Professional Documents
Culture Documents
s false? (a) statement of changes in equity (c) statement of retained (b) When goods are sold by the retailer
(a) Financial reporting should provide information which is earnings (c) It will depend on the terms of delivery of the merchandise
relevant to investment, credit and public policy decisions. (b) profit (loss) statement (d) statement of cash flow (i.e., CIF cost, insurance, and freight or FOB)
(b) Generally speaking, GAAP are those accounting principles 8. Which of the following reconciling items would require an (d) It will depend on the terms of payment (i.e., cash or credit)
with substantial authoritative support. adjusting journal entry on the company’s books?
(c) GAAP are established to ensure the relevancy of the (a) outstanding checks (c) deposits in transit 14. When the allowance method of recognizing bad debt expense is
general-purpose financial statements to the widespread (b) non-sufficient funds checks (d) cash on hand used, the typical write off of a specific customer’s account:
uses of the information by external decision makers. (a) has no effect on net income (c) decreases current asset
(d) Once established, GAAP should never be changed. 9. In recording the bank balance with the book cash balance, which (b) decrease net income (d) decreases working capital
of the following would not cause the bank balance shown on the
bank statement to be lower than the unadjusted book balance? 15. Which of the following is the incorrect statement?
2. A firm signs a major contract in December to construct
(a) cash on hand at the company (a) The fair value method of accounting is the most appropriate
custom machinery for a client. No work is begun the current year
(b) NSF checks from a customer, as reported on the bank method of accounting for short-term investments in
yet the footnotes to the firm’s financial statements discuss the
statement marketable debt securities.
nature and peso amount of the contract. This is an example of
(c) interest credited to the account by the bank (b) Unrealized holding gains and losses on investments in
(a) reliability (c) historical cost
(d) deposits in transit trading securities are recognized in income.
(b) full disclosure (d) conservatism
(c) All investments in available for sale securities are reported
10. In determining the cost of goods sold: at fair value.
3. A corporation needed a new warehouse; a contractor
(a) purchase discounts are deducted net purchases (d) Only investments in bonds are accounted for by the fair
quoted a P250,000 prices to construct it. The corporation
(b) freight out is added to net purchases value method.
believed that it could build the warehouse for P215,000 and
decided to use company employees to construct the warehouse. (c) purchase returns and allowances are deducted from net
purchases 16. Which of the following is false?
The final construction cost incurred by the corporation was
(d) freight in is added to net purchases (a) A debit valuation allowance balance for an investment in
P240,000 but the asset was recorded at P250,000. This is in
available for sale securities implies a corresponding owners’
violation of the:
11. Which of these would cause the inventory turnover ratio to equity account with a credit balance of the same amount.
(a) time period assumption (c) cost principle
increase the most? (b) Unrealized holding gains on investments in available for sale
(b) matching principle (d) revenue principle
(a) increasing the amount of inventory on hand securities may be recognized as a direct increase to owners’
(b) keeping the amount of inventory on hand constant but equity.
4. Which of the following accounting concepts best justifies increasing sales (c) Investments in trading securities may be classified as current
the use of accruals and deferrals? (c) keeping the amount of inventory on hand constant but or long-term.
(a) Cost/benefit constraint (c) Continuity assumption decreasing sales (d) Investments in available for sale securities may be classified
(b) Unit-measure assumption (d) Materiality constraint (d) decreasing the amount of inventory on hand and increasing as current or long-term.
sales
5. Which of the following most clearly states the most 17. Which of the following is incorrect?
important quality which an expenditure must have to be 12. An entity is a large manufacturer of machines. A major customer (a) Investments classified as long-term are reclassified as short-
recognized as an asset on the balance sheet? has placed an order for a special machine for which it has given a term investments only if it is the intention of the
(a) It must be both material and relevant deposit to the entity. The parties have agreed on a price for the management to dispose of them in the short term.
(b) It must have reasonably certain future benefit to the machine. As per the terms of the sale agreement, it is FOB (free (b) If an investor company does not have significant influence in
business. on board) contract and the title passes to the buyer when goods another company, it must use either the fair value method
(c) It must be a physical object are loaded into the ship at the port. When should the revenue be or the cost method to account for that investment in equity
(d) It must be used in operation of the business. recognized by the entity? securities.
(a) When the customer orders the machine (c) If an investor company has a controlling interest in another
(b) When the deposit is received company, it must use either the cost method or the equity
6. Which of the following is a current asset? method to account for that investment in equity securities.
(c) When the machine is loaded at the port
(a) cash surrender value of a life insurance policy, where the (d) The cost method is sometimes applied to investments in
(d) When the machine has been received by the customer
company is the beneficiary equity securities.
(b) investment in marketable securities for the purpose of
13. A large manufacturer of cosmetics sells merchandise to a retailer,
controlling the issuing company 18. Select the incorrect statement.
which in turn sells the goods to the public at large through its
(c) cash designated for the purchase of tangible fixed assets (a) The cost method of accounting for an investment in a
chain of retail outlets. The retailer purchases merchandise from
(d) trade installments receivable normally collectible in 24 months subsidiary recognizes the legal fact that the parent and
the manufacturer under a consignment contract. When should
revenue from the sale of merchandise to the retailer be subsidiary are one economic unit.
7. The basic components of financial statements include recognized by the manufacturer?
(choose the incorrect one): (a) When goods are delivered to the retailer
(b) Realized gains and losses on investments in equity securities (a) An entity shall present a noncurrent asset held for sale and 27. An entity classified a noncurrent asset accounted for under the
accounted for under the cost method are usually measured the assets of a disposal group classified as held for sale cost model as held for sale on December 31, 2009. Because no
by the difference between the cost and current selling price. separately from other assets. offers were received at an acceptable price, the entity decided on
(c) Under the equity method of accounting for long-term (b) The liabilities of a disposal group classified as held for sale July 1, 2010 not to sell the asset but to continue to use it. In
investments in equity securities, the investor’ investment shall be presented separately from other liabilities. accordance with PFRS 5, the asset shall be measured on July 1,
account is decreased by all dividends received from the (c) The assets and liabilities a disposal group classified as held 2010 at:
investee. for sale shall be offset as a single amount. (a) The lower of its carrying amount and its recoverable amount
(d) The equity method of accounting for long-term investments (d) An entity shall not depreciate a noncurrent asset classified (b) The higher of its carrying amount and its recoverable
in equity securities is based on the presumption that the as held for sale or while it is part of a disposal group amount
investor owns a sufficient number of the outstanding voting classified as held for sale. (c) The higher of its carrying amount on the basis that is had
shares of another company to exercise significant influence never been classified as held for sale and its recoverable
over the operating and financing policies of the other 23. What is the treatment of gain on an initial increase in the fair amount
company. value less cost to sell of a noncurrent asset classified as held for (d) The lower of its carrying amount on the basis that it had
sale? never been classified as held for sale and its recoverable
19. Which of the following is the incorrect statement? (a) The gain shall be recognized in full. amount
(a) For a long-term equity investment, the investor accounts for (b) The gain shall not be recognized.
a stock split in the same manner as for a stock dividend. (c) The gain shall be recognized but not in excess of the 28. The following statements relate to the term “profit”.
(b) The relative sales value method is usually used to apportion cumulative impairment loss previously recognized. Statement 1: Profit is any amount over and above that required to
the book or carrying value of a long-term equity investment (d) The gain shall be recognized but only in retained earnings. maintain the capital at the beginning of the period.
between the old shares still owned and newly received stock Statement 2: Profit is the residual amount that remains after
rights related to those shares. 24. Noncurrent asset classified as for rental to others shall be expenses have been deducted from income.
(c) A stock dividend received on an investment reduces the per presented in the statement of financial position as: (a) Both statements are false.
share cost to the investor. (a) Current asset (b) Statement 1 is false.
(d) For the equity method to be applicable to equity (b) Other noncurrent asset (c) Statement 2 is false.
investments, it is presumed that the investor owns enough (c) Noncurrent investment (d) Both statements are true.
voting shares of the investee to exercise managing control. (d) Property, plant and equipment
20. An entity shall classify a noncurrent asset or disposal group as 25. How should the assets and liabilities of a disposal group classified 29. Which of the following is not true of a subsidiary ledger?
“held for sale” when: as held for sale be shown in the statement of financial position? (a) The purpose of a subsidiary ledger is to store details of certain
(a) The carrying amount of the asset or disposal group will be (a) The assets and liabilities shall be offset and presented as a general ledger accounts.
recovered through continuing use. single amount. (b) The sum of the individual balances in a subsidiary ledger
(b) The carrying amount of the asset or disposal group will be (b) The assets of the disposal group shall be shown separately should equal the balance in the general ledger control
recovered through a sale transaction. from other assets in the statement of financial position, and accounts.
(c) The noncurrent asset or disposal group is to be abandoned. the liabilities of the disposal group shall be shown (c) Journal entries posted to a subsidiary ledger need not be
(d) The noncurrent asset or disposal group is idle or retired separately from other liabilities in the statement of financial posted to the general ledger.
from active use. position. (d) One benefit of a subsidiary ledger is that the number of
(c) The assets and liabilities shall be presented as a single general ledger accounts necessary is reduced.
21. Noncurrent asset or disposal group is classified as “held for sale” amount and as a deduction from equity.
when the asset is available for immediate sale and the sale is (d) There should be no separate disclosure of assets and 30. The purpose of trial balance is to:
highly probable. For the sale to be highly probable, (choose the liabilities that form part of a disposal group. (a) indicate whether total debits equal total credits.
incorrect one) (b) ensure that all transactions have been recorded.
(a) Management must be committed to a plan to sell the asset. 26. An entity acquires a subsidiary exclusively with a view to selling it. (c) speed the collection of cash receipts from customers.
(b) An active program to locate a buyer and complete the plan The subsidiary meets the criteria to be classified as held for sale. (d) increase assets and owner’s equity.
must have been initiated. At the end of the reporting period, the subsidiary has not yet
(c) The asset must be actively marketed for sale at a reasonable been sold, and six months have passed since its acquisition. How 31. The closing entry for sales discounts is:
price in relation to its carrying value. will the subsidiary be valued in the statement of financial position (a) debit sales discounts and credit income summary.
(d) The sale is expected to qualify for recognition as a at the date of the first financial statements after acquisition? (b) debit sales discounts and credit sales revenue.
completed sale within one year from the date of (a) At fair value (c) debit income summary and credit sales discounts.
classification of the asset as “held for sale”. (b) At the lower of its cost and fair value less cost to sell (d) not used because sales discount is a real account which is not
(c) At carrying amount closed.
(d) In accordance with applicable PFRS
22. Which statement is incorrect concerning presentation of 32. Which of the following is not reversed at the start of the new
noncurrent asset or disposal group classified as held for sale? accounting period?
(a) expense paid in advance that is debited to the expense (b) II, IV, VI, VIII, X (d) II, III, V, VII, X (d) As long as the gap is not greater than 3 months, there is no
account at the time of payment problem.
(b) doubtful accounts computed using the aging schedule 37. The historical cost concept measures assets on the basis of:
(c) income earned but not yet recorded because was not yet (a) the replacement cost of assets on the balance sheet 43. When an investor purchases sufficient ordinary shares to
received (b) the amount of cash for which the assets could be sold gain significant influence over the investee, what is the proper
(d) rent collected in advance and credited to a nominal account (c) an appraisal by the auditors accounting treatment of any excess of cost over book value
33. In the equation, “Assets + Expenses = Liabilities + Revenue + (d) the fair market value of assets on the day they were acquired?
Capital”, the expenses and revenues are: acquired (a) The excess remains in the investment account until it is sold.
(a) contra asset and contra liability accounts, respectively, that (b) The excess is immediately expensed in the period in which
assist analysis of the financial progress of the firm 38. In financial accounting, gains may be defined as: the investment is made.
(b) incorrectly stated because their signs are reversed, i.e., both (a) total receipts of cash (c) The excess is amortized over the time period that is
are contra items that should have negative signs in the (b) total receipts of cash in excess of the historical costs of the reasonable in the light of the underlying cause of the excess.
formula assets being sold (d) The excess is charged to retained earnings at the time the
(c) adjustments to capital that are postponed until the end of a (c) total revenues investor resells the investment.
specific accounting period to determine their net effect on (d) total increases in net assets other than revenues
capital for that period
44. Land, building and equipment should be reported on the
(d) incorrectly included in the formula because “Assets = 39. Under the accrual basis of accounting, if cash is received prior to balance sheet at their cost, less accumulated depreciation, unless:
Liabilities + Capital”
the sale, then: (a) some obsolescence is known to have occurred
(a) revenue is recognized when the cash is received (b) some of the property still on hand were written down
34. Which of the following statements is true?
(b) a liability is recognized when cash is received pursuant to a quasi-organization
(a) Service companies do not need to prepare financial (c) a liability is removed from the system when the cash is (c) the amount of insurance carried on the property is well in
statements.
received excess of its book value
(b) Manufacturing companies maintain the simplest accounting (d) revenue is removed from the system when the services have (d) not given
records.
been performed or the goods have been delivered
(c) Merchandising companies purchase goods that are ready for
sale and then sell them to customers.
45. Dave started his own cheese factory on March 16, 2003.
(d) A drugstore is an example of a service company. 40. If there is an objective evidence that AFS is impaired, the
Which of the following transactions would not be admissible in
cumulative loss that had been recognized in other comprehensive
Dave’s accounting system for the month of March?
income:
(a) On March 18, Dave purchased a cow on account for P3,000.
35. Which of the following is not an accurate statement regarding the (a) Shall be amortized over a reasonable period
(b) On March 20, Dave sold his cow to a fast food restaurant for
rules of debit and credit in recording revenue and expense (b) Shall remain unpaid until the financial asset is disposed of
P5,000.
transactions? (c) Shall be recognized in profit or loss
(c) On March 21, Dave contracted with a local radio station to
(a) revenue increases owner’s equity; since increases in owner’s (d) Shall be recognized as an adjustment of the beginning
run several one-minute advertising spots during the month
equity are recorded by credits, revenue is recorded by a balance of retained earnings
of April.
credit (d) All of the above transactions would be admissible for Dave’s
(b) expenses decreases owner’s equity; since decreases in 41. A net unrealized loss on an entity’s portfolio of AFS equity
accounting system in the month of March.
owner’s equity are recorded by debits, expenses are securities shall be reflected in the current financial statements as:
recorded by debits (a) Direct reduction of retained earnings
(c) in recording revenue transactions, we debit the assets (b) Current loss resulting from holding equity securities
46. Jeff purchased a new register system for his grocery store,
received and credit the revenue account (c) Footnote or parenthetical disclosure only
paying P1,000 in cash and issuing a P6,000 note payable for the
(d) expenses used up assets; since decreases in assets are (d) Component of other comprehensive income
balance owed. As a result of this transaction, Jeff’s balance sheet
recorded by credits, expenses are recorded by credits to
would reflect:
the expense account 42. What should happen when the financial statements of an (a) an increase in assets and an increase in liabilities
associate are not prepared as of the same date as of the financial (b) a decrease in assets and an increase in liabilities
36. Consider the following: statements of the investor? (c) an increase in assets and a decrease in liabilities
I. increase an asset VI. decrease owner’s equity (a) The associate shall prepare financial statements for the use (d) an increase in assets and an increase in owner’s equity
II. decrease an asset VII. increase a revenue of the investor at the same date as that of the investor. 47. The double-entry system of accounting means that every
III. increase a liability VIII. decrease a revenue (b) The financial statements of the associate prepared up to a transaction:
IV. decrease a liability IX. increase an expense different date shall be used as normal. (a) is recorded initially on both the journal and the general
V. increase owner’s equity X. decrease an expense (c) Any major transactions between the date of the financial ledger
Using the above, if an asset account is debited, what are the five statements of the investor and that of the associate shall be (b) increases one general ledger account while decreasing
possible corresponding credits? accounted for. another
(a) I, IV, VI, VIII, IX (c) I, III, V, VII, IX
(c) affects at least two general ledger accounts and is recorded (c) All investments in available for sale securities are reported (d) the cost of the pledged inventories should be transferred from
by an equal amount of debits and credits at fair value. current assets to noncurrent assets.
(d) results in changes in accounts on both sides of the balance (d) Only investments in bonds are accounted for by the fair
sheet value method. 59. Slow-moving and obsolete inventory items should be priced for
balance sheet purposes at:
48. Which of the following statements is not correct? (a) retail inventory price.
(a)debits may increase assets 54. Which of the following is true? (b) cost or market, whichever is lower.
(b)credits may increase liabilities (a) The fair value method of accounting is the most appropriate (c) moving average.
(c)debits may increase liabilities method of accounting for short-term investments in (d) at an amount not in excess of possible realizable value.
(d)credits may increase owner’s equity marketable equity securities.
49. Tony owns a store specializing in bags. Tony has just (b) All bond investments are accounted for by the amortized 60. Subnormal or obsolete goods, either under the cost or the lower
completed a transaction that caused a P12,000 increase in total cost method. of cost or market basis:
assets and a P12,000 increase in liabilities. This transaction could (c) The carrying value of an investment in trading securities or (a) should be taken up an unrealized inventory loss.
have been: available for sale securities is limited to market value at the (b) should be valued at bona-fide selling price less direct cost of
(a) the investment in his business of P12,000 in cash date of acquisition. disposition.
(b) the purchase of store equipment, paying P9,000 in cash and (d) The realized gain or loss on a short-term investment in an (c) should be valued by applying an inventory method that
issuing a P12,000 note payable for the balance owed equity security is usually equal to the difference between its uses a constant or nominal value for the normal inventory
(c) the purchase of bags for his inventory, paying P4,000 in cash cost and its sale price. level.
and issuing an P8,000 note payable for the balance owed (d) should be adjusted in the cost of goods sold.
(d) none of the above transactions would cause total assets and 55. Which of the following is false?
total liabilities to increase by P12,000 (a) A debit valuation allowance balance for an investment in 61. Merchandise which a trader contracted to purchase but which
available for sale securities implies a corresponding owners’ was not delivered or identified in the year should:
50. Dean has completed the posting process for the month of equity account with a credit balance of the same amount. (a) not be included in the inventory.
June and has prepared a trial balance in which the debits total (b) Unrealized holding gains on investments in available for sale (b) be included in the inventory at cost.
P11,000 and the credits total P11,100. Which of the following securities may be recognized as a direct increase to owners’ (c) be included in the inventory at its probable retail value.
errors would be the most likely candidate in causing the trial equity. (d) be included in the inventory at a normal price.
balance not to balance by P100? (c) Investments in trading securities may be classified as current
(a) a P100 debit was posted as a P100 credit or long-term. 62. The appropriate valuation of an operating lease on the statement
(b) a P100 debit was posted as a P100 credit and a P100 credit (d) Investments in available for sale securities may be classified of financial position of a lessee is:
was posted as a P100 debit as current or long-term. (a) zero
(c) a P50 debit was posted as a P50 credit (b) the absolute sum of the lease payments
(d) the purchase of supplies on account was never posted to 56. Which of the following is the correct statement? (c) the present value of the sum of the lease payments
the general ledger (a) Investments in available for sale securities and trading discounted at an appropriate rate
securities are classified separately in a balance sheet. (d) the market value of the asset at the date of the inception of
51. Which of the following is the correct statement? (b) Investments in available for sale securities include only the lease
(a) The best way to ascertain whether a marketable security is equity securities.
short-term or a long-term investment is to check with a (c) Investments in trading securities include only debt 63. When equipment held under an operating lease is subleased by
securities dealer. securities. the original lessee, the original lessee would account for the
(b) For balance sheet classification, a security is classified as a (d) Increases in the market value of trading securities and sublease as:
short-term investment if it is readily marketable. available for sale securities investments always cause the (a) operating lease (c) direct financing lease
(c) For balance sheet classification, a security is classified as a valuation account to decrease. A (b) sales-type lease (d) capital lease
short-term investment based on the intended holding
period. 57. Tangible goods used in the productive process and directly related
to the products being manufactured are called: 64. Equal monthly rental payments for a particular lease should be
(d) All investments in trading securities are reported at book
(a) factory supplies. (c) raw materials. charged to rental expense by the lessee for which of the
values.
(b) finished goods. (d) goods in process. following?
58. When a portion of inventories has been pledged as security on a Capital lease Operating lease
53. Which of the following is the incorrect statement?
loan: (a) Yes No (c) No No
(a) The fair value method of accounting is the most appropriate
(a) the value of the portion pledged should be subtracted form (b) Yes Yes (d) No Yes
method of accounting for short-term investments in
marketable debt securities. the debt.
(b) an equal amount of retained earnings should be appropriated. 65. In a lease that is recorded as an operating lease by the lessee, the
(b) Unrealized holding gains and losses on investments in
(c) the fact should be disclosed but the amount of current assets equal monthly rental payments should be:
trading securities are recognized in income.
should not be affected. (a) allocated between a reduction in the liability for leased asset
and depreciation expense
(b) allocated between a reduction in the liability for leased asset financial statements. (b) fair value on balance sheet date
and interest expense (c) revalued amount minus accumulated amortization and
(c) recorded as a reduction in the liability for leased asset accumulated impairment losses
(d) recorded as rental expense (d) cost minus accumulated impairment losses and
accumulated amortization
71. Which will demonstrate an agreement to refinance (choose the
66. Where the balance sheet indicates that a portion of property, incorrect one)?
77. Which of the following is not considered in estimating the useful
plant and equipment the related accumulated depreciation (a) Long-term obligation has in fact been issued before the
life of intangible assets?
pertains to equipment leased to customers, it is evident that the: issuance of the financial statements for the purpose of
(a) expected usage of the asset by the enterprise
(a) operating method of accounting is used for the lease refinancing.
(b) stability of the industry in which the intangible asset
(b) financing method of accounting is used for the lease (b) Equity security has in fact been issued before the issuance
operates
(c) lessor has violated GAAP of the financial statements for the purpose of refinancing.
(c) salvage value of the asset
(d) lessor is using the income tax method of accounting for the (c) Before the issuance of the financial statements, the
(d) level of maintenance expenditure required to obtain the
lease enterprise has in fact entered into a financing agreement
future economic benefit from the asset
that clearly permits the enterprise to refinance the currently
67. A 20-year property lease, classified as an operating lease, maturing long-term debt on a long-term basis.
provides for a 10% increase in annual payments every five years. (d) Preferred stock has in fact been issued before the issuance 78. Choose the correct statement.
In the 6th year compared to the 5th year, the lease will cause the of financial statements for the purpose of obtaining working (a) Financial accounting is a social science and cannot be
following expenses to increase: capital. influenced by changes in legal, political, business and social
Rent Interest environments.
(a) Yes No (c) No No 72. Some obligations that are due to be repaid within the next (b) Financial accounting is an information system designed to
(b) Yes Yes (d) No Yes operating cycle and expected to be refinanced or “rolled over” provide information primarily to the internal users.
68. Which is not an essential characteristic of an accounting liability? should be classified as noncurrent: (c) General-purpose financial statements must be prepared by
(a) The liability is the present obligation of a particular (a) If the refinancing or “rolling over” is at the discretion of the a certified public accountant.
enterprise. enterprise and the refinancing agreement has been reached (d) The preparation of general-purpose financial statements is
(b) The liability arises from past transaction or event. before the issuance of the statements. usually based on the assumption that the primary users of
(c) The settlement of the liability requires an outflow of (b) If the refinancing or “rolling over” is at the discretion of the the information are external decision makers.
resources embodying economic benefits. enterprise regardless of whether a refinancing agreement
(d) The liability is payable to a specifically identified payee. has been reached or not before the issuance of the 79. Which of the following statements is false?
statements. (e) Financial reporting should provide information which is
69. Current liabilities include: (c) If the refinancing or “rolling over” is not at the discretion of relevant to investment, credit and public policy decisions.
(a) only obligations which are expected to be settled within the the enterprise. (f) Generally speaking, GAAP are those accounting principles
normal operating cycle. (d) Subject to no conditions. with substantial authoritative support.
(b) only obligations which are due to be settled within one (g) GAAP are established to ensure the relevancy of the
year from balance sheet date. 73. Which is not a characteristic of an intangible asset? general-purpose financial statements to the widespread
(c) obligations which are expected to be settled within the (e) the asset lacks physical substance uses of the information by external decision makers.
normal operating cycle and obligations which are due to be (f) the asset is used in production or supply of goods and (h) Once established, GAAP should never be changed.
settled within one year from balance sheet date. services, for rental to others or for administrative purposes
(d) refinanced long-term debt falling due within one year from (g) the asset provides future economic benefits 80. Which of the following statement is true?
balance sheet. (h) the asset has indeterminate useful life (a) Managers of an entity are considered to be internal decision
makers.
70. A long-term debt falling due within one year should be reported 74. Which is not unidentifiable intangible asset? (b) External decision makers can be obtained whatever financial
as noncurrent liability should be reported as noncurrent liability if (a) patent (c) copyright data they need whenever they need it.
the following conditions are met (choose the incorrect one): (b) franchise (d) goodwill (c) Accounting information is prepared for and useful to only
(a) The original term is for a period of more than one year. outside decision makers.
(b) The enterprise intends to refinance the obligation on a (d) The members of the Board of Directors are not “internal
75. If the pattern in which the economic benefits from the asset are
long-term basis. users” only.
consumed cannot be predicted reliably, the method of
(c) The intent to refinance is supported by an agreement to amortization for an intangible asset should be:
refinance which is completed before the issuance of the 81. Choose the incorrect statement.
(a) straight line (c) declining balance
financial statements. (a) The objective of the external financial statements is to
(b) output method (d) sum of years’ digits
(d) The intent to refinance is supported by an agreement to communicate the economic effects of completed
refinance which is completed after the issuance of the transactions and other events on the entity.
76. Intangible assets should be carried (benchmark treatment):
(b) The practice of accounting requires considerable
(a) gross cost
professional judgment.
(c) Security analysis use information from financial statements (c) affects at least two general ledger accounts and is recorded (d) an understatement of owner’s equity
and other sources to project future earnings. by an equal amount of debits and credits
(d) The assessment of earnings quality has become an exact (d) results in changes in accounts on both sides of the balance
science. sheet
142) What is measured by the accumulated benefit obligation? 147) The vested benefits:
a. The pension expense, computed by the plan formula applied to a. are employee benefits that are not conditional of future
years of service to date, assuming future salary levels employment
b. The pension expense, computed by the plan formula applied to b. are benefits to be paid to the retired employees in the current
years of service to date, using existing salary levels period.