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PAS 1 Presentation of Financial Statements

QUIZ 1: MULTIPLE CHOICE

1. PAS 1 requires an assessment of the entity’s ability to continue as a going concern each time
financial statements are prepared. Who is responsible in making this assessment?
a. Accountant
b. Auditor
c. Management
d. Government regulatory body

2. These are the end product of the financial reporting process and the means by which
information gathered and processed is periodically communicated to users.
a. Financial reporting
b. Financial statements
c. Financial products
d. Accounting statements

3. Which of the following is not one of the general features of financial statements under PAS 1?
a. Fair presentation and compliance with PFRSs
b. Going Concern
c. Cash Basis
d. Materiality and aggregation

4. Who is responsible for the preparation and the fair presentation of an entity’s financial
statements in accordance with the PFRSs?
a. Any accountant
b. Certified Public Accountant
c. Auditor
d. Management

5. This type of presentation of statement of financial position does not show distinctions between
current and noncurrent items.
a. Classified presentation
b. Unclassified presentation
c. Non-discriminating presentation
d. Awesome presentation

6. In making an economic decision, an investor needs information on the amounts of an entity’s

economic resources and claims to those resources. That investor would most likely refer to
which of the following financial statements?
a. Statement of financial position
b. Statement of comprehensive income
c. Statement of cash flows
d. Statement of changes in equity
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7. Which of the following financial statements would be dated as at a certain date?

a. Statement of financial position
b. Statement of profit or loss and other comprehensive income
c. Statement of cash flows
d. All of these

8. Imagine you are a business manager. You would be most awesome as a manager in which of the
following independent scenarios?
a. Your company has an average total assets of ₱10M during the year. At the end of the year,
your company reported profit of ₱1M. The average return of other similar companies with
the same level of assets is 30%.
b. Your adoption of accounting policy has led to the immediate recognition of expenses. Those
costs could have otherwise been allocated over several periods. Accordingly, your company
did not declare dividends during the period. This resulted to a decline in the market value of
your company’s stocks while the prices of all other stocks in the stock market have
increased.
c. You changed your company’s method of allocating costs from an accelerated method to a
straight-line method. The change met the requirements of the PFRSs. This led to the
smoothing of expenses, which increased your company’s profit during the period by 12%,
above the industry average.
d. You are great at closing deals, that’s why you’re a boss. Eager to increase your company’s
resources, you were able to obtain a ₱20M loan from a bank. Interest expense on the loan
during the year was ₱3.4M while the return on investments of loan proceeds was 2%.

9. This comprises all “non-owner changes in equity.” It excludes owner changes in equity, such as
subscription, issuance, and reacquisition of share capital and declaration of dividends.
a. Other comprehensive income
b. Changes in equity
c. Total comprehensive income
d. Profit or loss

10. Materiality judgment is least likely to be applied in which of the following?

a. in determining whether an item warrants separate presentation in the financial statements or
is to be aggregated with other items
b. in determining whether information could influence the decisions of users, and therefore,
must be presented in the financial statements
c. in determining whether the cost of processing and communicating information exceeds the
benefits expected to be derived from it
d. whether additional information needs to be provided, including the level of detail and
conciseness of the information’s presentation

“There is a time for everything, and a season for every activity under the heavens;” (Ecclesiastes 3:1)

- END –
QUIZ 2: ESSAY

What is the relevance of the Conceptual Framework and the PFRSs to your future career as a
business manager or an accountant?
Pointers for grading students’ answers:
for BS Accountancy students
- The proper application of accounting policies
(chosen by management) rests with the
accountant.
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for Non-BS Accountancy students
- The financial statements, including the
proper selection of accounting policies, are
the responsibility of an entity’s management.
- The financial statements are used by users of
financial information in assessing
management’s stewardship.