Professional Documents
Culture Documents
5. Which of the following most clearly states the most important quality
which an expenditure must have to be recognized as an asset on
the balance sheet?
(a) It must be both material and relevant
(b) It must have reasonably certain future benefit to the business.
(c) It must be a physical object
(d) It must be used in operation of the business.
9. In recording the bank balance with the book cash balance, which of
the following would not cause the bank balance shown on the bank
statement to be lower than the unadjusted book balance?
(a) cash on hand at the company
(b) NSF checks from a customer, as reported on the bank statement
(c) interest credited to the account by the bank
(d) deposits in transit
(d) The lower of its carrying amount on the basis that it had never
been classified as held for sale and its recoverable amount
32. Which of the following is not reversed at the start of the new
accounting period?
(a) expense paid in advance that is debited to the expense account
at the time of payment
(b) doubtful accounts computed using the aging schedule
(c) income earned but not yet recorded because was not yet
received
(d) rent collected in advance and credited to a nominal account
37. The historical cost concept measures assets on the basis of:
(a) the replacement cost of assets on the balance sheet
(b) the amount of cash for which the assets could be sold
(c) an appraisal by the auditors
(d) the fair market value of assets on the day they were acquired
38. In financial accounting, gains may be defined as:
(a) total receipts of cash
(b) total receipts of cash in excess of the historical costs of the
assets being sold
(c) total revenues
(d) total increases in net assets other than revenues
45. Dave started his own cheese factory on March 16, 2003. Which
of the following transactions would not be admissible in Dave’s
accounting system for the month of March?
(a) On March 18, Dave purchased a cow on account for P3,000.
(b) On March 20, Dave sold his cow to a fast food restaurant for
P5,000.
(c) On March 21, Dave contracted with a local radio station to run
several one-minute advertising spots during the month of April.
(d) All of the above transactions would be admissible for Dave’s
accounting system in the month of March.
46. Jeff purchased a new register system for his grocery store,
paying P1,000 in cash and issuing a P6,000 note payable for the
balance owed. As a result of this transaction, Jeff’s balance sheet
would reflect:
(a) an increase in assets and an increase in liabilities
(b) a decrease in assets and an increase in liabilities
(c) an increase in assets and a decrease in liabilities
(d) an increase in assets and an increase in owner’s equity
49. Tony owns a store specializing in bags. Tony has just completed
a transaction that caused a P12,000 increase in total assets and a
P12,000 increase in liabilities. This transaction could have been:
(a) the investment in his business of P12,000 in cash
(b) the purchase of store equipment, paying P9,000 in cash and
issuing a P12,000 note payable for the balance owed
(c) the purchase of bags for his inventory, paying P4,000 in cash
and issuing an P8,000 note payable for the balance owed
(d) none of the above transactions would cause total assets and total
liabilities to increase by P12,000
50. Dean has completed the posting process for the month of June
and has prepared a trial balance in which the debits total P11,000
and the credits total P11,100. Which of the following errors would
be the most likely candidate in causing the trial balance not to
balance by P100?
(a) a P100 debit was posted as a P100 credit
(b) a P100 debit was posted as a P100 credit and a P100 credit was
posted as a P100 debit
(c) a P50 debit was posted as a P50 credit
(d) the purchase of supplies on account was never posted to the
general ledger
60. Subnormal or obsolete goods, either under the cost or the lower
of cost or market basis:
(a) should be taken up an unrealized inventory loss.
(b) should be valued at bona-fide selling price less direct cost of
disposition.
(c) should be valued by applying an inventory method that uses a
constant or nominal value for the normal inventory level.
(d) should be adjusted in the cost of goods sold.
B
70. A long-term debt falling due within one year should be reported
as noncurrent liability should be reported as noncurrent liability if the
following conditions are met (choose the incorrect one):
(a) The original term is for a period of more than one year.
(b) The enterprise intends to refinance the obligation on a long-term
basis.
(c) The intent to refinance is supported by an agreement to
refinance which is completed before the issuance of the
financial statements.
(d) The intent to refinance is supported by an agreement to
refinance which is completed after the issuance of the financial
statements. D
71. Which will demonstrate an agreement to refinance (choose the
incorrect one)?
(a) Long-term obligation has in fact been issued before the issuance
of the financial statements for the purpose of refinancing.
(b) Equity security has in fact been issued before the issuance of the
financial statements for the purpose of refinancing.
(c) Before the issuance of the financial statements, the enterprise
has in fact entered into a financing agreement that clearly permits
the enterprise to refinance the currently maturing long-term debt
on a long-term basis.
(d) Preferred stock has in fact been issued before the issuance of
financial statements for the purpose of obtaining working capital.
D
72. Some obligations that are due to be repaid within the next
operating cycle and expected to be refinanced or “rolled over”
should be classified as noncurrent:
(a) If the refinancing or “rolling over” is at the discretion of the
enterprise and the refinancing agreement has been reached
before the issuance of the statements.
(b) If the refinancing or “rolling over” is at the discretion of the
enterprise regardless of whether a refinancing agreement has
been reached or not before the issuance of the statements.
(c) If the refinancing or “rolling over” is not at the discretion of the
enterprise.
(d) Subject to no conditions.
A
75. If the pattern in which the economic benefits from the asset are
consumed cannot be predicted reliably, the method of amortization
for an intangible asset should be:
(a) straight line (c) declining balance
(b) output method (d) sum of years’ digits
A
84. Dave started his own cheese factory on March 16, 2003. Which
of the following transactions would not be admissible in Dave’s
accounting system for the month of March?
(e) On March 18, Dave purchased a cow on account for P3,000.
(f) On March 20, Dave sold his cow to a fast food restaurant for
P5,000.
(g) On March 21, Dave contracted with a local radio station to run
several one-minute advertising spots during the month of April.
(h) All of the above transactions would be admissible for Dave’s
accounting system in the month of March.
C
85. Jeff purchased a new register system for his grocery store,
paying P1,000 in cash and issuing a P6,000 note payable for the
balance owed. As a result of this transaction, Jeff’s balance sheet
would reflect:
(a) an increase in assets and an increase in liabilities
(b) a decrease in assets and an increase in liabilities
(c) an increase in assets and a decrease in liabilities
(d) an increase in assets and an increase in owner’s equity
A
88. Tony owns a store specializing in bags. Tony has just completed
a transaction that caused a P12,000 increase in total assets and a
P12,000 increase in liabilities. This transaction could have been:
(a) the investment in his business of P12,000 in cash
(b) the purchase of store equipment, paying P9,000 in cash and
issuing a P12,000 note payable for the balance owed
(c) the purchase of bags for his inventory, paying P4,000 in cash
and issuing an P8,000 note payable for the balance owed
(d) none of the above transactions would cause total assets and total
liabilities to increase by P12,000
B
89. Dean has completed the posting process for the month of June
and has prepared a trial balance in which the debits total P11,000
and the credits total P11,100. Which of the following errors would
be the most likely candidate in causing the trial balance not to
balance by P100?
(a) a P100 debit was posted as a P100 credit
(b) a P100 debit was posted as a P100 credit and a P100
credit was posted as a P100 debit
(c) a P50 debit was posted as a P50 credit
(d) the purchase of supplies on account was never posted to
the general ledger C
BPS/EPS
93) Under PAS 33, EPS disclosures are required for
I. Entities whose ordinary shares or potential ordinary shares are
publicly traded.
II. Entities that are in the process of issuing ordinary shares in the
public market.
a. I only b. II only c. Both I and II
d. Neither I nor II
103) For a company that has only ordinary share outstanding , total
shareholder’s equity divided by the number of shares outstanding
represents the:
a. return on equity
c. stated value per share
b. book value per share
d. price-earnings ratio
Sharebased
105) The entity has issued a range of share options to employees. In
accordance with PFRS 2, what type of share-based payment
transaction does this represent?
a. Equity-settled share-based payment transaction
b. Asset-settled share-based payment transaction
c. Cash-settled share-based payment transaction
d. Liability-settled share-based payment transaction
c. Equity
b. A noncurrent asset
d. A
liability
108) An entity has entered into a contract with another entity. The
latter will supply the former with a range of services. The payment
for those services will be in cash and based upon the price of
former’s ordinary shares on completion of the contract. In
accordance with PFRS 2, what type of share-based payment
transaction does this represent?
a. Asset-settled share-based payment transaction
b. Cash-settles share-based payment transaction
c. Liability-settled share-based payment transaction
d. Equity-settled share-based payment transaction
109) If share-based payment transaction provides that employees
have the right to choose the settlement whether in cash or shares,
the entity is deemed to have issued
a. An equity instrument
b. A liability instrument
c. A compound financial instrument
d. Either an equity instrument or liability instrument but not both
110) Under PFRS 2 share – based Payment, the method that must be
used to measure employee stock options and other payments given
to employees in the form of equity securities, is:
a. Initial cost
c. Fair
value
b. Discounted cash flows
d. Selling price
111) Many shares and most share options are not traded in an active
market. Therefore, it is often difficult to arrive at a fair value of the
equity instruments being issued. Which of the following option
valuation techniques should not be used as a measure of fair value
in the first instance?
a. Black – Scholes model
c. Monte – Carlo model
b. Binomial model
d. Intrinsic value
112) It is the difference between the fair value of the shares to which
the counterparty has the right to subscribe and the price the
counterparty is required to pay for those shares.
a. fair value
c. Market value
b. Intrinsic value
d. Book
value
SHE
117) Under IFRIC 17, a property dividend declared before the end of
the reporting period should be recognized as liability at the end of
the reporting period at
a. Carrying amount of the asset to be distributed
b. Fair value of the asset on the date of declaration
c. Fair value of the asset at the end of reporting period
d. Fair value of the asset at the date of distribution
119) Gains and losses on the purchase and resale of treasury stock
may be only be reflected in
a. Paid-in capital accounts
b. Paid-in capital and retained earnings accounts
c. Income, paid-in capital and retained earnings
d. Income and paid-in capital accounts
121) Which of the following statements best describes the net effect
on retained earnings of the purchase and subsequent sale of
treasury stock?
a. retained earnings may never be increased , but sometimes
decreased.
b. Retained earnings may never be increased or decreased
c. Retained earnings may be increased but never be
decreased.
d. Retained earnings account is always affected unless the selling
price is exactly equal to cost
122) When stock rights are exercised, how much should be treated as
total proceeds from the issuance of shares?
a. only the consideration received
b. The total of the consideration received and the amount previously
recorded for the stock rights
c. the amount previously recorded for the stock rights
d. The total par value of the shares
128) The peso amount of total shareholders’ equity remains the same
when there is
a. Issuance of preference share in exchange for convertible
debentures
b. Issuance of nonconvertible bonds with share warrants
c. Declaration of a stock dividend
d. Declaration of a cash dividend
Income taxes
c. Equity
b. Tax expense
d.
Cash
132) Under PAS 12 Income Taxes, deferred tax assets and liabilities
are measured at the tax rates that:
a. Applied at the beginning of the reporting period
b. At the end of the reporting period
c. At the rates that prevail at the reporting date
d. Are expected to apply when the asset or liability is settled
Benefits
141) Which of the following is not one of the six components of
pension expense (or part of a component)?
a. Initial transition asset
b. Amortization of unrecognized gain or loss
c. Expected return on plan assets
d. Growth (interest cost) in PBO/ABO since the beginning of the
period
d. Value in use
c. Either I or II irrevocably
b. II only
d. Either I or II revocably
150) For a defined benefit pension plan, the discount rate used to
calculate the projected benefit obligation is determined by the
Expected return on plan asset Actual return on plan
asset
a. yes yes
b. no no
c. yes no
d. no yes
151) The present value of pension benefits accrued to date using
assumptions as to future compensation levels is the
a. Prior service cost.
c. Projected
benefit obligation.
b. Accumulated benefit obligation.
d. Accrued pension cost.