An entity’s functional currency is

a. the currency of the primary economic environment in which the entity operates.
b. the currency in which the entity uses in presenting its financial statements.
c. the currency required by regulatory agencies to be used in financial statements
filed by the entity.
d. all of these.

.How does an SME account for events after the reporting period that provide
evidence of conditions that existed at the end of the reporting period?
a. As adjusting events after the end of the reporting period.
b. As disclosures only in the notes.
c. Either a or b as an accounting policy choice.
d. None of these. The PFRS for SMEs does not require SMEs to identify and
account for events after the reporting period

If the deferred tax asset is not wholly recoverable, the SME shall
a. recognize a valuation allowance reducing the carrying amount of the deferred
tax asset.
b. recognize a valuation allowance increasing the carrying amount of the deferred
tax asset.
c. recognize a corresponding increase in deferred tax liability to decrease the net
amount of deferred taxes.
d. a or c.

On April 1, 2008, Ivy began operating a service proprietorship with an initial cash
investment of ₱1,000. The proprietorship provided ₱3,200 of services in April and
received full payment in May. The proprietorship incurred expenses of ₱1,500 in
April which were paid in June. During May, Ivy drew ₱500 against her capital
account.
What was the proprietorship's income for the two months ended May 31, 2008, under
the following methods of accounting?
Cash basis Accrual basis
a. 1,200 1,200
b. 1,700 1,700
c. 2,700 1,200
d. 3,200 1,700