1.
Arrange the following steps of revenue recognition in ANSWER: The value of underlying asset is based on the
accordance with PFRS 15
ANSWER: IDENTIFY the contract; Identify the
performance; Determine; Allocate; Recognize
2. Certain criteria must be met before a contract with a
customer is accounted for under PFRS 15. Which of the
following precludes a contract from being accounted for
under PFRS 15?
Answer: The contract does not result toa change in the
risk, timing or amount of the entity’s future cash flows.
3. S1: adoption of PFRS 15 significantly affects entities
that sell products and services in a bundle or multiple
deliverables or those engaged in major projects.
S2: PFRS 15 applies to contracts with customers on
trade of shares of stocks.
ANSWER: TRUE AND FALSE
4. S1: One of the main core principles of PFRS 15 is
that an entity should recognize revenue in a manner
that depicts the pattern of transfer of goods or services
to a customer.
S2: transaction price is the amount of
consideration in a contract to which an entity expects to
be entitled in exchange for transferring goods or
services to a customer.
ANSWER: TRUE AND TRUE
5. S1: At all times, in applying PFRS 15 , the time
value of money shall be considered.
S2: If the fair value cannot be reasonably
estimated, the stand alone selling of the promised good
or service is used.
ANSWER: FALSE AND TRUE
6. Under PFRS 16, a lessee is required to recognize
ANSWER: right of use and lease liability
7. The lessee may apply the operating lease model
under what condition?
ANSWER: both short term and low value lease
8. A short term lease is defined as
ANSWER: twelve month or less
9. Which statement is true about low value lease?
value of the asset when new regardless of the age of
the asset.
10. Lease payment under an operating lease shall be
recognized as rent income by the lessor on
ANSWER: straight line basis over the lease term unless
another systematic basis is representative of the time
pattern.
11. Entity A, a manufacturing entity, obtains insurance
against product liability from Entity B, an insurance
company. Entity B then cedes the insurance contract
with Entity C, another insurance company. How does
entity B account for the insurance contract with Entity
A?
ANSWER: General model or premium allocation
approach
12. Entity A, a manufacturing entity, obtains insurance
against product liability from Entity B, an insurance
company. Entity B then cedes the insurance contract
with Entity C, another insurance company. How does
entity C account for the insurance contract ceded by
Entity B?
ANSWER: General model or premium approach
13. Entity A, a manufacturing entity, obtains insurance
against product liability from Entity B, an insurance
company. Entity B then cedes the insurance contract
with Entity C, another insurance company. How does
entity B account for the insurance contract ceded by
Entity C?
ANSWER: Modification to general model for reinsurance
contracts held.
14. The premium allocation approach cannot be applied
to which of the following insurance contracts?
ANSWER: INSURANCE CONTRACTS WITH SIGNIFICANT
VARIABILITY IN THEIR FULFILLMENT CASH FLOWS.
15. The unearned profit from a group of insurance
contracts is referred to under PFRS 17 as?
ANSWER: contractual service margin
16. Imagine you are a business manager. You would be
most awesome as a manager in which of the following
independent scenarios?
ANSWER: you changed you r company’s method of
allocating costs from an accelerated method to a
straight-line method. The change met the requirements
of the PFRS. This led to the smoothing of expenses,
which increased your company’s profit during the
period by 12%, above the industry average.
17. Materiality judgement is least likely to be applied in
which of the following?
ANSWER: in determining whether the cost of processing
and communicating information exceeds the benefit
expected to be derived from it.
18. 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.
ANSWER: total comprehensive income
19. 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?
ANSWER: Statement of financial position
20. Who is responsible for the preparation and the fair
presentation of an entity’s financial statements in
accordance with the PFRS?
ANSWER: management
21. According to PAS 8, these are the specific principles,
bases, conventions, rules and practices applied by an
entity in preparing and presenting financial statements.
ANSWER: accounting policies
22. A change in the pattern of consumption of economic
benefits from an asset is most likely a
ANSWER: change in accounting estimate
23. PAS 8 permits a change in accounting policy only if
the change
ANSWER: is required by a PFRS or is a result in reliable
and more relevant information
24. These arise from misapplication accounting policies,
mathematical mistakes, oversights or
misinterpretations of facts, or fraud.
ANSWER: ERROR
25.How should the following changes be treated,
according to PAS 8?
ANSWER: Change of accounting estimate and change of
accounting policy
26. According to PAS 10, those are events, favorable
and unfavorable, that occur between the end of the
reporting period and the date when the financial
statements are authorized for issue.
ANSWER: events after the reporting period.
27. The sarin company’s financial statements for the
year ended 30 April 20X8 were approved by its finance
director on 7 July 20X8 and a public announcement of
its profit for the year was made on 10 July 20X8. The
board of directors authorized the financial statements
for issue on 15 July 20X8. Under PAS 10, after what date
should consideration no longer be given as to whether
the financial statements to 30 April 20X8 need to reflect
adjusting and non-adjusting events?
ANSWER: 15 July 20X8
28. Which of the following is an example of non-
adjusting event?
ANSWER: Destruction of a machine by fire after the
reporting period.
29. One of Entity A’s delivery trucks had an accident on
February 14, 20X2. The truck totally wrecked and is
uninsured. Entity A’s December 31, 20x1 current-period
financial statements were authorized for issue on
March 31, 20x2. Entity A asked you if it can write-off the
carrying amount of the destroyed truck from its
December 31, 20x1 statement of financial position.
What will you tell Entity A?
ANSWER: No, don’t write off the ruck because the event
is non-adjusting event. You should, however, disclose
the event if you deem it to be material.
30.Which of the following is most likely to be a non-
adjusting event?
ANSWER: the entity announces a major restricting after
the end of the reporting period.

1. Entity A acquires equipment by issuing shares of
stocks. How should Entity A report the transaction in
the statement of cash flows?
ANSWER: Not reported
2. Entity’s A, a financial institution, received cash
dividends from its investments in marketable securities
during the year. How will the dividends be presented in
Entity As statement of cash flow?
ANSWER: as operating activity
3. Which of the following statements best describes a
statement of cash flows?
ANSWER; the statement of cash flows shows historical
changes of cash equivalents during the period.
4. Which of the following is presented under the
investing activities section of a statement of cash flows?
ANSWER: PURCHASE OF EQUIPMENT THROUGH CASH
5. The primary purpose of a statement of cash flows is
to provide relevant information about
ANSWER; the cash receipts and cash disbursement of an
entity during a period.
6. Interest payments to lenders are classified as
ANSWER: Financing activities
7. These are those presented in addition to
consolidated financial statements of the financial
statements of an entity with an investment in an
associate or joint venture that is accounted for using
equity method in accordance with PAS 28
ANSWER: Separate financial statements
8. S1: Prescribes the accounting and disclosure
requirements for investments in subsidiaries, associates
and joint ventures when an entity prepares separate
financial statements.
S2: It is mandated that by PAS 27 which entities
should produce separate financial statements
ANSWER: TRUE AND FALSE
9. S1: Separate financial statements cannot be
prepared or presented simultaneously with
consolidated financial statement.
S2: to apply the provisions of PAS 27 the entity
involved must have an investment in a subsidiary,
associate or joint venture.
ANSWER: FLASE AND TRUE
10. S1: Separate financial statement s are prepared
in accordance with all applicable PFRS subject to certain
exceptions
S2: to apply the provisions of PAS 27 the entity
involved must have an investment in a subsidiary,
associate, or joint venture.
ANSWER: TRUE AND TRUE
11. ABC Co. has identified the following five operating
segments: “Credit”, HOTEL. How should ABC Co,
disclose its reportable segments?
ANSWER: HOTEL and events as single reportable.
12. An entity recently has acquired a new brand from a
competitor company. Which of the following
statements is correct?
ANSWER: the entity can disclose this new segment
separately if it is a distinguishable component and is
used by management in internal reporting even though
it does not meet the PFRS criteria.
13. According to PFRS 8, a reportable operating
segment is one which
ANSWER: either
14. Which of the following is not among the
quantitative threshold under PFRS 8?
ANSWER: at least 10% of total revenues (external only)
15. According to PFRS 8 disclosures for the major
customer shall be provided if revenues from transaction
with a single external customer amount to
ANSWER: 10% or more of the entity’s external revenues
16. an operating segment is a component of an entity
ANSWER: All of these characterize an operating
segment
17. operating segments that do not meet any of the
quantitative threshold
ANSWER: May be considered reportable and separatlett
disclosed if management believes that information
about the segment would be useful to the statement
users.
18. the term chief operating decision maker
ANSWER: REFER TO A FUNCTION OF ALLOCATING
RESOURCES TO THE OPERATING SEGMENT AND
ASSESING TEHIR PERFORMANCES.
19. S1: PFRS 8 only applies to separate financial
statements and not to consolidates financial
statements.
S2: Segment reporting is the disclosure of
certain financial information about the products and
services an entity and the geographical areas in which
an entity operates.
ANSWER: FALSE AND FALSE
20. Rights designed to protect the interest of the party
holding those rights without giving that party power
over the entity to which those right relate.
ANSWER: PRITECTIVE RIGHTS
21.Control exist if the investor has all of the following,
except
ANSWER: power over the investor
22. This prescribe the principles for the preparation and
presentation of consolidated financial statement.
ANSWER: PFRS 10
23. S1: An operating segment may engage in
business activities for which it has yet to earn revenue.
S2: The management approach is used in
identifying operating segments
ANSWER: TRUE AND TRUE
24. S1: PFRS 10 deals with the accounting for
business combination at the acquisition date
S2: An investor has power over an investee
when the investor has existing rights that give it the
current ability o direct the investee’s relevant activities
ANSWER: true and false
25. S1: Investors current ability to direct investees
relevant activities is often evidenced by the investor’s
ability to establish and direct the investee’s operating
and financing policies.
S2: Control is the basis for consolidation
ANSWER: TRUE AND TRUE
1. PFRS 12 applies to
ANSWER: investments accounted under equity method
2. According to PFRS 12, interest in another entity refers
to
ANSWER: contractual and non-contractual involvement
that exposes an entity to variability of returns from the
performance of another entity.
3. PAS 24 requires the disclosures of key management
personnel compensation. Which of the following is not
included in this disclosure?
ANSWER: reimbursement of officers out of pocket
expenses
4. Which of the following is not requires to be disclosed
under PAS 24?
ANSWER: the name of the parent of the entity’s
associate
5. Which of the following is correct regarding the
provisions of PAS 34?
ANSWER: encourages publicly listed entities to prepares
at least a semi-annual financial report to be issues not
later than 60 days after the end of the interim period.
6. According to PAS 34, measurements in the interim
period are made on
ANSWER: a year-to-date basis
7. Which of the following best indicates that two parties
are related to the purpose of PAS 24?
ANSWER: one party has the ability to affect the financial
and operating decisions of the other party through
control, significant influence or joint control.
8. Which of the following are not related parties?
ANSWER: two Co- ventures of a common joint venture
business
9. Which of the following is not a required disclosure
under PAS 24?
ANSWER: Related party transaction (in the consolidated
financial statements)

10. Entity A wants to publish quarterly interim financial

reports. Which of the following standards may Entity A
apply in preparing and presenting its interim financial
reports?

ANSWER: Both PAS 1 and PAS 34

11. If an entity does not prepare interim financial

reports

ANSWER: the conformance of its annual financial

statements with the PFRS is not affected.

12. Interim financial reports prepared in accordance

with PAS 34 shall at a minimum, include

ANSWER: condensed set of financial statements

13. PFRS 12 prescribes the minimum disclosure for

interest in other entities wherein the investors has

ANSWER: any of these

14. Which of the following is outside the scope of PFRS

12?

ANSWER: HELD FOR TRADING SECURITIES