QUESTION 5-10 Multiple Choice (ACP)

1. The elements directly related to the measurement of financial position are

a. Asset, liability and equity
b. Asset and liability
c. Income and expenses
d. Asset, liability, equity, income and expense

2. The elements of financial position describe amounts of resources and claims against
resources
a. During a period of time
b. At a moment in time
c. During a period of time and at a moment in time
d. Neither during a period of time nor at a moment in time

3. The elements directly related to the measurement of financial performance are

a. Income and expense
b. Asset, liability and equity
c. Asset and liability
d. Income, expense and equity

4. It is a present economic resource controlled by the entity as a result of past events.

a. Asset
b. Liability
c. Equity
d. Income

5. It is a present obligation of the entity to transfer an economic resource as a result of past

events.
a. Asset
b. Liability
c. Equity
d. Expense

6. It is the residual interest in the assets of the entity after deducting all the liabilities.
a. Income
b. Equity
c. Retained earnings
d. All of the choices match the definition

7. It is an increase in asset or a decrease in liability that results in increase in equity other

than contribution from equity holders.
a. Asset
b. Liability
c. Income
 d. Expense

8. It is a decrease in asset or an increase in liability that results in decrease in equity other

than distribution to equity holders
a. Asset
b. Liability
c. Income
d. Expense

9. This arises in the course of ordinary regular activities of the entity and is referred to by a
variety of different names including sales, fees, interest, dividends, royalties, and rent.
a. Income
b. Revenue
c. Profit
d. Gain

10. Which statement in relation to income is true?

a. Income encompasses both revenue and gain
b. Revenue encompasses both income and gain.
c. Gain encompasses both income and revenue.
d. Income is technically the same as revenue.

QUESTION 5-11 Multiple Choice (Conceptual Framework)

1. Which is not within the new definition of an asset

 a. An asset is a present economic resource
b. The economic resource is a right that has potential to produce economic
benefit
c. The economic resource is controlled by the entity as a result of past event
d. Future economic benefit is expected to flow to the entity.

2. Which of the following criteria need not be satisfied for a liability to exist?
a. The entity has an obligation
b. The obligation is to transfer an economic resource.
c. The obligation is a present obligation that exists as a result of a past event.
d. The settlement is expected to result in an outflow of economic benefit

3. A present obligation exists as a result of past event if

a. The entity has already obtained economic benefit.
b. The entity must transfer an economic resource.
c. The entity has not yet obtained economic benefit but must transfer an
economic resource.
d. The entity has already obtained economic benefit and must transfer
economic resource.

4. Rights that have the potential to produce economic benefits and correspond to an
obligation of another entity include all, except
a. Right to receive cash
b. Right to receive goods
c. Right to exchange economic resources wih another entity on faborable terms.
d. Right over property, plant, and equipment

5. An economic resource could produce economic benefit it an entity is entitled to all,

except
a. To receive contractual cash flows
b. To exchange economic resources with another entity on unfavorable terms
c. To receive cash by selling the economic resource to
d. To extinguish a liability by transferring an economic resource

6. It is the present ability to direct the use of an economic resource and obtain the
benefit that may flow from it.
a. Control
b. Legal right
c. Obligation
d. Ownership

7. It is a duty or responsibility that an entity has no practical ability to avoid

a. Right
b. Obligation
c. Equity
d. Expense
 8. Obligations to transfer an economic resource include all, except.
a. Obligation to pay cash
b. Obligation to deliver goods
c. Obligation to provide services
d. Obligation to transfer an economic resource even if a specified future event
does not occur

9. Which statement is not true about income and expense?

a. Income is increase in asset or decrease in liability that results in increase in
equity other than contribution from equity holders
b. Expense is decrease in asset or increase in liability that results in decrease in
equity other than distribution to equity holders
c. Income and expenses are the elements that relate to financial position
d. Income is broader than revenue

10. This new term refers to the statement of profit or loss and a statement presenting other
comprehensive income.
a. Income statement
b. Statement of comprehensive income
c. Statement of financial performance
d. Statement of financial position

QUESTION 5-12 Multiple Choice (AICPA Adapted)

1. Revenue may result from
a. A decrease in an asset from primary operations.
b. An increase in an asset from incidental transactions.
c. An increase in a liability from incidental transactions.
d. A decrease in a liability from primary operations.

2. What is the primary distinction between revenue and gains?

a. The materiality of the amount
b. The likelihood that the transaction will recur
c. The nature of the activity that gives rise to the transaction
d. The method of disclosing the transaction

3. The term income

a. Includes revaluation surplus
b. Includes adjustment of prior period error.
c. Includes gain resulting from the sale of an asset in an arm’s length transaction.
d. Is the same as retained earnings.

4. A decrease in an asset arising from peripheral or incidental transaction is called

a. Capital expenditure
b. Cost
c. Loss
d. Expense

5. An outflow of asset based on an activity that represents the major operations is

called
a. Loss
b. Liability
c. Expense
d. Equity