall disclose the total amount of revenue from major customers and the identity of the segment reporting the revenue d. Statement cash flows cumulatively for the current year to date with comparative statement for the comparable period of the immediately preceding year 22. Outstanding checks c.What is the preferable presentation of accounts receivable from officers. employees or affiliated entities in a statement of financial position? a. To ease the payment of cash to vendors c. May be considered reportable and separately disclosed if management believes that information about the segment would be useful to the users of the financial statements c. To effectively plan cash inflows and outflows b.

Historical cost b. A loss is recorded by debiting loss on inventory and crediting inventory c. Any receivables not individually significant should be collectively assessed for impairment 27. Prime cost d. There is a direct reduction in the selling price of the product that results in a loss b. The inventory is combined with other inventory of the consignor c.Which of the following statements is true regarding writedown and reversal of writedown? a. Percentage of accounts receivable using allowance method b. Current selling price less cost to complete and cost to sell 30. The cost of goods on hand at the beginning and the cost of goods acquired during the period b.Which of the following statements is incorrect regarding how the impairment assessment is to be performed on receivables? a.Entities must allocate the cost of all goods available for sale between a. As assets but separately from other receivables d. Entities are required to record inventory writedown in a separate loss account d. Direct writeoff method d. All of the choices are true 31. The inventory is combined with other inventory of the consignee 29.How is a significant amount of consignment inventory reported? a. As trade notes and accounts receivable if they otherwise qualify as current assets 25. Standard cost c. All of the choices are acceptable 26. Commodities held by broker-traders ________________________________________________________________________________________ Page 4 of 14 . By means of notes only c. The NRV is substituted for cost and the loss is buried in cost of goods sold 32. All of the choices are correct 28. Reversal of inventory writedown is prohibited b. The inventory is reported separately on the consignee’s statement of financial position d.When the cost of goods sold method is used to record inventory at net realizable value? a. Ant receivable individually assessed as not impaired should be included with the other receivables that are not individually significant and collectively assessed d.Which of the following is not permitted for accounting for material amount of uncollectible accounts receivable? a. Percentage of sales using allowance method c.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ b. The income statement and the statement of financial position d. The inventory is reported separately on the consignor’s statement of financial position b. The cost of goods on hand at the end and the cost of goods acquired during the period c. Separate reporting of reversal of inventory writedown is required c. Receivables that are individually significant should be considered for impairment separately or individually b.Which of the following is not an acceptable basis for valuation of inventory? a. Only the portion of the loss attributable to inventory sold during the period is recorded d.Net realizable value is the general rule for valuing which of the following types of inventory? a. Receivables that are not individually significant should be assessed for impairment individually c.

Held to maturity b. The goodwill is separated from the rest of the investment and is impaired tested individually b.An entity acquired ordinary shares representing a passive interest. At fair value through profit or loss d. Trees Felled trees b. At the money b.How is the impairment test carried out for an investment in associate? a. Investments where an entity has holdings of between 20% and 50% d. An investment in equity instruments that is not held for trading c. The fair value measurement of agricultural produce stops at the time of harvest d. Either current or noncurrent financial liability depending on redemption date 36. A financial asset measured at amortized cost d. The investee’s shares are listed on a stock exchange. Vines Grapes Product After Harvest Logs.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ b.How should preference shares that are redeemable mandatorily be presented in the statement of financial position? a. Either as available for sale or at fair value through profit or loss 37. Investments where an entity has holdings of more than 50% 39. Which of the following categories could this investment in equity shares be classified? a. Current financial liability c. The fair value of agricultural produce at the point of harvest can always be measured reliably c.Which of the following is an incorrect combination? Biological Asset Agricultural Produce a. All of the choices are measured at NRV 33. Dairy cattle Cheese c. Out of the money 40. On the money d. Equity d.Equity investments acquired by an entity which are accounted for by recognizing unrealized holding gains or losses as component of other comprehensive income are a. Pigs Carcass d.An entity make an irrevocable election to present in other comprehensive income changes in fair value of a. In the money c.If the price of the underlying is greater than the strike or exercise price. A financial asset measured at fair value through profit or loss 38. An investment in equity instruments that is held for trading b. Noncurrent financial liability b. Computer components for sale to manufacturers c. the call option is a. Inventories priced on an item by item basis but not those priced on a total inventory basis d. Nontrading where an entity has holdings of less than 20% b. lumber Milk Sausage Wine 34. Trading investments where an entity has holdings of less than 20% c. All of these statements are true regarding agricultural produce 35. an entity shall measure agricultural produce at a fair value less cost of disposal at the point of harvest b.Which of the following statements is true regarding agricultural produce? a. In all cases. The entire carrying amount of the investment is tested for impairment by comparing the recoverable amount with the carrying amount ________________________________________________________________________________________ Page 5 of 14 . Available for sale c.

Over 10 years using straight line 48. Charged to the new building if accounted for as inventory 46.If payment for an asset is deferred beyond normal credit terms. Included as part of the asset cost c. Asset must be revalued at the discretion of management d. The carrying amount of the investment should be compared with the market value d.The carrying amount of an existing old building demolished to make for the construction of a new building should be a.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ c. Over 5 years using straight line d. Depreciation method b. The amount at which the asset could be exchanged d. plant and equipment a. Accounted for a loss b. When received b. Physical wear and tear are more important than economic obsolescence 45. There are no specific rules regarding the frequency of revaluation 47.Under the revaluation model in accounting for property. The recoverable amounts of all investments in associates should be assessed together to determine whether there has been an impairment on all investments 41. Assets must be revalued quarterly b. The operating efficiency of the asset decreases in later years b. Amortized as interest expense over the credit period 43.Capitalization of borrowing costs a. Should never be suspended once capitalization commences ________________________________________________________________________________________ Page 6 of 14 . The amount of cash that could currently be obtained by selling the asset in an orderly disposal 44. Service value declines as a function of obsolescence rather than time d. Useful life or depreciation rate d. The amount of impairment loss recognized c. Shall be suspended during temporary period of delay b. The present value of future cash flows to be derived from the asset c. The estimated net amount currently obtainable if the asset is at the end of the useful life b.Which of the following statements best describes residual value? a. Capitalized as cost of the new building c. Charged to the land d. May be suspended only during extended period of delay in which active development is delayed c. Amortized as interest expense over the life of the asset d.What is the theoretical basis of straight line depreciation? a. Asset must be revalued annually c. Net gains or losses from fair value adjustments 42. Considered interest expense of the current year b. Service value declines as a function of time rather than use c. Of the period in which it becomes receivable c. the difference between the total payment and cash price equivalent should be a.Which of the following disclosures must be made when the fair value model is used for investment property? a.A grant that becomes receivable as compensation for losses already incurred or for the purpose of giving immediate financial support should be recognized as income a.

Engineering activity to advance the design of product to the manufacturing stage 56. Post-tax gain on discontinued operations 57. 10 years b.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ d.Which of the following research and development costs should be capitalized and amortized over current and future periods? a. the cost of litigation should be charged to a. Unrealized fair value gain of biological assets d.The reason goodwill is referred to as a master valuation account is that a. Patent and amortized over the remaining useful life of the patent 53. then the information is considered to have ________________________________________________________________________________________ Page 7 of 14 . The value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation d. Only on the successful effort method may be used b.Which of the following costs should be excluded from research and development expense? a. Administrative salaries allocated to research and development d. Expense of the period d.Under PAS 1. The time value of money 50. Investment income from associates under equity method c. 20 years c. Both the successful effort method and the full cost method may be used d. Unrealized fair value gain of available for sale securities b. Shall be suspended only during extended period of delay in which active development is delayed 49.Which accurately describes GAAP regarding accounting for costs of drilling dry holes? a. Patent and amortized over the legal life of the patent b.When an entity successfully defended a patent from infringement by a competitor. Acquisition of R and D equipment for use in current project only c.If financial information provides feedback about previous evaluations. Modification of the design of a product b. 40 years d. which of the following items is not included in the computation of profit or loss? a. It represents the purchase price of a business that is about to be sold b. Cost of testing equipment that will also be used in another separate research and development project scheduled to begin next year c. Legal fees and amortized over five years or less c. The carrying amount of the asset c.Which of the following is not relevant in determining value in use? a. It is the difference between the fair value of the net identifiable assets as compared with the purchase price of the acquired business c. It is the only account in the financial statements that is based estimated value 52. Cost of marketing research for a new product d. Labor and material costs incurred in building a prototype model b. Expectation about possible variation in the amount and timing of future cash flows d. The expected future cash flows from the asset b. Research findings purchased from another company to aid a particular research project currently in process 55. Neither the successful effort method nor the full cost method may be used 51. No arbitrary cap on the useful life has been established 54. Only on full cost method may be used c.What is the maximum amortization period mandated for intangible assets? a.

segment information need be presented only on the a. major customers. 3rd statement: If an entity whose securities are publicly traded prepares financial statements that comply with IFRS.If a single financial report contains both consolidated financial statements of an entity whose securities are publicly traded and the separate financial statements of the parent or one or more subsidiaries. Customer’s check in payment of past due account b. True. Sometimes an entity disposes of a group of assets.In interim reporting. other than events or conditions that differ in substance from those previously occurring II. I and II are considered as a change in accounting policy 61. Cash in a special checking account for payroll c.Analyze the following statements: 1st statement: Segment reporting standard shall be applied by entities whose equity of debt securities are publicity traded 2nd statement: Segment reporting standard shall be applied by entities that are in the process of issuing equity or debt securities in public securities markets. a. Basis of the parent financial statements d. false.Which of the following is/are not considered as a change in accounting policy under PAS 8? I. or part of a cash-generating unit. Major customers. which of the following should be accounted for on a time proportion basis? a. True.Under PFRS 8. Such a disposal group may be a group of . Productivity bonus d. true 63. The application of a new accounting policy for transactions. Depreciation b. The group may include any ________________________________________________________________________________________ Page 8 of 14 . Predictive value d. I only b. Cash deposited with a utility company 60. Basis of the consolidated financial statements 64. entity-wide information is disclosed for the entity as a whole about its a. True. Basis of the parent and one or more subsidiaries financial statements c. II only c. that entity is encouraged to disclose financial information by segment voluntarily. Geographical areas. true. false d. even if an entity has only one reportable segment. Product and services b. true c. true b. Confirmatory value 58. products and services d. a single cash-generating unit. possibly with some directly associated liabilities. No value b. Costs of sales c. Fair value c. product and services 59. Geographical areas and major customers c. true. Unrestricted compensating balance for a loan d.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ a. The application of accounting policy for transactions. None. I and II d. other events or conditions that did not occur previously or were immaterial a. Inventory value decline 62. false. together in a single transaction. Basis of the parent or one or more subsidiaries financial statements b.Which of the following cannot be shown as part of cash in the current asset section of the balance sheet? a. True.

[III] Interpretations developed y the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC). II. expense-generating units c. a. [I]-[III] b. [II] International Accounting Standards. c. a. The statement is false c. product-generating units b. The statement is sometimes true but most of the time false d. its fair value at the date of the subsequent decision not to sell. I.International Financial Reporting Standards (IFRs) are Standards and Interpretations adopted by the International Accounting Standards Board (IASB). I. False. including current assets. [I] each of the headings and subtotals that were included in its most recent annual financial statements and the selected explanatory notes a required by the IFRS.Analyze the following statements. and one of the choices below: a. [II]-[III] d. [I] 68.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ assets and any liabilities of the entity. d. current liabilities and assets excluded from the measurement requirements of this IFRS. 2nd statement: the IFRS prohibits or discourages an entity from including in condensed interim financial statements more than the minimum line items or selected explanatory notes as set out in the IFRS a. cash-generating units 65.The entity shall measure a non-current asset that ceases -to be classified as held for sale (or ceases to be included in a disposal group classified as held for sale) at the lower of its carrying amount before the asset (or disposal group) was classified as held for sale. false 67. its recoverable amount at the date of the subsequent decision not to sell. at a minimum. False. amortization or revaluations that would have been recognized had the asset (or disposal group) not been classified as held for sale. true d. They comprise: [I] International Financial Reporting Standards. I. [II] Additional line items or notes shall be included if their omission would make the condensed interim financial statements misleading. II. those condensed statements shall include. [I]-[II] c. true b. its disposable amount at the date of the subsequent decision not to sell. [ an income statement]. The statement is sometimes true but most of the time true ________________________________________________________________________________________ Page 9 of 14 . from example. II c.A complete set of financial statements normally includes a [statement of financial position] balance sheet. III d. 66. false c. True. III b. [I] Nothing in the IFRS is intended to prohibit or discourage an entity from publishing a complete set of financial statements In its interim financial report. adjusted for any depreciation.If an entity publishes a set of condensed financial statements in its interim financial reports. and those notes and other statements and explanatory material that are an integral part of the financial statements a. as a statement of cash flows or a statements of funds flows). III 69. The statement is true b. statement of comprehensive income. revenue-generating units d. a. b. a statement of changes in financial position (which may be presented in a variety of ways. True. [III] Basic and diluted earnings per share shall be presented on the face of an income statement. its carrying amount at the date of the subsequent decision not to sell.

I. plant and equipment b.In determining whether an asset that incorporates both intangible and tangible elements.An adjustments of the carrying amount of an asset or a liability. Prior period errors 71. When the software is not an integral part of the related hardware. that results from the assessment of the present status of. An integral part of the related hardware and it is treated as property. could be the determining factor.The IFRS on impairment of assets is not applicable to those listed below except one a. 75. Material omissions d. natural gas and similar nonregenerative resources 74. a. and expected future benefits and obligations associated with. an entity uses judgment to assess which element is more significant. plant and equipment. or the amount of the periodic consumption of an asset. I. an entity uses judgment to assess which element is more significant. An integral part of the related hardware but treated as intangible asset. Not an integral part of the related hardware and it is treated as property. plant and equipment d. individually or collectively. Biological assets related to agricultural activity c. III c. Accounting policies b. IV 73. plant and equipment excludes the following except one: a. Deferred tax assets d. the operating system of a computer. II. A computer software for a computer-controlled machine toll that cannot operate without that specific software is a. (IV) impairment losses to be recognized a.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ 70. As property plant and equipment b. Land on which the trees are planted d. III b. computer software is treated a. Investment property that is measured at cost 77. or a combination of both. For example.The IFRS on impairment of assets is not applicable to those listed below except one a.Misstatement of items are material if they could. II. Mineral rights and mineral reserves such as oil. Non-current assets (or disposal groups) classified as held for sale ________________________________________________________________________________________ Page 10 of 14 . Accounting policies b. Not as property plant and equipment d. The size or nature of the item. Material omissions d. plant equipment classified as held for sale b. Assets arising from construction contracts c. Inventories b. plant and equipment are the (I) recognition of the assets . Not as intangible asset 76.In determining whether an asset that incorporates both intangible and tangible elements. c. a.The principal issues in accounting for property. Prior period errors 72. An integral part of the related hardware but not treated as property. Property. Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances.Property. influence the economic decisions of users taken on the basis of the financial statements. I.(II) the determination of their carrying amounts and (III) the depreciation charges. IV. As intangible asset c. II d. assets and liabilities. Accounting estimate c. Accounting estimate c.

There is no payment or there is a small payment for the derivative on the date of the contract.All of the following are characteristics of a derivative. [III] amortization of ancillary costs incurred in connection with the arrangement of borrowings. Government b. Government fund 80.The reports that may portray the financial effects of transactions and other events by grouping them into broad classes according to their economic characteristics. [I]-[III] 83. they refer to government. [III] manufacturing plants. government agencies and similar bodies whether local. Government grants b. Intangible assets c. [V] exchange differences arising from currency borrowings to the extent that they are regarded not as an adjustment to interest costs a. a.A financial instrument that derive it value from another underlying item such as share price. Republic c. a. 82.Under IFRS. [I]-[V] b. Readily settled at a future date by a net cash payment. Must contain an underlying and a notional b. Requires either initial or substantial net investment. [I]-[IV] c. [I]-[III] 84. Local government 79. [I]-[V] b.Examples of qualifying assets are [I] inventories that require a substantial period of time to bring them to a saleable condition. [II] inventories that are routinely manufactures or otherwise produced in large quantities on a repetitive basis over a short period of time. Financial projections ________________________________________________________________________________________ Page 11 of 14 . [I]-[III]-[V] d. Equity instrument 81. Financial liability d. they do not include benefits provided only indirectly through action affecting general trading conditions. Financial budgets c. such as the provision of infrastructure in development areas or the imposition of trading constraints and competitors a. Financial statements b. [II] amortization of discounts or premiums relating to borrowings. Assets arising from employee benefits 78. [IV] power generation facilities and [V] investment properties a.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ b. For IFRS. exchange rate or interest rate.Borrowing costs mat include : [I] interest on bank overdrafts and short-term and long-term borrowings. [IV] finance charges in respect of finance leases recognized . A a. Government assistance c. Derivative b. [I]-[IV] c. Biological assets related to agricultural activity that are measured at fair values less estimated point-of-sale costs d. c. Government aid d. national or international. National government d. except D a. Financial asset c.This is an action by government design to provide an economic benefit specific to an entity or range of entities qualifying under certain criteria. d. [I]-[III]-[V] d.

Correct answer no given 89.Qualitative characteristics are the attributes that make the information provided in financial statements useful to users. III.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ d. II. Variable cost per unit increase c. Cost accounting c. I. Fixed costs increase 92. Is governed by generally accepted accounting principles b. Neutrality 88. relevance. relevance. Segment reports 85. Understandability. I. II & III d. Denominator not used d.The contribution margin increase when sales volume remain the same and a. reliability and comparability d. Depreciation expense for plant machinery c. relevance. Understandability.The qualitative characteristics that describes that users are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence is a. III & V c. IV & V b. Denominator Numerator c. reliability and substance over form c. Numerator denominator 91. Understandability b.These broad classes are termed the elements of financial statements. Is geared primarily to the past rather than the future d. Sales salaries ________________________________________________________________________________________ Page 12 of 14 . Fixed costs decrease d. I. Reliability d. reliability and faithful representation 87. Draws from disciplines other than accounting c. the four qualitative characteristics are: a. IV & V 86.That kind of accounting concerned with providing information to management in making decisions about the operations of the business a. Management accounting d.Management accounting a. Places more emphasis on precision of data compared with financial accounting which does snot 90.How many the following be used in calculating the break-even point in units? Contribution Contribution Fixed cost margin per unit Fixed cost margin per unit a. Responsibility accounting b. I. Costs may be classified as unexpired or expired. Variable cost per unit decrease b. Understandability. reliability and neutrality b. Cost of goods sold b. Relevance c. relevance. Numerator not used b. Understandability.Cost is the amount measured by the current monetary value of economic resources given up or to be given in obtaining goods and services. The elements directly related to the measurement of financial position in the balance sheet are : (I) assets (II) liabilities (III) income (IV) expenses a. Which of the following costs is not always considered to be expired immediately upon being recognized? a.

2. Both statements are false. A debit to an expense account and a credit to a revenue account c. a.Which of the following pairs of transactions ad special journals is properly matched? Transaction Journal a. Prepare adjusting entries General Journal d. Cost of goods sold c. Cost of goods manufactured 94.In retailing enterprises. 7 b. STATEMENT 2: Financial instrument encompasses financial asset. c.This Framework sets out the concepts that underlie the preparation and presentation of financial statements for a. External users b. Not among the choices 95. 6. The statement is false 96. b. a. The statement is true d. Notes and loans 6. Loss from bankruptcy of a major debtor not provided for in the annual adjustment. Inventory b. d. purchases adjusted for change in inventory. Sell merchandise for cash Sales Journal 98.An adjusting entry will not take the format of which one of the following entries? a.This framework is not a Philippine Financial Reporting Standard (PFRS) and hence does not define standards for any particular measurement or disclosure issue. Pay Voucher for purchase of Voucher Register merchandise on account c. 99. and which gives rise to a financial asset of one party and financial liability or equity instrument of another party. 7 ________________________________________________________________________________________ Page 13 of 14 . Statement 1 is true. The statement is sometimes false but most of the time true c. Cost of goods sold is.Which of the following is / are correct example / s of financial instrument? 1. 3. In manufacturing company. 93. Cash in the form of checks 3. Equity securities Asset Bearer Liability Issuer Payee Depositor Customer Debtor Issuer Investor Drawer Bank Seller Lender Investor Issuer a.Which of the following statements is / are true? STATEMENT 1: PAS 32 defines a financial instrument as any contract the gives rise to both a financial asset of one entity and a financial liability or equity of another entity. Cash in the form of notes and coins 2. 1. the income statement includes cost of goods sold. Debt securities 7.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ d. 2. The statement is sometimes true but most of the time false b. Statement 2: is true. Both statements are true. A debit to an expense account and a credit to an asset account b. Finished goods d. A debit to an asset account and a credit to a revenue account d A debit to an liability account and a credit to a revenue account 97. Cash in bank 4. 1. the purchases account is replaced by which account? a. Internal and external users d. financial liability and an equity instrument characterized by a contract that involves two parties. in effect. Internal users c. Trade accounts 5. Collect cash on account Sales Journal b.

4. a. 1. Financial asset b. d. 6. 3. All of the above ________________________________________________________________________________________ Page 14 of 14 . 5. Financial liability c. 6. Financial equity d. 1.BALIUAG UNIVERSITY CPA REVIEW 2014-15 THEORY OF ACCOUNTS JACF __________________________________________________________________________________________________ c. and an equity instrument of another entity. a contractual right to exchange financial instruments with another entity under conditions that are potentially favorable. Any asset that is cash. a contractual right to receive cash or another financial asset from another entity. 5. 100.