we | THEORY of ACCOUNTS 1. The following statements pertain to the provisions of Conceptual Fi changes in the prices of assets and lability ofthe entity ‘Starement 11, The selection of the appropriate coocept of capital by an entity should be based on the needs ofthe users Statement i1I: The concept of capital maintenance chosen by an entity st rmi a. None of the foregoing statements is false d. Only statement III is false 2. One element of the objective of financial reporting isto provide: 4. information that is useful in assessing cash flow prospects. ‘The objective of financial reporting in the Conceptual Framework for Financial Reporting: a. _ Is the foundation For the Framework. , Participating ©. Voting dd. Noncumulative 62. The cumulative feature of preference shares: requires that preference dividends not paid in any year must be made up in a later year before dividends are distributed to ordinary shareholders. . limits the amount of cumulative dividends to the par value of the preference shares, ‘means that the shareholder can accumulate preference shares until itis equal to the par value of ordinary shares at which time it can be converted into ordinary shares. cnables a preference shareholder to accumulate dividends until they equal the par value of the shares d idends. and reecive the shares in place of the cash di 63. Redeemable preference shares should be: a. included as a liability b. included with ordinary shares ©. excluded from the statement of finaneial position, 4. included as a contra item in shareholders’ equity. 64, Cumulative preference dividends in arrears should be shown in a corporation’s statement of financial position as: a. afootnote, | b. an increase in current liabilities. c. an increase in equity. d. an increase in current liabill portion. 65. The features most freqyently associated with preference shares include all of the following, EXCEPT a. Callable at the option of the shareholder. b. Convertible into ordinary shares. cc. Non-voting. d. Preference as to assets in the event of liquidation. 66. When preference shares share ratably with the ordinary shareholders in any profit distributions beyond the prescribed rate this is known as the: a. Participating feature. b. Cumulative feature. c. Callable feature. d. Redeemable feature. 67. Which of the following events occurring after the reporting period (i.., subsequent events) would require adjustments in the financial statements? — oe ‘a. Loss on an uncollectible trade receivable as a result of a customer's deteriorating financial condition ieading to customer’ bankruptcy subsequent to balance sheet date b. Purchase of an‘existing business c. Decline in net tealizable value of inventory as a result of fire a. Sale of a bond or share capital planned before the balance sheet date ies for the current portion and non-current liabilities for the long-term 6ofll‘68. Liquidating dividends: ‘8, Reduce amounts paid-in by sharcholde Are poked under PPR. ©, Require a credit to Share Capita Go. Andajg dt tbe choices are coment ming compar deca a liquidating dividend. The journal entry to record the declaration must include a debit to: b. Retained Eamings © Accumulated Depletion 4. Accumulated Depreciation 70. Which one of the following disclosures should be made in the equity section ofthe statment of financial position, ‘rather than in the notes to the financial statements? a. Liquidation preferences. b. Dividend preferences © Call prices 4. Conversion or exercise prices 71. Dividends are NOT paid on: a reasury shares, b. noncumulative preference shares ©. nonpartcipating preference shares 4. allof the choices. 72. Noncumulative preferred dividends in arrears 8. are not paid or disclosed. ‘must be paid before any other cash dividends can be distributed a c. are disclosed as a liability until paid. 4. are paid to preférence shareholders if sufficient funds remain after payment of the current preference dividend. 73. Convertibie bonds: ‘2. Allow a company to issue debt Financing at cheaper rates. 1. Are separated into the bond component and the expense component. | ‘Are separated into their components based on relative fair values. 1 The en arcs itoordinary shares requires that any exces ofthe par value ofthe ordinary shares issued over the carrying amount of the preference shares being converted should be: “h treated as a direct reduction of retained earnings. b. reflected currently in income. . reflected currently in other comprehensive income. d. treated asa prior period adjustment. 15, When the cash proceeds Per scnd sod wth detachable share warrants exced the ir value ofthe bonds without the warrants the excess should be credited 10 a, Share Premium-Share Warrants. b. Share Premium—Ordinary. c. Retained Eamings. d. A share liability account, 76, ‘The major difference between convertible debt and share warrants is that upon exercise of the warrants: a. the holder has to pay a certain amount of cash to obtain the shares. b. the shares are eld by the company fora defined period of time before they are issued tothe warrant holder. if c. the shares involved are restricted and can only be sold by the recipient after a set period of time. 4. no share premium can be apart ofthe transaction 77. ‘The date on which to measure the compensation element in a share option granted to a corporate employee ordinarily is the date on which the employee: ‘a. is granted the option. . has performed all conditions precedent to exercising the option. c. may first exercise the option. d. exercises the option. 78, ‘The date on which total compensation expense is computed ina share option plan isthe dat: a ofgrant b. of exercise. ©, thatthe market price coincides with the option price. d. that the market price exceeds the option price. 79, ‘The statement of cashflows provides answers fo all ofthe following questions, EXCEPT: a. what i the impact of inflation onthe cash balance atthe end of the year? . where did the cash come from during the period? . what was the cash used for during the period? 4. what was the change in the cash balance during the period?% s. According to PAS 1, a requ forma forthe presentation of» tatemet of Financia He Re preoribed bu guidance 1 rovided i the standard ors ube format not precribed and no quienes provided the andar C presibed bythe standard SL fou prscibed by the standard ut details are found in the Corporations Act 11. woah ofthe follwing ham, If eins, does NOT have tobe preted wt be item onthe face ofa statement of prof or low and ether comprehensive come? 2 Closing inventory b Revenue © Post-tax profit or loss of discontinued operations 4. Profit or loss attributable to non-controlling interests The statement of financial position 4. Omits many items that are of financial value, b. Makes very limited use uf judgments and estimates © Uses fair value for most assets and liabilities d. All of the choices are correct regarding the statement of financial position 53. Statement of financial position information is useful for all of the following. EXCEPT 8, determining free cash flows b. assessing a company's risk ©. evaluating a company's liquidity 4d. evaluating a company’s financial flexibility Investors and creditors use Statement of Comprehensive Income information for various purposes. Which is NOT among these purposes? Evaluate the future performance of the company b. Provide a basis for predicting future performance Help assess the risk and uncertainty of achieving future cash flows, 4. _ All of the choices are purposes of Statement of Comprehensive Income 85. Which of the following is considered a non-adjusting event under PAS 10? a Decline in market value of investments between the end of the reporting period and the date when the financial statements are authorized for issue. ‘The receipt of information after the reporting period indicating that an asset was impaired at the end of the reporting period, or that the amount of a previously recognized impairment loss for that asset needs to be adjusted. ©. The determination after the reporting period of the cost of assets purchased, or the proceeds from assets sold, before the end of the reporting period. 4, the determination after the reporting period of the amount of profit-sharing or bonus payments, if the entity had a present legal or constructive obligation at the end of the reporting period to make such payments as a result of events before that date 86. Under PAS 24, all of the following are considered 1o be NOT necessarily related parties of the reporting entity, EXCEPT 4. Post-employment benefit plans b. Providers of france ©. Public utilities” d. Trade unions 87. Under PFRS 8 (Operating Segments), “Major Customer” a. The identity of the major customers b. Total amount of revenue from major customers ¢. The fact that the entity relies on major customers d. The idemtty of the segments reporting the revenue from major customers 88. The statement of cash flows reports all of the following, EXCEPT: a. the free cash flows generated during the period. b. the net change in cash for the period. ©. the cash effects of operations during the period, d. investing transactions. 89. Ifa business entity entered into certain related party transactions, it would be required to disclose al ofthe following information, EXCEPT:, a, nature of any future transactions planned between the parties and the terms involved, b. nature of the relationship between the parties to the transactions, ¢. peso amount of the transactions for each of the periods for which an income statement is presented. d. amounts due from or to related parties as of the date of each statement of financial position presented. 90. Events that occur after the December 31, 2014 statement of financial position date (but before the statement of financial position is authorized to be issued) and provide additional evidence about conditions that existed at the statement of financial position date and affect the realizability of accounts receivable should be: a. used to record an adjustment to Accounts Receivable at December 31, 2014. b, discussed only in the Management commentary section of the annual report. c. disclosed only jin the Notes to the Financial Statements, d. used to record an adjustment directly to the Retained Earnings account 84, b. disclosures include all of the following, EXCEPTa balance in ace the followin, ©. SERREES in aecouning poi . Fevenue, Cost, or exe 92+ A seement of a business cos of EXPENSES, lose all of 2 total revenues, f Sa ee ms — total combined ness SNPs gue’ YEE ven the reve be a a ese ; ‘ Po aN Foreign sal SSM pontine pro ~ combined net is . 2s Fn r ae ot mt econ Exch ‘ oid det an min ree ee = {rete dics uN tne ha ots nt unt eciny an : igo " that gave rise to the litigation occurred prior to the mero 95, ted a5 a transaction in which: b &2 Scduirer obtains control of one or more busee b. an acquirer obtains control of an acqune “ss it control of one of more entities G._ an acquitee obtains control of one oF more buswesses 96: Am accounting system that collects financial and operate seen onthe ‘basis of the underly 8. Activity-based costing b. Cyele-time costing ©. Variable costing 4. Target costing 97. Joint costs are used for: a. determining inventory costs for accounting purposes b. controlling costs ¢. setting the selling price of a product 4. determining whether to continue producing an item ‘98. The following statements are based on PAS 8 (Accounting policies, changes in accounting estimates and errors) Statement I: To the extent that a change in an accounting estimate gives rise to changes in assets and liabilities, or relates to an item of equity, it shall be recognized by adjusting the carrying amount of the related asset, liab ity or ‘equity item in the period of the change. ‘Statement Il: Prospective recognition of the effect of a change in an accounting estimate means that the change is applied to transactions, other events and conditions from the date of the change in estimate, Statement III: 4 change in the measurement basis applied is a change in an accounting estimate, and is not a change in an accounting policy. a. True, true, false b. True, true, true c. True, false, true d. False, true. false 99. Joint product costs are generally allocated using the a. Relative sales value b. Additional costs after split-off ©. Relative profitability d. Direct labor hours 100. Standard cost variances are not closed to: a. Direct materials b. Work-in-process c. Finished goods ! d. Costs of goods sold 101. Which cost accumulate procedure is most appropriate for a just-in-time (JIT) production system? a. Backflush costing b. Process costing , c. Job order costing d. Activity-based costing ature and extent of cost102, When translating foreign curency denominated finan When oii rin ore 4 Ginancial statements into the functional cureney, the exchange 4 -asan item of yain or loss inthe statement of profit o loss b. asa deferred asset or liability EOE Ott 8 OEE SomeceEe te ome ¢, asa separate component of equity 4k directly inthe retained earnings account 103.Activity-based costing (ABC) first assigns costs to ‘a Activities b. Departments ©. Products 4 Overhead 104.Financial statements otnonprofit organization (NPO) includes all of the following, EXCEPT ‘a. Statement of changes in equity b. Statement of financial position c. Statement of activities dd. Statement of cash flows 105.In an ABC system, what should be used to assign a department's manufacturing overheat! costs to products produced in varying lot sizes? a. Multiple cause-and-effect relationships b. A single cause-and-effect relationship c. Relative net sales values of the products 4d. A product's ability to bear cost allocations 106.1n comparison with firms that use plant-wide overhead rates and departmental overhead rates, companies that have adopted activity-based'costing will typically use: ‘a. More cost pools and more cost drivers b. More cost pools and fewer cost drivers cc. Fewer cost pools and more cost drivers d._ Fewer cost pools and fewer cost drivers 107-4 company uses a two-way analysis for overhead variance: budget (conrllable) and volume Th based on the: a. Fixed overhead application rate Total overhead application rate c. Variable overtiead application rate 4d. Variable or fixed overhead application rate 108. The statement of Bnancial position of NPO shall report separately 3 clases of net assets that EXCLUDE _ ‘a. Donated net assets b. Unrestricted net assets 1e volume variance is ¢. Temporarily restricted net assets 4. Permanently restricted net assets 1o9.Net assets that are restricted by the governing board of a non-government, not-for-profit ‘organization are reported as part of: : a. Unrestricted net assets b. Any of these, depending on the terms c. Permanently restricted net assets 4. Temporarily restricted net assets 110-The “contractual adjustment account” of a nonprofit hospital isa (an): ‘a. Contra-revenue account b. Expense account cc. Loss account d. Asset account’ 1 11.Under NGAS, how frequent should the tral balance be prepared? a, Monthly b. Quarterly ¢, Semi-annually a Annually ; ; 112. Under NGAS, allotments by DBM are recorded in the registries a. Quarterly b. Monthly ¢._Atthe beginning of the period d tthe end ofthe period, 1113. Which is not a basic feature 0! 2 re "our-dgit responsiblity aeeount cOdins structure b. One-fund concept ¢. Two-column trial balance 5. Threesdigit account number system 1of LIpris not a basic feature of NGAS? 14 i" Corollary and negative (red) entries b. Perpetual inventory system c. Straight-line depreciation 4. Allowance for dou 15.Journals and ledgers are shall be used under NGA: btful accounts the book of accounts the HS of the national government agencies. Whic +h of the following journals a, General journal b. Journal of checks jssued c. Journal and "ntory purposes are recorded using in, first-out (FIFO) Last-in, first-out (LIFO) “lon he allotment by the Central office to its Regional office. Suballotment | Regular allotment Ordinary Allotment 4. zation issued by the DBM to through the issuance of Modified Disbursement Notice of Cash Allocation b. Allotment © Obligation 4. Appropriation 119-Build-operate-transfer “BOT” arrangements under the scope of IFRIC 12 are usually made between (among): f The government (grantor) and a private entity (operator) b. The government (operator) and a p c. rivate entity (grantor) general public (operator) and a private entity ) and the government ‘The government (grantor), fi {General public (grantor), a private entity (operates 120-Under a build-operate-transfer (BOT) scheme covered operator for infrastructure projects shall be: a Expensed (Financial Asset model); Capitalized (Intan Expensed (Financial Asset model); Expensed Capitalized Financial Asset model): Capitalized (Financial Asset model by IFRIC 12, any borrowing costs incurred by the private gible Asset model) ntangible Asset model) Expensed (Intangible Asset model) '); Capitalized (Intangible Asset model) b. c. a - Nothing Follows -