CPA REVIEW SCHOOT- OF THE PHII-IPPINES

Manila

THEORY OF ACCIOUN'I'S Saturday. July 27,2413

First Prebour6 p*spination 8:00 a.m. to 9:30 a,rrr.

SEI' A

MUI-'I'IP[,EI CHO[{lE * MARK FULLV ivith

Pencil I'.ic. 2 the ietter of your choice on the
answer sheet provide,J. Make the mark DARK but do not use too much pressLlre. IiRASURES
ARE STI1ICTLY NGT ALLOWED.

D 1. Debit alw'eys means

a. Right side of an account
b. Increase
c. Decrease
d. lllone ol these

D 2. A trial balance may prove that debits and credits are esual but
a. An amount could be e:rtered in rhe wrong accollnt.
b. A transaction could have been entered twice.
c. A transaction couirJ ha'ze been omitted.
d. All of these
C
l. An adiustirlg er"rirv to rccord an accrued exit€n:-r involles a debit to
a. Expense accor-rnt and a credit to a prepaii atcotiiit.
b. Expense accour.rt and a credit to cash.
c. Expense accoLlnt and a credit to a liabiiit)' account"
d. I-iability account and a eredit 1o an expense eccoLlnt.
C 4. The closing entries
a. irlr.rst dehit or credit one income stateixent acr:ount and orre statement of tlnancial position
account.
b. Include closing tlre dil'idends eccount io inc:xnc SLuri11or,,'.
c. Are posted to the al..propriate general ieriger accounts.
d. All of the cl,oices i-1"rc ccrrect regarciing clo:sing entries.
D 5. Reversing entries do not apply to rvhich ot'ti:e tbllowing iterrs?
a. [Jnearned reveuue
b, Accmed wages
c. Prepaid insurance
ci. Depreciatioll

B 6. Which of'the folllrwinlr represents a fornr olconrnrunication tiri:ough iliiancial reporting but not
through tinanc i r. I stal r:,rrents?
a. Statement of ilnancial position
b. President's letter
c. Income statcrrerit
d. Notes to flnancial statenients
C 1, Which of the following statements rs uof an o.b.iective of tlnancial reporting?
a. To provide information that is usei,,rl in in.;estrnent anci credit decisi,ons.
b. T'o provide information about resollrces. ciaims against those resources. and changes in thent.
c, To provide infbmratiorr on the liqr"ricialion valr:e olan entity,,
d. To provide iufbrmatrirn that is usefiil iir ass,:ssing cash tlow prospects.
A 8. Which olthe fbllowing has ilie highest autliorita"trre sliilporl'/
i'r, lnternational Financial lieporting Standarcis
h,. International Accounting Standarcls
c. Interpretaiions of the IFRI('
d. Conceptual Frame',,i,orl.. f-cr Financial Reportir.lg
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A 9. T'he urrcleriS,ing therne r:1'the conceptual tiar:rervork is

il. Decision usefirlness
b. [Jnderstanclability
c. Iteliability
d. (ioniparabilitl,
B 'Ihe Conceptr"ral
10. Framework includes a.ll i:,i',".: iellcwing ex*{:pt
a. Ob.iective of flnarrcial reporting
b. Supplementary infbrmation
c. Elenrents of irnancial statements
d. Qualitative characteristics of accolllttil1g inI'ornratiolr
A ll. In the Conceptual Frameu'ork. an ingredi::l-rt rrl'a tirndaneirlul i;u;iiittrtive characteristic is
a. Neutrality
b. Vtritiability
c. Tilueliness
d. Llnderstandability
C 12. Inllatiorr is ignored in accounting di.re to the
l. Economic entit), assunrption
b. Coing concern assumption
c. Monetary urrii assumption
d. Per iodicity' assunrption

A l-1. tiecognitiorr of amoriization of an intarrgihle asset illustrates u,lrich principle of'acct-runting?

il.Expcnse recognition
h). Full disclosure
c. Revenue recognition
d. [-iistorical cost
B 14. Staterlent of financial position inlbrmatior: is irseful lbraii of tire foilorving" c.r.cept
ar. fo compute rate of returu
b. 1'o arralyze cash inflows and outt'lows fcr the period
c. l-o elaluate capital strllctllre
d. To rissess firture cash ilows
D 15. S'hich of tlie lollowing is a cirrrent asset'J
tl.
Cash surretidet'r,alue of'a lii'e rnsurance p,llic,v tif which ti;e eniit;,is the berretlciary.
b. In,,'estnrettt in equity securities for tire purp.]se of c,rntlclling the rssr-iing entity.
c.C'ash cL:signated lbr the purchase of propertv. plai'r alr,"1 ecpripnterl.
tl.
'['r'adc'
irtstailtt-lent iiccou]rts receivabie nonlally collectiLrl" ii: l8 nrontl:s.

C -l'hc
16. itictirne stirterrrent infornration wor:id llt-ip irl lvliich olthc f'ollow'ing tasks'7
a. Eviiluirtc tne liquidity cf an entiti..
h. Evaluate the solvency of an entit5,.
c. Estimerte future cash florvs.
d. Estirlare fLnure flnarrcial flexiroilitl. Kung mas marami syang creditors, wala ding

A kwenta yung income mo sa I/S

17. S'hich of the fbllowing is not a genera.lly praciiced rletlrocl rif preserrting the income statement'l
RE a. lncluding prior period rd.ir"rstrnents in detclnrini:rg net ilicurre.
-fhe
b, condensed inconre statentent.
-l'he
c. consolidated income statemcnt.
d. lnclrrriing gains and losses l'ronr discontinueri operntions irr rJetr:r'nriningi net income.

B 18. Whicir ot'lhe fbllowing rvould bppear tirsl ::: ir ttat,,.mrni r:1-retr,neii rarni:igs'?
il. Net income
b. Prior period ariiustnrent
c. Cash Llividends
d. Share di,iiclends
 Page 3

incotlle?
B 19. Which of the f,',liowing is irrclUdecl iucoiTrpreltensive
a, lnrreStments i,.1 rrwners
tr. iJr-rrealized ;:ai"is on avaiiable for sale secLlrities
c. DistriLrutions [c owners
d. Changes in ar:':ounting Poiicv

luctes 13 tlre financial stateurelrts

C 20. Urrder International Financial Reporting Standarcis'
a. Must be quantifiable'
b, Must qr-ralifY as an element' of tire financial statenients'
c. Ampli'fy or explain items presenteci in the mainto body
d All of the choices are correct regar:ding notes the tlnancral statements'
D 21. Significant accounting p,,llicies nla)' not be
a. Selected on the basis oijr"tdgrnent'
h. Selected ti'om existri'rg acceptable alternatives'
c. Utrttsual or inno"'ativ: in applicatiotl'
d. Omitted fiotl firta;:rcial statement disclostlre'
D 22. Which assur-rtption li' principle reqltires thr',t
all inforntatiot'r sig'riiticant errough to aftbct a
reportecl i, the finarlcial statet,ents?
clecisio, of reasonably infor,recl useis sho,ld be
a. It4atchirig
b. Coirrg collcern
c. Ilistorical cost
d. Fr.rll disclosut'i:
rvouricl reqrtire adjtrstme,t of the
D _- whicir of
2j. tl-re following events after tl-re reportirig peri.d
ac(]otlrrts befbre iss,-rance of tire firrailcial statenrents?
a. Loss of Plant as a result of flre
heid as an investment
b. changes in the quoted market prices of secr-rrities
c Loss on ir-rventoiy resultiug tiorn majcr flood loss
c-leenlecl ttncet'taiu at year erld'
c1. I-oss on a lawsuit tite or-ltcome of ,vliich was

B 24, Rr)venue of a seglllei-it ii'rcir:cles

a. Only sales to unaffiliated customers'
b. Sales to r-rnaffiliated custonlers and interseqnrent saies'
c. Sales to unaffrliaicd customers and interest revenue'
d. sales to ,una{t'iliated cLlstol'llers and other revellLle ancl gains'
when the r:evenue of the segment exceeds
B 25. A segment of a br:sitress is to tre reported separately
:

teli Percent tl i'1he

a. Total corllL;n:d revenue of all segntents rePorti n g Proti t'
b. Total rever.rue rf all the entity' s indr"rstlY segtuettts
c. Total expoil and foreign sales'
Li. Cor-nbined net income of aii segments reportii^rg Protit.
reporting. except
A 26. Ailof tire fbllowing statenrents are t,rue regarciing iriterinr
interim reportir-rg date'
a. A co,rplete set;f filancial staten.]entsls r.quir.d at the
aclvertising expenditures that could
b. Entities are reclr;ired to expense ir-iielinr amollnt like
benefit later interinl Periods
ettt v i er'r' o i i nteri nl reporti ng'
c. PF'RS cloes not mention the integral and i nclepetrci
iluring the year should be reporteci'
d. No accruals or def-errals in anticipati:rg of tiriure events

u'hy' accour-rting chiitrges are classified into

B 27, Which of the lollorviLig is the best explauatlon
o ift'erent cate go ri es?
a. -[-he materiality'' of'the ciranges involved' clia.ges i, the tl,a'cial statements'
tl. Each category i'r,oives diff'erenimetliod olrecognizirlg
c. Tire tact that sr-rme treatments are considered GAAP aud some are not'
C1'AsLlrver,ol.maiielgersandtlreirneedlopr"ovirleathvorableprotitpictr-rre.
 Page 4
B 28. Which nrethod is required for reporting change:r in nccor-rniing policii:s?
.i. Cunruli:tive effect approach
ir. fi.etrospc.ctive approach
c. Prospective approach
d. Ar c.raging approach

C 29. Which trvpe of accounting change shoLrid 11.',.1r,.s ho tccounte.l fitr iii current ar.! filture periods?
a. Cl:ange in accounting pt:iicy
h Cirangre iri repor-ting entit.rt
c. ['hange in acc.ounting estirlatc
d. (-'olrection of an error
A 30. S/h1"is retrospective treatrnent of chang.es in ar:cor-rntirrr t.,stiniate is prnhibiterJ?
a. (.'hartg.:s in estimhtes as nornlal recurring correctidrls and ad.iustrrents which are the natural
result ot'the accounting process.
h 1'he retrospeciive treatnrent for any type of presentatiorr is not allowed.
Retrospective treatnlent o1'clranges in accountirrg estintates ls pr,rhibitecl because PFRS
requires i1.
d. FRSC dtles nor prohibit retrospective treatment of changes in accounting estimates but is
silent oit tiris issr.re

D 31. A cash ecluilaient is a shorl-term. highly liqrricl invesiriterrt that is rc--acJily convertitrle into knorvn
antoilnls ofc:sh and
a. Is accr:ptable as a nteans to pal- current liahilities.
b. Has a current nrarket value tl-rat is greater tharr original cost
c. Beat's an intefest rate that is at least eiiual to the prit:te rate ol'iirterest ai the date of
iir.pri,.larion.
d, Is so trear its ntatitrity tirat it presents irisigniticant risk of'charges irr interc.st rates.

B 32. \\'liich r'tf tlte 1'ollowing is air appropri,rte r',;ionciling item io the hnlirr:c,i pcr h;ink in a
bauk recr.inci iialian?
a. lJarrk serr ice charge
tr. Deposit iri rransit
c. Bauk irrlerest
d. (,'hargeback tbr NSF checli

C 3i. All o1'the follo.,ving are probiems associateil railh the valurtion *f aciounts rec*iva"hle. except
a. IJncollectib!e accor.tnts
b. Ii cturns
c. Cash discoultts under the net methcd
d. Allolval:ces granted
D 14. \\rhich of the ftrllowing nrethods of deternrining bad rlebt e:tperlsc does not properll, match
expense and revenuei)
il. (,har:gii:g Lratl debts rvith a percentage of sales under tlie allon,ance rrreffuocj.
b. C'hargling hrd debts',v.th an anlouni. cleiived ti'trn a perccntage oi'account.: receivable under
the al Ic-rr.l,ance nrethod.
c. Charging bad debts u'itir an amoLrnt clerii'ec1 flonr agrng accourrt-s receivable r-rn<ler tfue
irllor.vance method.
d. Charging bzril clebts as accounts are w,ritten ofl'as uncollecti'nlr:.
A 35 l'he adl'antag.,: olrelating an errtity's baci clebt e{pelse to outstancitng accounts receivable is that
this approar:ir
a. Cives a reasonatrly correct statement ol .iccrrunts receir;ible in the stateltlent of flnancial
position.
b. Best relates bad debt expense to the period of sale
t ls the tlnly general15' accepted rrethod fbr r,alr,ring .rccounts receivahle .
d. Mal<es estimates ot'uncollectible accounts Lrlnecessirry.
 Page 5

C 36. Which of the following should not be tal<err into accoultt rvherr determining the cost of
inventories'?
a. Storage costs of parl-finished goods
b. T'rade discounts
c. Itecerverable purcliase taxes
d. Import duties on shippingl of inventory itrr,vard

A i7. ['low shorrld import dr-rties be dealt witl-r w]rerr valuing invelttot'ies at LCNRV?
Lt. Adderl to cost
h,. Igrrored
c. Deducted in arriving at Ni{V
d. Deducted f}om cost

C 38. Which of the following statements is true iu relatii-rtt to illventor,Y?

I. flost of lhctory ntallagement should be iirclLrded in the cost of inv'c"ntor11.
IL Maintenance expeuses ior an iteni of eqLripnrent r-tsec'l in the' tlanutiictiirittg process should
be inr:luc{ed in the ccst ol inventorl'.
a. I oniy
b. II only
c. Both l and II
d. Neither I nor II
B 39. An cntitl, other than a financial ir-rstitlrtiot-r recei',,ecJ divic'ler-rds f'r'orti its investment in shales.
Horv sl.ror.rld it disclose the dividerrds rcceive,l iir tirc stirtetrent of cash flows?
a. Operatirrg casli inf'low
b. Either as operating cash ir-rflow or as invesiing cr.sh irrtlori'
c. Either as operating cash inflovv or as f-inartcing i:asli ilrf iou'
d. As an ad.iustment in the "operating actiritre's" s;ectiou of the cash tlou'

A 40. When it is difficr"rlt to distinguish betweetl a change in accourtting estiutate irnd a change iu
accounting policy, an entity should
ri. I'reat tl-re entire change as a chanlle in r:stirnate r-vith appropliate tiisclosLtre.
b. Apportion on a reasonabte basis the relative auroLlnts of citange in estitlate an,J tlie chauge
in accor-rnting policy and treat each one accordirrglr'.
c. Treat the entire change as a change in accountirrg policy.
d, Ignore it in tiie year of tlie change.

B 41. At the end of the current reporting periocl. aii entitl,carriecl a receivable Ij'ortr a tlajor cLlstonler.
-l-he
customer declared banl<rurptcy after:he eud ot'reporting periocl hLrt prior to authorization of
f-inancial statements. How shor,rld the errtity accolrirt lbr this event'7
il.Disclose in the notes tlie fact that the ctistomer cieclaru'cl bankruptcy.
b. Make a provision ibr this post-repoiting period event
c, Ignore the everrt
d. Reverse the sale in the comparatii'e statr:nrent trx'the prior pc'rioc1.

B 42. Which of the following statements is truc in reliition to events alier leporting periocl'?
I. Notes to the llrrancial statements shor,tld give details o1'all nraterial adjusting events
included in those flnancial statemerts.
ll. Notes to the financial statements shouid give details ol rnaierial norrad.]usting events
vr,lrich could influence the econonric decisions oluset's.

it. I orrll'
b. II only
c. Both I and II
d. Neithel I r-ror II
 Page 6
C .{3. Def'erred tax assets are the amollnt of incolre texes recoverable in firture periods in respect of
a. The carryfbrward of unused tax losses
h,. 'faxablc temporary dilterences and carryfonvard of unused tax losses
c, DedLrctible tenlporary differences arrci can'yfbrw'ard of unused tiix losses
d. Pelmanentdiffbrences
C .{4. An entity in'rported machinery fbr installr1i111 h,./':'p year enc-I. 'fhe nrachinerv was delal'ecl by
few rronths but reached tlie factory preirrise:; trelbre year-eric1. Tl-re bank charged iitterest otr the
ioan taken to fund the machinery. What is rhc propertreatment of iieight and interest expcnse?
a. Both expenses should be capitalized.
b.. Irrterest rnay be capitalized bLrt fieiglht shoLrlcj he expensed.
c. Freight charge should be capitalized irut interest carrnot be capitalized.
d. Both experises should be expensed.

D 45. Which of tlre following tentrs besl iic.sclibes tlre cost ol an anrolrnt srrbstitutcci lbr cost of'an
asset less residual value?
a. Revalr-recl amoLrnt
ir. C'arrying arltount
c. I{eco\'erable anr(}Lrnt
d. Depreciable anrount

D 46. Which of the fbllowing shouid be inclriCer1 i:-,the cost of air item of erluipmetit'?
a. lnitial operating losses rvhile demanrl cuiids up."r
b. Aprportioned general overhead costs
c. C'osts oltraining staff on tlre neu'zissr't
ii. Instaliation and assentbly costs
D 47. Which of the following costs relatiflg ro ir)rtclrilent assets shoriJC nitl be carritalrzc-cl?
a. Replacement of a building's rool'ever.., 1.s ycars
b. Cost of site preparation
c. Installatior-r and assembly costs
r'i. Replacenrent of sn-iall spare pafis a;-,uL,ri1'.,
B 48. I'he classification of a lease as either arr operaiirig or finance lease is trased on
i.r. The length of'the lease.
b. The transf'er of the lislis and rev,,ards olcvrner',hiir.
c, The nrinirnunr lease paynlents being;]t ieast.rl-i:o olthc lair value.
d. The economic lif'e of the asset.
B 49. Which of tlie lollowing is not included::r iir; cletlnition o1'rrinin.runr lease paynrents'7
a. Any payment requirecl by a bargain purchirse option that is reasonabiy ce riain
b. Costs fbr services and taxes to be paid kry,arrci reinrLrursed to the lc'ssor
c, ReqLrired payntents over tlre lease teiil
d. ;\ny' an-rount gr-iaranteed by a llart'i r:lrteri to the l,.rssc.]
D 50. Revenue lroni an artist;c pertbm:ance is lecognizecl once
a, The audience register fbr tlie evenl uuiin,:.
b. The tickets fbr the concert ale soltl.
c. C'ash has becn receiveci f'r'on-r tire ticlcr:, rair:s.
ii. 'l'he el'ent takes place.
B 51. A large manut'acturer sells rnerchandise to ii retailer under a consignmcnt contract. When should
rc-venlre be recognized by the manufactuler?
a. When goods are delivered to tl're retailer
b. Wheu goods are sold by the retailer
c. It vi,ill depend on the ternls of delivery of the nterchancJise
d. it will depend on the terms of paynrent
 Page 7

C 52. l)lau assets include

t'I. Assets treid by a 1or,1'-1,:,'trl en-lplol ec henetlt fr"rrlcl'
b. Qualifying ii.tstti"or:ce polily.
c. A.ssets by a ittrrg-te:'n:einployee benef it t'r-rnd ancl qualrti"ing insttratrce policy
d. Expected return ,-ri'; plan assL'ts,
C 5j. In the case oi':r nor,pronetary grant, rvhich olthe tbllorving accorinting treatments is prescribed?
a. Recorcl thc ass,,r at leplacement cost arrd the grant at a nominal l'alrie.
b. llecord tlie llrant at a value estirtated Lry mauagetrtent'
c. Recorcl botl-i rhe grant and the asset at fiiir r,'alue oIihe nolttt-ionetary asset.
cl. Reccrd onl'r,the asset at iair value and noi recognize il-re firir valr"te of tlre grant.

D 54. In relat:or to a benefit incliidcd in 1he lenr "governmer-It assistance''. rvi-iich of the follorving
stateirents is true?
I. I he provisiot't of infrastructltre in develonitrg arerls is a benetjt.
II, 'l'hc inrposition ol'tradirrg constraints on cotnpetilors is a benefit.

a. lurrll'
tr. ll only
c. Both l and II
d. Neitlier I nor II

B -55. An entity primarill,generatrts and expi',ncls cash in ttne pt'itrlat'y econotrric environmetlt''fhe
correct terrn tbi the r:ur:-renc.r of this prii-nar'1, ec'ot'tott-tic en'.'irct.tllletlt is the
a. Presentation currcl'lcY
b. Fr-lnctionzil culren0y
c. Reportin5: cr-in'ettov
d. Foreigu c rlrlt-'nc-Y
C -56. \\1hich uithe foilowing costs ntary nct be eligible fbr capititlization trs borrorvitlg costs?
a. Interest on ionds issued to i"rnance the constructicn of l qLrl)iif ing asset.
Il, Aniortizatiou of cliscor-rnts or prerniuils relatrii14 to borrowitrlrs tirat qualir,v t-or capitalization'
c. Inrputed cost olequity
cl. Ixi:ltange dif'tergnces ari:;irrg tiont fbrerign cilt'rencl bot'row'ings to the extent thev are
regar<1ed as an acl"justment to interest costs lrettairiirtg to a qLralil"ving asset.

B 57. Which of the fbllou,ing rnay not be r-onsicierer-l a ''qualiff ing asset" in relatiorr to capitalizatioll
of borrow'ing cost?
a. A notver generalion piant that nomrally tal<es trl'o ,vears to construct.
b. A,t e"pe,xive priva;cJet rhat can he pr-rt'i:hasec! iiirttr a locaI r'eticlor.
c. .A toll bridge that 6sr.rall;i iakes nlore 1h*n it 1'cttr to bLriltJ.
d. A ship tltat norn-iaily take s one to t\ o years to coruplete.

B 58. Which of tl-re follo',,,;iirg treatnrents is rt:qr-rir"cil fbr borrowing costs incttrrecl that are directly
attrihutable tii the coltrjtructiort c-la cluerliii'inu assct':
a. Recognize as an expeuse when iucttrred,
l-.. Capitalize ris cr.lst of the asset.
c. Either rec,o!jiti71e as an expense wherr incurred or capitalize as cost of'the asset
11. Ne;rher re;t'rgrnize as an expelrse when incurrecl nor capitalize a:i cost of the asset

B 59. \Virich of tlie foiiorving disciosr-ues i: not a n.,urclatc'd clisclosLrrc r,vitl.r respect to |elatecl parties?
r. l{eiationships betrveen parent airci suhsiiiiaries it'respective cll i,r'ltethet' thei'e have been
lians:rctior:s between those re iated parti e:;.
b. Narles o1'ail the associates that an entrti, has del,ill wilh drrriilg the t'ear'
c. Name of the entiry's parenr and, iidifiirent, the r.rltimate controlling partY.
d. If 6either t6e egtitv's pareltt nor ihe ultirnare parent prodLtces tlnancial sti'ltell-ients available
fbr pLrbiic use. then the name of the rrext n-rost senior parerlt tirat does so'
 Page 8

C 60. \\'hich of tlre tbllowing is not ;r related partl'clisclcsure?

a. -l-he
Ilntities u,itlr.ioint coniroi or significarrt influence over ihe entitl'.
b,. parent company o1'the entity.
c. An entity' that has a conlnlon direstor with the entity.
d, .loint venture in which the errtity is a venlttret'.
B 61. Slhich of the follor.ving is not a t'elated J:rr-:l'o{'rtrr errtitY')
a. A shareholder ot"tlie eriiity t-lvning -1*'7c cf.the oii;inarl'shares ousttrnding
b. An entity providing banking fhcilities to the entit!
c. An associate of the entit)'
d. Ke1 nrariagenlent personnel of the entitl'
B 61. lrrvcstntt'l:ts held by. retirerrre rit lreneflt plarrs shou]d be nteasltred at
a. Net rcaliz:alrie valu,:
h. Iritir vaiue
c. Original cost less impaimrents
d. Value in use
B 63.lhe,:quit3,,nrelhocl is not- reqrii!'ecl to be appliecl *'lten thc. associatc ltals beeu acquired and held
r,r.ith a yiew tc its ciisposal ivithirr a certain tinre period. Wlrat is the period u'ithin u'hich the
associate nrust be disposed ot?
a. Six rriontirs
b -l"r,relve nronths
c. Two years
d. lrr the ncar luture
D 64. I-lori.is goodrviil arising on tlre acr1uisition r1'r:n assuciatr',.lealt rvith irr tiie finanr:i:tl statements?
a. It is aniortized.
ir. lt is inrpainllent tested individr-ralli'.
c. lt is ri'ritten off against prolit cr loss.
d. Coo(wili is not ricognized separately,rr,itlrin tlte carriitts anrottttt ol'tl-ie itrvestnlent.
B 65. \I,hat accounting methoci slrourld be used tbl arr inl'estnrcni in a:r associilte u'here it is operating
tupder severe lo,rg-ternr restrictions. Ibr exanrple lvhere tlte goveilrntetrt of the entity has
tenlp{}rdry controi over tite associilte'J
ru. PirRS 9 sirould be appliecl.
b. The equity method sltoirlcl be applietl if siglnificarrt inf'lttence can tre cxet'ted.
c. The associate shourld be sllor,r'n at cost.
d. Proportionate consciidation should be rrsed.
B 66. W6ich ofttl,e tbllowing should be considet'er-l noitti"tgtletarY'l
{i. J rade receiviibles
b. Det'errecl tax liabiIities
c. Accruecl expense and otl-rer payahles
d. l"axes pa,r'able
D 67. Which of the tollowing would indicate that l,l'r'rerinllrtiriti e xist;'i
a. Sales on credit are at lorver prices thatt ci.tslt sales
b. lnflation is approactting, or exceeds. 209''o nr:r ;'enr
c. ir,4onetary iten:s do not increase in r,'alirt'
cl. People lrreflerto keep theirwealth in noriruoneiary assets or a stab!e fbreigrr cllrreincy
D 68. Which of the f'o!!ou'ing assets i:; not a ilrranciai ilsset')
a. Caslr
b. An ec}rity instrurxent of anolhc,-r c'ntii)'
c. Loan receivable
d, Prepaid experlse
 Page q

B 69. What is tlre prii,r:ii.,al accounting lor a conlpotll'ld iustntnletlt?

a. Tlre issr.rer srrail classify a compound iristntment as either a tiabiiity or eqr-rity'
b. Tire issr.rer -si.rall classity ttre iiot',itit1 arrci eqr-rity cotnponeiits ot'a compoutrcl instrutllent
separately as liability or eqtrily iristrltnreut'
c. fhe issr-rer si,all classify a compc.ruirC instlunrert as a liabiiity in its entiretl. rrntil converted
into equity.
d. T'he issuers6all classify a r:or:rponnci insirr-tt-uent as a liabiiitf in its errtirety'
C 70' what is tlie acctltultil-i!I tbr tre:rstr15' silere transrciicns'7
i,t. On repurchase ot'ircestll)' sl-iares. a grrin ot. loss iS recogniz-ecl'
6. On reissrrance oltrr:asury shares. o gii,", or loss i-" recogt-tizcd eqr-ral to the clitfe|ence betrveen
the previor.rs repr,rrchase price anc the reissuance plice.
C. On reptrrchase or reis-.ttatrce of treasui'1'siiares. no galrr or lOss is t'ecogtiizecl'
d. Treasurry shares i1l-f:: BicfJLitlted for as financial assets.
B 71. which shorild hc linssifle,-i as financial itr:rtt'inrtet.ils?
a. Patents
b. Trade receivabi::,
c. Inventot'ie:
d. Land ar,d lluiidirli:

qr-roted nlarket price' The

D 72. Atreptitv acqr-iirec governnleni bon.ls l'er-lcerliible atir,"r 5 Years at the
errrit\, lras n6..:rrirc;t ipter-iliori to sel1 tlre tronds artcl has a policy
to hold thelii as iuvesttrlents
rurless certain ci,rporate criteiia irre met:nrJ the
l:cnrls ari: solci to uaintaitr liquiditl'' Whi^ch of
ttte tbllowing is the ntost appropriate classiflcation fbr the il.ivestment
in governtner]t bonds?

a. FIeltl fbr trading

b. At iair value through profit or io:'s
c. Held to maturity
d. Available for salt:
C 13.|i a new issue of shart:s ',or cash is rtlade L1911vg'i1r thi vear-encl ancl thc clate that the t'inancial
stLiteltteltts are altlhoriz.:t1
a. EPS tbr both the ctiri:erti ;iirc1 tl-ie previotts yeiil' are adjustecl
b. EPS tbr the cLlrrertt year only is ad.iLrstod'
c. No acliustmenl i:; rnadc to EPS.
ci, Diluted EPS c"ni,r is ad.lusted.

B 1.t
/+. Value in use is
a. Tire tlali<et vaiue.
and from its
c'lisc,;;,rlc,'l present valtre of i'uture cash llows arisiirg lrom rtse of the asset
'fl-re
b.
disposal,
c. Thc liigher of an asset's f'air valLie less cost olc.li,.posal aud urarket i'alr-te position'
d. The amour:r at which tire asset is recognizecl in rhe statetnetrt of llnancial
B 75. \\,iren calcLrlating the estirnates of firtr.rre cesh l'1oi.rs, rvhicrh olthe loilorvir-rg
cash flows should
not 1oc iirclucied?
a. Cash flows i'rom disposal.
b. h-i,,.onre tax payments.
c. Cash flows front ti.ie sale of assets producecl by the asset.
ttse of'1he asset'
cl. Cash or-rtflows incr"trred to gelleraie the cash iullou's fl'onr tlre continLling

D 76. A casli-g.erreratiug ut-tit ls

a. The sntilllest bitsit:ess segnrent.
b. AtrY grclttping c:f'assets iirat generates casil tlr:w:;'
c. Apy, gl'9up olassr:is thr,t iS reporteci separate l1' to l11al'lagernent,
11, l'hc snrallest gr.rrrp of assets il-,ut g.n"intes ineiepencient casl.r [lou's
t't'otr cotltinLlillg Llse'
 Page I0

C 77. \\'hen allocating an irlpairnlent loss. sr,iclr a loss sirouid rcrittce the carryirtg anrottnt of' u'lrich
asset llrst?
a. Plopertl'. plant. ancl equipnrent
b. lntangible assets
c. Liooil* ill
d. ('urrcnt assets
A 78. Which of the lollon'ing tet'ilts best describes t[]e' higher oi'ti.rir lalue lt-::;s cost 'tf clisposal and
valr"re iu use'?
ll. lteeoverable aurt-nr:rt
tl. Rcvalued antoLtnt
c. Depreciahle arnount
d. C'arr,virrg antounf

B 79. Which ol'the following is the correct Ceirrrition cla provision'.'}

a. { 1:o.sitrle obligation arisingr l'rorn past eventr
tr. .{ liabilitl, of uncertain ti:rtiltg or ar-ltoLint
c. A Iitrbilitl' r'hiclr cannot be ei'sii1' nreiisr.u ed
tl. i\n obligatitin to Lransler lunels tr.r an entlt,r
D [:i0. \\'hich of'tlre fiillorving itenrs rvoulcl ciualii'1'as 1]"i intrngil':i,: it:;set'7
r. Adrertising and pronrotic'rn on the launch rrl-a huge proditct.
b. ('ollege tLrition lees paid to eruplol'crr"'s x'ho ciecirle to cnr,.ril in an exccutivc M.l-].i\ ptngranr
at i-iarvarci IJnivcrsity a'hile working rr':lh lire entit].
c, Operating losses cluring the initial slagcs ol'the prtr.ieci.
rl. [-egal costs paid to inteilectual propertl'lar.ryers to regislcr i'pi]ictti.

B 81. An entitv has recentlv contplerterl a resealch r-r,rd clereloprlettl prtfect. \\:hich of the lbllowing
stalenrents is accurate?
a. (',JSIs incurrecl during tlre research phir-..e cilu b.'cnlrilrilrzeii.
b. C'osts incurreil dr"rrir-rg ths dsvelopnteni phlsc can be ciipitalizeci il'r:ritcria srtclt as teclrnical
fbasibilitl,'of the project are ntet.
c. Training costs oltechnicizrns used in reselrch tan be cirpir;1li7sd.
d. Designing o1'jigs and tools qualit.r'i.rs lrr::.c.ri( ir activitics.

D tt2. \\/hich ot'the lbllorving is not relevant in detenrirring tlre rrsefiri lit'e olan irrtartgible asset?
il. 0bserlescence
h. Ii::pected action ot'conrpetitr:r
c. 1'he expected usage of'the assei
ii, '['hr' rbsidual value oi'1he assc:t
C 83. \\'hat is the brest e'n'i,-1ence of ths thir rerlue ot'a t'inancial ittstrtttnent'/
a. The cost. including irans;rction ccsts dileclli' *1'rtOr,rai[rlt tei tlte 6:urcl,rase origirration or
issuance of tire f inancial iirstrument.
h. 'fhe estimateci valr-re detentlinecl using discounted cash flow techniques. option pricing
nrociels or other r,aluation teclrniques.
c ilr..'c1rrc;ted price. if arr active market exisis lbr the flrrancial itrstruttnent.
(1. -l'lic present value of the contractual caslr floivs less inrpainnent.

A 84. trr adclition to financial assets at lair valric 1hr':rrrglt nrcifit or loss. lihich ol the tbllowing
categories of financial assets is nreasured iit lair r'alue''
.1. Availatrle i'cr sale llnancral assets
b. ileld to maturity irtvestments
c. Lr.rarrs and receivables
cJ. Investnrents i:-r urcl"iroteC eclitity insrnlinents
 Page I I
A 85. A gain arising from charrge in fairvaiue oi'an investnrent property lor rvlrich an entity has opted
to use the firir value r-nodei is lecognizetl itr
c. Nc't protit fbr the year
b,, General reserve in the shareholders' eqLriiy
c. Valr"ration reserve in tlie shareholders' equitl'
d. Retained earnings

B 8(r. Which of the followir-ig statelltents bes' .lescril")cs ()'r\ner'-occtrpied prope 11y'?

a. Propertv held for sale in the ordinar\/ coLrrse r-ri'bttsiriess

b. Propert5'held fbr use in the proclrrction nnd sLrppl,v of gooils or sen'ices ancl propertl'helcl fbr
adni i ni strative purposes
c. Ploperly held to earn rentals
d. Propertv held fbr- capital appreciation

B 87.-fhe lbllorving properties {all Lrncler the jefinirior., cf ini'estnrent Lirilperl}. except
a, L,and held fbr long-term capit;rl appli:cielic,ri
b. I)rl;1.;ertl occupied i:'f ilrt crt-rplc)/ce par,/trrg tll.lri\cl I'eilt
(:, L-ancl ireld 1br a currentlv undeterrtrinecl use
11. A bLrilding orvned by an entilr'antl lcaseri out under art oprratins lease

C 88. Ceneri:ll..,speaking. Lriological assers,'clalingr to ngliculnrrai trctivitl'sitould be itrertsttred usirrg

a. H istorical cost
b. L{istorical cost less depreciation lr'sS i:trpairntetit
c. A tair value approach
d. Net realizable valLre
C 89. \\/here the fair value of tlie biological ::sset clnnot he clctenrined tcliahll'. the biological asset
shor.rld be measured at
a. Cost
ir. Cost less accumulated depreciatior-r
c. Cost less accumulated clepreciatir)r-r &ncl accu:i:ulatecl inrpairntent losses;
d. Net realizable value

D 90. Which of the fbllowing iten.rs wolrid bt'ciassilleri :is agi'icultr-rral produce'l
a. 'Tree

b. Br"rsh
c. BLrtter
d. Apple

A 91. I-lolv should the inconre l}om disconlin.red cperation be pr,-'serrted in tire incorne statenlent'?
a. the entity should disclose a singre irilor.lilt or thr lace of the irrcome statentent \\'ith,
arralysis in the notes
b. 'l-he amounts fiom discontinued opelatiou shoulcJ bc broken clon'r-t or.'er each category of
revenLle and erpense,
c, Discontinued operation sl-rould be shor.,,rr .1:i a irovement on retained earnings.
d, l)iscontir-nred operation should be shcwn as a iine iienr atier gross profit with the taxation
being shown as paft of incor-ne tax e:ipr-'n.re.

D 91. Which of the lbllou,ing criteria cioes nrt l'ravc to be nret in orcler lirr an opet'ittiotr to be
classifled as discontinued?
a. T'he operation should reprcsent a sepaiate m.j]\)i'Iine of business or gc'ographical area.
b. The operation is part of a single plan tr: rlispose of a seprratc ntajor line of bttsiness or
geographical area,
r', "fhe operation is a subsidiary acquired t'x,:lLrs-:iiely rvith a view to lesitle.
d, 'fhe
operation rlust be sold within iiirce nrontlis of the 1'ear'-end.
dapat expected to be sold within one year after date of classification.
 Page 12

B 93. l{ow'shourld the assets and liabiiities ola disposal group classiflecl as held fbr sale be shorvtt in
the statenlent of financial position?
a, Tlre assets and liabilities should be ofiset and presented as a single arroLlnt.
b. 'fhe assets of the disposal grollp shoLrld be shown separately' lrom othet' assets and the
Iiabilities should be shown separately f'r'orl otirer liabilities.
c. Tlre assets and liabilities shoulci be presenteci as a deductiori iionr equity.
d. There should be no separate disclc:tt:;e ot'as:sclr and liabilities,
C 94. Which is not a characteristic of the ''full cost" n.reflocl in the oil ancl gas irrdustry?
a. All costs incurred in acqLriring. expltlring ar-id cleveiopirrg ri,ithin a defiued cost center are
capital ized and amor-tized.
b. Costs are capitalize.d even if a specif,rr: pr<l,ie:ct in a cost center was a lailure,
c. Costs olur.rsuccessflul acquisitioir anci exploration activities are charged to expense.
d. Exploration and evaluation asset is classitled either as tangible asset or ar-r intangible asset
according to the nalure of the asset.

C 95. Which e.xperrditures would neverquaiif,v as an explolatioir and evaltiation asset'J

a. Expenditures for acquisitior-r of rights lo explorc.
b. Exlenilitures fbr exploratory drilling.
i. tlxpenditures related to ihe dtv,-:lcpttreitt o1't-ttitre:'al is:;,ittl'c,:s,
ci. Expenditures fbr activities in relaiie,lr tc evaiLrating the teclitrical i'easibility attd conrnlercial
viabilitl, of extractiug a mineral re st.rLtitre.

B 96. When collectibility is reasonably assirrerl. the excess o1'the subscription price over the stated
value of the no-par subscribed share crlpitri shail bc recorded as
a. No par share capital
b. Share premiunr rvhen the sr.rbscription is recorcl:C
c. Sliare premium when the sLtbscriptic,tt i:s coilccrccl
d. Share premium rvhen the share capitiri is i:rsut:d.
C 97. An entity declared a cash dividend on a certain ciate payable on eurotlier date. What would be the
ettect on letained earnings?
a. Increase on iire c'iate of c'leclalation
b. Not be affected on the cltite ol.declrir'.rtrr:r'r
c. Not be affected on the date of payircnl
rl. Decrease on the date clf payment
C 98. Earnincs per share as reported in the inconre siatement shall be conrpr"ttc'd on the basis ol
a. T'lre number of shares outstanding at the end of the vear
h A. iveigl-rted average of tlre nun-iber o1'shares outstanclirrg clLrritrg tlre year regarclless of' the
extent of fluctuations
c. A weighted average ol the number cf sliares outstanding durirrg tlre year except that minor
fluctuations in the number of shares nra1,' be ciisregarded
d. The nunrbel of shares ourtstanding in tlre rridcJle of the,vear'
D 99. tr'hat is the eff'ect ilan inventory accoirirt is: unrlcrstated lt year-eud'?
a. Overstate the net purchases
b. Overstate the gross margin
c. Overstate the cost of goods available fbr sale
d. Overstate the cost of goods sold
C 100, Total shareholders' equity cJii,'ided by thc nrrnrbel of shares outstarrcling represents the
a. Itetunr on eqr-rity
b. Stated value per share
c. Book value per share
d. Earnings per share
tiNI}