1.

One of the basic features of financial accounting is the 

a. Direct measurement of economic resources and obligations and changes in
them in terms of money and sociological and psychological impact.
 b. Direct measurement of economic resources and obligations and changes in
them in terms of money.
 c. Direct measurement of economic resources and obligations and changes in
them in terms of money and sociological impact. 
d. Direct measurement of economic resources and obligations and changes in
them in terms of money and psychological impact.

2. Under Statement of Financial Accounting Concepts No. 2, which of the following is an

ingredient of the primary quality of reliability?
 a. Understandability
b. Predictive value
c. Verifiability
 d. Materiality

3. Under Statement of Financial Accounting Concepts No. 2, feedback value is an ingredient of

the primary quality of 
Relevance            Reliability
a. No                       No
b. No                       Yes
C. Yes                      Yes
d. Yes                       No

4. Interest cost included in the net pension cost recognized by an employer sponsoring a defined
benefit plan represents the:
a. amortization of the discount on unrecognized past service cost 
b. increase in the fair value of plan assets due to passage of time
C increase in the projected benefit obligation due to passage of time 
d. shortage between the expected and actual return on plan assets.

5. There has been considerable discussion regarding the nature of accounting principles
(standards). One source delineates these principles into three levels - pervasive, broad operating,
and detailed. Which of these three levels should be viewed as composing generally accepted
accounting principles?
a. Pervasive only.
b. Pervasive and broad operating only.
c. Broad operating and detailed only. 
d. Pervasive, broad operating and detailed.

6. Strict adherence to the entity concept would not allow

a. The use of the account form of the balance sheet.
b. The use of replacement cost as a basis of valuation on the financial statements
of branches
c. The capitalization of certain construction costs of subsidiary companies.
d. A parent company to take up in its books its proportionate share in its
subsidiary's profits and losses.

7. Which is incorrect concerning the recognition and measurement of a defined benefit plan?
a. Actuarial assumptions are required to measure the obligation and expense and
there is a possibility of actuarial gains and losses.
b. The obligation is measured at a discounted basis.
c. The defined benefit plan must be fully funded
d. The expense recognized for a defined benefit plan is not necessarily the amount
of contribution due for the period

8. What is measured by the accumulated benefit obligation?

a. The pension expense, computed by the plan formula applied to years of service
to date, assuming future salary levels
b. The pension expense, computed by the plan formula applied to years of service
to date, using existing salary levels
c. The pension obligation, computed by the plan formula applied to years of
service to date, using existing salary levels.
d. The pension obligation, computed by the plan formula applied to year of service
to date, assuming future salary levels.

9. The accounting period convention regards the life of the entity as consisting of –
a. A chain of one-year segments.
b. The entire life of the venture.
c. The remaining corporate life of the business.
d. Any period for which an accounting report is prepared.

10. The going concern concept assumes that

a. The business firm shall continue to operate indefinitely.
b. The market values of assets are relevant.
c. The long-lived assets are adjusted for current prices.
d. The building cost is shown at replacement value.

11. In the diluted earnings per share computation, the treasury stock method is used for options
and warrants to reflect assumed reacquisition of common stock at the average market price
during the period. If the exercise price of the options or warrants exceeds the average market
price, the computation would
a. Fairly present diluted earnings per share on a prospective basis.
b. Fairly present the maximum potential dilution of diluted earnings per share on a
prospective basis.
c. Reflect the excess of the number of shares assumed issued over the number of
shares assumed reacquired as the potential dilution of earnings per share.
d. Be antidilutive.

12. Tax rates other than the current tax rate may be used to calculate the deferred income tax
amount on the balance sheet if
a. It is probable that a future tax rate change will occur.
b. It appears likely that a future tax rate will be greater than the current tax rate.
C. The future tax rates have been enacted into law.
d. It appears likely that a future tax rate will be less than the current tax rate.

13. Ant dilutive securities

a. Should be included in the computation of diluted earnings per share but not
basic earnings per share.
b. Are those whose inclusion in earnings per share computations would cause
basic earnings per share to exceed diluted earnings per share.
C. Include stock options and warrants whose exercise price is less than the average
market price of common stock.
d. Should be ignored in all earnings per share calculations
14. Accounting requires the preparation of statements that summarize exchange transactions in
terms of some unit of measurement. Revenue is expressed as the number of pesos received or the
peso equivalent of the commodities or services received; cost is expressed as the number of
pesos paid out or the peso equivalent of the items given up. Fluctuations in the value of the pesos
are ignored. The above describes what accounting assumption or principle?

a. Going concern c. Unit of measure

b. Historical cost d. Realization

15. In a sale-leaseback transaction where none of the four leasing criteria are satisfied, which of
the following is false?
a. The seller-lessee removes the asset from its books.
b. The seller-lessee records the lease as an operating lease
c. The purchaser-lessor records a gain.
d. All of the above are false statements.

16. Assume that a company using a purchases journal made an error in totaling the journal's
accounts payable column. The error should be discovered:
a. When the purchases journal is posted to the general ledger
b. When the sum of the vendor accounts does not equal the balance in the
Purchases journal.
c. When the total of the schedule of accounts payable is compared with the
balance of the Accounts Payable account
d. When the creditors receive their payments.

17. After posting is completed, there may be an error if

a. The sum of the customer account balances does not equal the total in the sales
journal.
b. The sum of the customer account balances does not equal the general
ledger Accounts Receivable controlling account balance.
C. The balance in the sales journal does not equal the Accounts Receivable account
balance.
d. The sum of the accounts receivable ledger does not equal the balance in the
sales journal.
18. The four measurement bases currently used in financial accounting for assets measurement
do not include the
a. Amount of cash expected to be received in the future, as in the normal
conversion of an account receivable.
b. Price in a current purchase, as in applying lower of cost or market to
inventories.
c. Price in a current sale, as in applying lower of cos or market to temporary
investments
d. Price of a past purchase adjusted for changes in the general purchasing power
of the peso, as in the application of the LIFO inventory method.

19. Objectivity, in accounting, means that the data which enter into the accounting process are
based on
a. Opinion of the auditor.
b. Objective and verifiable evidences
C. Opinions of the management.
d. Inferences and interpretations.

20. Objectivity is assumed to be achieved when an accounting transaction.

a. Is recorded in a fixed amount of peso.
b. Involves the payment or receipt of cash.
c. Involves an arm's-length transaction between two independent parties.
d. Allocates revenues or expenses in a rational and systematic manner.

21. All of the following are considered basic financial instruments of an SME, except
a. Accounts payable in foreign currency
b. Loan from associate due on demand
c. Investment in convertible debt
d. A debt instrument with a fixed rate of return

22. Which of the following should be recognized in other comprehensive income of an SME?
a. Gain and loss from continued operation
b. Gain and loss from translation of a foreign operation
C. Gain on re-measuring equity investment at FVOCI
d. Extraordinary gain and loss
23. The PFRS for SMEs mentions the following components of other comprehensive income,
except
a. Gain and loss on hedging instrument
b. Revaluation surplus of property, plant and equipment
c. Actuarial gain and loss of defined benefit plan
d. All of these are SME component of OCI

24. Which component of OCI of an SME is reclassified to profit or loss?

a. Change in fair value of hedging instrument
b. Revaluation surplus of property plant and equipment
C. Translation gain and loss
d. Actuarial gain and loss

25. Which of the following types of contracts would probably not be covered by PERS4?
a. Life insurance
b. Medical insurance
c. Motor insurance
d. Pension plan

26. Under IFRIC2 members shares in cooperative may give the holder the right to request
redemption for cash or another financial asset. Such members shares shall be accounted for as
a. Equity
b. Liability
c. Either as equity or liability
d. Partly equity and partly liability

27. Members shares in cooperation shall be classified as equity when

a. The redemption of members shares is unconditionally prohibited by law
b. The entity has the unconditional prohibited by law
c. Either the entity has the unconditional right to refuse redemption of members
shares the redemption of members shares is unconditionally prohibited by law
d. None of these
28. The basic purpose of derivative financial instrument is to manage some kind of risk such as
all of the following, except
a. Currency fluctuation
b. Stock price movement
c. Interest rate variation.
d. Uncollectible of accounts receivable

29. All of the following are characteristics of a derivative, except

a. It is settled at a future date
b. It requires no initial investment or an initial small net investment.
c. Its value change in response to the change in a specified underlying.
d. It is acquired for the purpose of generating a profit from short-term fluctuation.

30. Which of the following is an underlying?

a. A credit rating
b. An average daily temperature
C. A security price
d. All of these could be underlying.

31. An example of a national amount is

a. Currency swap.
b. Interest tare.
c. Number of barrels of oil
d. Stock price

32. Entities that attempt to exploit inefficiencies in various derivate markets by attempting to
lock in profits by simultaneously entering into transaction in two or more markets are called
a. Arbitrageurs
b. Gamblers
C. Hedgers
d. Speculators
33. Which embedded derivative should not be accounted for separately?
a. An investment in a convertible bond that is classified as available for sale!
b. An investment in a bond whose interest payments are linked to the price of gold
and the bond is classified as available-for-sale.
c. An investment in a bond whose interest payment s are linked to the price of
silver and the bond are classified as at fair value through profit of loss.
d. A call option in an investment in an equity instrument that allows the issuer to
repurchase the instrument.

34. Which of the following is one of the conditions that must exist for an entity to recognize
revenue on separate units a multiple deliverables arrangement?
a. The delivered item is not returnable
b. Collection has occurred for all of the separate items
c. The delivered item has value on a stand-alone basis and can be sold separately
d. The separate units must be delivered within 90days of the end of the accounting
period

35. An entity has come out with an offer to refund the cost of purchase within one month of sale
if the customer is not satisfied with the product. When should the entity recognize the revenue?
a. After a month of sale
b. When goods are sold to the customers
C. Only if goods are not returned by the customers after the period of one month
d. At the time of sale along with an offset to revenue of the liability of the same
amount for the possibility or the return.

36. Sales in which the buyer is not yet ready to take delivery but does not take title are
a. Barter sales
b. Bill and hold sales
c. Lay-away sales
d. Sales with buyback

37. Bill and hold sales in which delivery is delayed at the buyers request but the buyer assumes
title and accepts invoicing should be recognized when
a. The buyer makes an order
b. The sellers starts manufacturing the goods
C. The title has been transferred but the goods are kept on the seller’s premises
d. It is probable that the delivery be made payment terms have been established and the buyer
has acknowledged the delivery instructions

38. Sales where the goods are delivered only when the buyer makes final payment are
a. Lay-away sales
b. Sales subject to installation or inspection
c. Bill and hold sales
d. Consignment sales

39. Lay-away sales are sales

a. On consignment
b. Where the goods are delivered only when the buyer makes final payment
c. With the right to repurchase
d. In which the buyer is not yet ready to take delivery but does take title to the
goods

40. The criteria for recognition of revenue at the completion of production of precious methods
include which of the following?
a. Units are interchangeable
b. No significant costs are involved in distributing the product
C Sale price is reasonably assured
d. All of these

41. For which of the following products is it appropriate to recognize revenue at the completion
of production even though no sale has been made?
a. Automobiles
b. Large appliances
c. Precious metals
d. Single family residential units

42. The milestone method of revenue recognize provides that if substantive milestone is achieved
what amount of revenue is recognized?
a. Contingent revenue is recognized in its entirely
b. Revenue is recognized up to the amount of cash collected
c. A prorate revenue based upon the percentage delivered to date
d. A percentage of total revenue based on the separate units delivered.

43. Which of the following is not an accurate statement concerning revenue recognition?
a. Revenue from selling products is recognized at the date of the sale.
b. Revenue from disposing of assets other than products is recognized at the date
of sale
c. Revenue from permitting others to use entity asset is recognized as time passes
or as the assets are used
d. Revenue from services rendered is recognized when cash is received or when
services have been performed.

44. If an entity cannot estimate reliably the outcome of a transaction involving the providing of a
service it should recognize revenue
a. Only to the extent of the expenses recoverable
b. Straight line over the period of the service contract
C. By recording an equal amount of revenue for each service performed
d. By using the percentage of completion method based on costs incurred
compared to total estimated cost

45. The milestone method of accounting may be used to recognize revenue for
a. Franchise arrangements
b. Multiple deliverable products or services
c. Long-term construction contracts
d. Research and development arrangements

46. Liabilities and stockholders' equity are similar in that

a. Both provide certain amount of payments in the form of interest and dividends
respectively based upon written agreements.
b. Both provide specific timing of payments as a result of specific maturity dates.
c. Both creditors and stockholders are equity holders although they have different
rights with respect to income, risk, control and liquidation.
d. Both liabilities and owners equity are ranked equally when the enterprise's
assets are distributed.

47. Lienne Corporation granted 1,000 stock options to its employees on January 1, 2006, for
services performed during 2006 and 2007. At the date of the grant, the fair value of the stock
options is P6,000. The options are exercisable on January 1, 2008, and expire on June 30, 2008.
On July 1, 2008, it was determined that none of the options were exercised. On December 31,
2008, Sydney Corporation should
a. Restate its financial statements for 2006 and 2007 and reduce compensation expense for each
year.
b. Make a prior period adjustment to retained earnings for compensation expense recognized in
2006 and 2007.
c. Not adjust or reverse compensation expense.
d. Record P6,000 of compensation expense in 2008.
48. An entity has entered into a contract with another entity. The latter will supply the former
with a range of services. The payment for those services will be in cash and based upon the price
of former's ordinary shares on completion of the contract. In accordance with PFRS 2, what type
of share-based payment transaction does this represent?
a. Asset-settled share-based payment transaction
b. Cash-settles share-based payment transaction
c. Liability-settled share-based payment transaction
d. Equity-settled share-based payment transaction

49. In determining earnings per share, interest expense, net of applicable income taxes, on
convertible debt which is dilutive should be
a. Added back to net income for diluted earnings per share.
b. Deducted from net income for basic earnings per share and ignored for diluted
earnings per share.
c. Deducted from net income for both basic earnings per share and diluted
earnings per share.
d. Added back to net income for basic earnings per share, and ignored for diluted
earnings per share.

50. Which statement is incorrect concerning materiality?

a. Information is material if its omission or misstatement could influence the economic decision
of users taken on the basis of the financial statement.
b. Materiality depends on the relative size of the item or error judged in the particular
circumstances of its omission or misstatement.
c. Materiality is a primary qualitative characteristic rather than a threshold or cut off point in
determining useful information.
d. Materiality is dependent on professional judgment because no threshold limit is defined in the
framework or accounting standard.

51. Which of the following division of the SEC reviews corporate filings?
a. The Office of the Chief Accountant.
b. The Division of Corporate Disclosure.
C. The Division of Enforcement.
d. The Division of Corporate Finance.

52. The following statements relate to the standards of adequate disclosure. Which statement is
considered false?
a. In complying with the standard of adequate disclosure, accountants are guided by the doctrine
that more information is always better than less.
b. Financial accounting information that meets the qualitative objectives of financial accounting
also meets the reporting standard of adequate disclosure.
c. Adequate disclosure is concerned not only with the kind of information contained in financial
statements but also with the manner in which that information is presented.
d. The disclosure standard calls for financial reporting of any financial facts significant enough
to influence the judgment of an informed reader of the statements.

53. The following statements relate to share options granted to employees in exchange for their
services. What statement is true?
I. The services received shall be measured at the fair value of the employees' services.
II. Fair value shall be measured at the date the options vest.
a. I only
b. ll only
c. Both I and II
d. Neither I nor II

54. What is the basis in recording transactions in the journals?

a. Journal entry voucher
b. Journal and analysis of obligations
c. Journal of checks issued
d. Journal of bills rendered
55. Which constitutional provision is incorrect?
a. All money collected on any tax levied for a special purpose shall be treated as a general fund
and paid out for the special purpose only.
b. No money shall be paid out of the National Treasury except in pursuance of an appropriation
made by law.
C. A special appropriation bill shall specify the purpose for which it is intended and shall be
supported by funds actually available as certified by the National Treasurer or to be raised by a
corresponding revenue proposal therein.
d. No law shall be passed authorizing transfer of appropriations.

56. The President of the Philippines shall submit to Congress as a basis of the general
appropriation bill a budget of expenditures and sources of financing within how many days?
a. 30 days from the opening of every regular session
b. 60 days from the opening of every regular session
C. 30 days from the beginning of the fiscal year
d. d. 60 days from the beginning of the fiscal year

57. Which statement is incorrect concerning budget preparation?

a. Budget preparation is done by the Congress of the Republic of the Philippines
b. The budget preparation begins with the issuance of a "budget call" issued by the Department
of Budget and Management.
c. Budget preparation covers estimation of government revenue, determination of budgetary
priorities and activities and the translation of approved priorities and activities into expenditure
levels.
d. Zero base budgeting may be used in the budget preparation.
58. An entity is in the entertainment industry and organizes outdoor concerts in four different
areas of the world. Europe, North America, Australia and Japan. The entity reports to the board
of directors on the basis of each of the four regions. The records show the profitability for each
of the four regions. The concerts are two types: popular music and classical music. What is the
appropriate basis for segment reporting in this entity?
a. The segments shall be reported by class of business, that is popular and classical music.
b. The segments shall be reported by region, so Australia and Japan would be
combined.
C. The segment information shall be reported as North America and the rest of the world.
d. Segment information shall be reported for each of the four different regions.

59. The consistency standard of reporting requires that

a. Accounting procedures once adopted should give a consistent rate of return.
b. Extraordinary gains and losses should not appear on the income statement.
c. The effect of changes in accounting principles should be properly disclosed.
d. Expenses should be reported as charges against the period in which they are
incurred.

60. Which of the following is an example of the concept of conservatism?

a. Stating inventories at the lower of cost or market.
b. Stating inventories using the FIFO method in periods of rising prices.
c. Using the percentage-of-completion method in the first year of a long-term construction
contract.
d. Using the interest method instead of the straight-line method to record interest in the first year
of long-term receivable.

61. An improvement made to machinery increased its fair market value and its production
capacity by 25 percent without extending the machine's useful life. The preferred treatment of
the cost of improvement is
a. Treated as expense
b. Debited to accumulated depreciation account
c. Capitalized in the machinery account
d. Allocated between accumulated depreciation and the machinery account

62. Heavy plant machinery is rearranged in the factory so as to improve the product routing and
thus, reduce time and cost of production. The cost pf rearrangement or reinstallation shall be
a. Charged as a manufacturing expense
b. Capitalized by a charge to the machinery account
C. Treated as part if cost. The un-depreciated cost of the first installation should be removed
from the accounts and the reinstallation cost should be capitalized.
d. Handled by using any of the above-mentioned treatments.

63. A Company purchased a piece of land with an old building. The old building will be
demolished to give way for the construction of a new one. Which one of the following should not
be charged to the building,
a. Cost of wrecking the old building, less any proceeds from the sale of salvage
b. Cost of excavation
C. Architect's fees and superintendent's salaries
d. Insurance premium applicable to the construction period

64. X Theater Corporation recently purchased the Y Theater and the land on which it is located.
X Theater Corporation plans to raze the building immediately and to build a new and modern
theater on the site. The cost of the Y Theater should be
a. Written off as an extraordinary loss in the year that the theater is razed.
b. Capitalized as part of the cost of the land
C. Capitalized as part of the cost of the new theater is razed.
d. Depreciated over the period from the date of acquisition to the date that the theater is actually
razed.

65.1f a corporation purchased a lot and building, subsequently demolished the building and used
the property as parking lot, the proper accounting treatment of the cost of the building would
depend on.
a. The significant of the cost allocated to the building in relation to the combined cost of the lot
and building.
b. The length of time for which the building was held prior to its demolition
c. The contemplation future use of the parking lot
d. The intention of management for the property when the building was acquired
66. For purpose of computing the weighted average number of shares outstanding in EPS
calculation, a mid-year that must be treated as occurring at the beginning of the year is the
a. Issuance of the share warrants
b. Purchase of treasury shares
c. Issuance of share certificates
d. Issuance of new shares from share split
67. Dean has completed the posting process for the month of June and has prepared a trial
balance in which the debits total P11,000 and the credits total P11,100. Which of the following
errors would be the most likely candidate in causing the trial balance not to balance by P100?
a. a P100 debit was posted as a P100 credit
b. a P100 debit was posted as a P100 credit and a P100 credit was posted as a P100 debit
c. a PSO debit was posted as a P50 credit
d. the purchase of supplies on account was never posted to the general ledger
68. Tony owns a store specializing in bags. Tony has just completed a transaction that caused a
P12,000 increase in total assets and a P12,000 increase in liabilities. This transaction could have
been:
a. the investment in his business of P12,000 in cash
b. the purchase of store equipment, paying P9,000 in cash and issuing a P12,000 note payable for
the balance owed
c the purchase of bags for his inventory, paying P4,000 in cash and issuing an P8,000 note
payable for the balance owed
d. none of the above transactions would cause total assets and total liabilities to increase by
P12,000

69. Some obligations that are due to be repaid within the next operating cycle and expected to be
refinanced or "rolled over should be classified as noncurrent:
a. If the refinancing or "rolling over" is at the discretion of the enterprise and the refinancing
agreement has been reached before the issuance of the statements.
b. If the refinancing or "rolling over" is at the discretion of the enterprise regardless of whether
a refinancing agreement has been reached or not before the issuance of the statements.
c. If the refinancing or "rolling over" is not at the discretion of the enterprise.
d. Subject to no conditions.
70. A businessman wants to withdraw P3,000 (including principal) from an investment fund at
the end of each years. How should he compute the required initial investment at the beginning of
the first year if the fund earns 6% compounded annually?
a. P3,000 times the amount of an annuity of P1 at 6% at the end of each year for five years.
b. P3,000 divided by amount of an annuity of P1 at 6% at the end of each year for five years.
c. P3,000 divided by the present value of an annuity of P1 at 6% at the end of each year for five
years.
d. P3,000 divided by the present value of an annuity of P1 at 6% at the end of each year for five
years.

71. How is the premium or discount on bonds purchased as a temporary investment generally
reported on published financial statements?
a. As an integral part of the cost of the asset acquired investment) and amortized over a period of
not less than 60 months.
b. As an integral part of the cost of the asset acquired (investment) until such time as the
investment is sold.
C. As expense or revenue in the period the bonds are purchased.
d. As an integral part of the cost of the asset acquired (investment) and amortized
over the period the bonds are expected to be held.

72. When a company is the beneficiary of the life insurance policy taken on the life of its
executive, it should charge to an expense account
a. The total premium payments.
b. The difference between the premium payments and the resulting increase in the cash
surrenders value.
c. The difference between the premium payments and the resulting increases in the loan value.
d. The increases in the cash surrender value.

73. On a parent's unconsolidated financial statements, which accounts, other than cash, are
affected when reflecting a subsidiary's earnings and dividends?
a. Dividend revenue, equity in earnings of subsidiary, and retained earnings.
b. Dividend revenue and retained earnings.
C. Investment in subsidiary, equity in earnings of subsidiary, dividend revenue, and retained
earnings.
d. Investment in subsidiary, equity in earnings of subsidiary, and retained earnings.
74. When an investor uses the equity method to account for investments in common stock, the
equity in the earnings of the investee reported on the investors income statement will be affected
by which of the following?
Cash dividends related to purchase Goodwill amortization from investee
a. No Yes
b. No No
c. Yes No
d. Yes Yes

75. Investor, Inc. owns 40% of Alimand Corporation. During the calendar year 19-5, Alimand
had net earnings of P100,000 and paid dividends of P10,000. Investor mistakenly recorded these
transactions using the cost method rather than the equity method of accounting. What effect
would thus have on the investment account, net earnings, and retained earnings, respectively?
a. Understate, overstate, overstate. b. Overstate, understate, understate.
C. Overstate, overstate, overstate. d. Understate, understate, understate.

76. Which will demonstrate an agreement to refinance (choose the incorrect one)?
a. Long-term obligation has in fact been issued before the issuance of the financial statements
for the purpose of refinancing,
b. Equity security has in fact been issued before the issuance of the financial statements for the
purpose of refinancing.
c. Before the issuance of the financial statements, the enterprise has in fact entered into a
financing agreement that clearly permits the enterprise to refinance the currently maturing long-
term debt on a long-term basis.
d. Preferred stock has in fact been issued before the issuance of financial statements for the
purpose of obtaining working capital.

77. A long-term debt falling due within one year should be reported as noncurrent liability
should be reported as noncurrent liability if the following conditions are met (choose the
incorrect one):
a. The original term is for a period of more than one year.
b. The enterprise intends to refinance the obligation on a long-term basis.
c. The intent to refinance is supported by an agreement to refinance which is completed before
the issuance of the financial statements.
d. The intent to refinance is supported by an agreement to refinance which is completed after the
issuance of the financial statements.

78. Which of the following is the correct statement?

A. investments in available for sale securities and trading securities are classified separately in a
balance sheet.
b. Investments in available for sale securities include only equity securities.
c Investments in trading securities include only debt securities.
d. Increases in the market value of trading securities and available for sale Securities investments
always cause the valuation account to decrease.

79. When an investor uses the equity method to account for investments in common stock, the
investment account will be increased when the investor recognizes.
a. A proportionate interest in the net income of the investee.
b. A cash dividend received from the investee.
c. Periodic amortization of goodwill related to the purchase.
d. Depreciation related to the excess of market value over book value of the investee's
depreciable assets at the date of purchase by the investor.

80. Which of the following describes the amount at which a parent company should carry its
unconsolidated domestic subsidiary on its separate financial statements in periods subsequent to
acquisition?
a. Original cost of the investment to the parent company.
b. Original cost of the investment adjusted for the parent's share of the subsidiary's earnings,
losses, and dividends.
C Current market value of the investment adjusted for dividends received.
d. Current market value of the investment.
81. Cash dividends are usually declared on one date and payable on another subsequent date to
stockholders of record on some other intermediate date. At which of these dates has the investor-
stockholder theoretically realized income from the dividends?
a. The date the dividend is declared.
b. The date of record.
C. The date the dividend check is mailed by the corporation.
d. The date the dividend check is received by the stockholder.
a loss in the current period. and the security reclassified a gain in the subsequent

b. The valuation allowance should be recognized as a loss in the current period

c. The valuation allowance should be adjusted to zero and the security reclassified at cost.

d. The valuation allowance should be recognized as a gain period.

83. Value in use is

a. The market value.

b. The amount at which the asset is recognized.

c. The higher between fair value less costs of disposal and market value.

d. The discounted value of future cash flows from the use and di the use and disposal of the asset. s
portfolio on the balance

84. The carrying amount of a current marketable securities portfolio on the sheet of a company shall be
the aggregate

a. Cost of the portfolio, whether it is higher or lower than the aggress value of the portfolio.

b. Cost of the portfolio, when it is higher than the aggregate market value of the portfolio

C. Market value of the portfolio, whether it is higher or lower than the aggregate cost of the portfolio.

d. Market value of the portfolio, when it is lower than the aggregate cost of the portfolio

85. What is the most appropriate basis for recording the acquisition of 40% of the stock in another
company if the acquisition was a noncash transaction?

a. At the book value of the consideration given.

b. At the par value of the stock acquired.

C. At the book value of the stock acquired.

d. At the fair value of the consideration given.

86. An entity recognized a large restricting expense in the current year an experienced a constantly
rising earnings since that time. This would example of
a. Cookie jar reserve

b. Creative acquisition accounting

C. Big bath accounting

d. Using transactions to increase reported earnings

87. Deferring the recognition of revenue for which the earnings process is complete is an example of

a. A change in accounting estimate

b. Big bath accounting

C. Cookie jar reserve

d. Strategic matching

88. The accounting profession indicates that

a. All entities that issue an annual report should issue interim financial reports

b. The integral view is the most appropriate approach for interim financial reports

C. A complete set of financial statements must be presented for an interim period

d. The same principles used for the annual report should be employed for interim reports.

89. The presumption that any reading interim financial report would.

a. Have access to the records of the entity

b. Not make decision based on the report

c. Have access to the most recent annual report

d. Understand all Philippine financial reporting standards

90. Publicly traded entities are encouraged to provided interim financial report

a. On a quarterly basis

b. Whenever the entity wishes

C. Within a month of the half year-end

d. At least at the end of half year and within 60 days of the end of interim period

91. If entity does not prepare interim reports

a. The year-end financial statements are deemed to comply with PERS

b. The year-end financial statements compliance with PFRS is not affected

C. The year-end financial statements will not be acceptable under local legislation

d. Interim financial reports should be include in the year-end financial statements

92. For interim reporting, the income tax expense for the second quarter should be computer using

a. Statutory tax rate for the year

b. Effective tax rate expected to be applicable for the second quarter. AICPA 1193

C. Effective tax rate expected for the full years as estimated at the end of the first quarter

d. Effective tax rate expected for the full year as estimated at the end of second quarter

93. Which of the following statements if true regarding interim financial reporting,

a. Interim reports are not required

b. Interim report are required on a quarterly basis

C. The discrete view is required for interim financial statements

d. Interim reports require the preparation of only a statement of comprehensive income and a
statement of financial position

94. Under PAS 34, which of the following statements is true

a. An interim financial report may consist of complete financial statements.

b. An interim financial report may consist of a complete set of a financial or condensed set of financial
statement with selected notes.

c. A complete set of financial statements is required at interim reporting date.

d. A condensed set of financial statements with selected notes is required at interim date.

95. If ending balance of accounts receivable exceeds the beginning accounts receivable

a. No cash was collected during the period

b. Net income for the period is less than the amount of cash basis income

C. Cash collections during the period exceed the amount of revenue ear need

d. Cash collections during the period are less than the amount of revenue ear need.

96. Under PFRS for SMEs the following are considered basic financial instruments except

a. Cash

b. Investment in convertible preference shares

C. Accounting receivable

d. Investment in bonds

97. The computation of impairment loss on basic financial instruments of SMEs is (are) true?

1) The impairment loss is the difference between the carrying amount and the best estimated of the
amount that would be received if the asset were solud
2) The impairment future cash flows at market rate of interest for similar as set

Statement (1) Statement (2) Statement (1) Statement (2)

a. True false c. True True

b. False true d. false false

98. Which of the following statements is true pertaining to the subsequen measurement of basic
financial instruments?

1. Debt instruments shall be measured at amortized cost using the effective interest method

II. Commitment to receive a loan shall be measured at cost less impairment

III. Investments in non-convertible non-puttable preference share that are publicly traded shall be
measured at fair value through profit or loss

a. I and II only C. I, II and III

b. II and III only d. I only

99. Which types of entities are required to apply PAS 30?

a. All entities

b. Banks, insurance companies and other financial institutions that are subject to prudential supervision
by regulators

C. Banks and similar financial institutions, one of whose principal activities is to take deposits and
borrow with the objective of lending and investing, and which are within the scope of banking or similar
legislation

d. Internationally active banks and similar financial institutions

100. Under PFRS 1, the first annual financial statements in which an entity adopts PFRS by an explicit
and unreserved statement of compliance with PFRS is called

a. PERS financial statements

b. First PFRS financial statements

C. Opening PFRS statement of financial position

d. First audited financial statements

101. An entity that presents first annual financial statements that conform with PFRS is known as

a. An originating entity c. A first time adopter

b. A provisional presenter d. An initial reporter

102. What is the date of transition to PFRS?

a. The beginning of the latest period in the most recent annual financial statements under previous
GAAP.

b. The end of the latest period in the most recent annual financial statements under previous GAAP.

C. The beginning of the earliest period for which an entity presents full comparative information under
PFRS.

d. The end of the earliest period for which an entity presents full comparative information under PFRS.
103. For a retailer required to collect sales taxes from customers, all of the following adaptations would
be made to the sales journal except:

a. Column totals would continue to be posted as usual.

b. A Sales Taxes Payable credit column would be added.

C. There would be a separate Accounts Receivable debit column.

d. A Sales Taxes Payable debit column would be added.

104. A company borrowed $50,000 from a bank by signing a long-term note payable. Identify the journal
the transaction would be recorded in.

a. Cash disbursements journal.

b. Sales journal.

C. Cash receipts journal.

d. General journal.

105. The statement of financial position at the date of transition to PFRS is best described as

a. Provisional PFRS statement of financial position

b. Closing PFRS statement of financial position

C. Opening PFRS statement of financial position

d. Originating PFRS statement of financial position

106. Under which of the following circumstances would an entity's current year financial statements not
qualify as first PFRS financial statements?

a. The entity prepared its financial statements in the previous year under PFRS for internal purposes.

b. The entity prepared its previous year's financial statements under its national GAAP.

C. The entity prepared its previous year's financial statements in conformity with all requirements of
PFRS but did not contain an explicit and unreserved statement of compliance with PFRS.

d. The entity prepared its previous year’s financial statements in conformity with all requirements of
PFRS and contained an explicit and unreserved statement of compliance with PFRS
107. Under what conditions would an entity’s current financial statements qualify as first PFRS financial
statements?

a. When an entity presented its most recent financial statements that contained an explicit and
unreserved statement of compliance with some but not all PFRS.

b. When an entity prepared financial statements in the previous period under PFRS for consolidation
purposes without preparing a complete set of financial statements.

C. When an entity did not present financial statements in the previous period.

d. All of these conditions would qualify the current year financial statements of an entity as first PFRS
financial statements.

108. Which is not a required adjustment in an opening PFRS statement of financial position?

a. Recognize all assets and liabilities whose recognition is required under PFRS.

b. Derecognize assets and liabilities if PFRS does not permit such recognition.

C. Disclose as comparative information all figures under previous GAAP alongside figures for the current
year presented under PFRS

d. Measure all recognized assets and liabilities according to principles contained in PERS.

109. How should a first time adopter of PFRS recognize the adjustments required to present the opening
PFRS statement of financial position?

a. All of the adjustments should be recognized in profit or loss.

b. Adjustments that are capital in nature should be recognize in retained earnings and adjustments that
are revenue in nature should be recognized in profit or loss.

C. Current adjustments should be recognized in profit or loss and noncurrent adjustments should be
recognized in retained earnings.

d. All of the adjustments should be recognized directly in retained earnings or, if appropriate, in another
category of equity.

110. A first time adopter should prepare how many statements of financial position?

a. Two c. Four

b. Three d. Five

111. Under PFRS 2, “Share-based payment", which of the following transactions involving the issuance
of shares does not come within the definition of a “share-based” payment transaction?

a. Employee share purchase plans

b. Employee share option plans

C. Share-based payment relating to an acquisition of a subsidiary

d. Share appreciation rights d. All of these statements are true about asset held for sale

112. which statement is true regarding requirements for share-based payment transactions?

a. Private entities are exempt.

b. Small entities are exempt.

C. Subsidiaries using their parent entity's shares as consideration for goods and are exempt.

d. There are no exemptions.

113. The compensation expense associated with share option is

a. The book value of the share times the number of options

b. The estimated fair value of options

c. Allocated over the number of years until expiration

d. Recorded on the date of grant

114. The most important accounting objective for share option is

a. Measuring and reporting the compensation expense during the service period

b. Measuring fair value for financial statement purposes

c. Disclosing increases or decreases in the share options held at the end of reporting period

d. Providing incentive to key management personnel

115. Share options should be reported as compensation expense

a. using the intrinsic value method

b. Using the fair value method

c. Using either the fair value method or intrinsic value method

d. Only in rare occasions

116. When recognizing compensation under a share option plan, unanticipated forfeitures are
accounted for as

a. Change in accounting policy c. Prior period error

b. Loss d. Change in accounting estimate

117. Under PFRS 5, which statement is true in relation to asset held for sale?
 a. The sale is highly probable and the asset is available for immediate sale in the present location and
condition.

b. An asset that meets the criteria as held for sale after the end of reporting period but before
authorization of financial statements should be measured at the currentyear at the lower of carrying
amount and fair value less cost of disposal.

c. To be classified as an asset held for sale, the sale must be expected to be completed within twelve
months after the end of reporting period.

d. All of these statements are true about asset held for sale

118. Which is not required for component's results to be classified as discontinued operations?

a. Management must have entered into a sale agreement.

b. The component is available for immediate sale.

c. The operations and cash flows of the component will be eliminated from the operations of the entity
as a result of the disposal.

d. The entity will not have any significant continuing involvement in the operations of the component
after disposal.

119. How should the results from discontinued operation be presented in the income statement?

a. As a single amount before tax in the income statement with analysis in the notes

b. As a single amount after tax in the income statement with analysis in the notes

C. As movement in retained earnings

d. As a line item before income from continuing operations

120. Under PFRS 6, an entity is required to consider which of the following in developing accounting
policy for the recognition of exploration and evaluation asset?

a. The requirements and guidance in PFRS dealing with similar and related issues

b. The definitions, recognition criteria, and measurement concepts for assets, liabilities, income and
expenses in the Conceptual Framework

c. Recent pronouncements of standard-setting bodies

d. Whether the accounting policy results in information that is relevant and reliable

121. Which is not a disclosure required in relation to exploration and evaluation expenditures?

a. Information about commercial reserve quantities

b. Accounting policy for exploration and evaluation expenditures

c. The amounts of assets, liabilities, income and expense, and operating and investing cash flows arising
from the exploration and evaluation of mineral resources
d. Information that identifies and explains the amounts recognized in the financial statements

122. Which expenditures would never qualify as an exploration and evaluation asset?

a. Expenditures for acquisition of rights to explore

b. Expenditures for exploratory drilling

C. Expenditures related to the development of mineral resources

d. Expenditures for activities in relation to evaluating the technical feasibility and commercial viability of
extracting a mineral resource

123. When calculating the estimates of future cash flows should not be included?

a. Income tax payments

b. Cash flows from disposals

Cash flows from the sale of assets produced by the asset

d. Cash flows incurred to generate the cash inflows from the continuing use of the asset

124. An entity is considering to apply an impairment test to an individual asset or to the cash generating
unit to which the assets belongs. Which of the following statement is true?

a. If the individual asset generates a significant proportion of cash inflows of the entity as a whole, the
cash generating unit should not be identified.

b. If the individual asset does not generate cash inflows that are largely independent from other assets,
the cash generating unit should be identified.

c. If the individual assets generates an insignificant proportion of the cash inflows of the entity as a
whole, the cash generating unit should not be identified.

d. All of these statements are true.

125. Which quantitative threshold is not a requirement in qualifying a reportable segment?

a. The segment revenue, both external and internal, is 10% or more of the combined external and
internal revenue of all operating segments.

b. The segments profit or loss is 10% or more of the greater between the combined profit of profitable
segments and combined loss of unprofitable segments.

c. The segment assets are 10% or more of the combined assets of all operating segments.

d. The segments assets are 20% or more of the combined assets of all operating segments.

126. Which of the following is not a required disclosure about operating segments?

a. The total of revenue from major external customers exceeding 50% of the entity's revenue.
b. The identity of a major customer that accounts for 20% of the entity's revenue.

c. Revenue from external customers attributable to the entity's country of domicile and attributed to all
foreign countries in total from which the entity derives revenue.

d. Revenue from external customers for each product and service.

127. Under PFRS 9, what is the principle for the recognition of a financial asset?

a. A financial asset is recognized when it is probable that the future economic benefits will flow to the
entity and the cost of the instrument can be measured reliably.

b. A financial asset is recognized when the entity obtains control of the instrument.

C. A financial asset is recognized when the entity obtains the risks and rewards of ownership of the
financial asset and has the ability to dispose the financial asset.

d. A financial asset is recognized when the entity becomes a party to the contractual provisions of the
instrument.

128. How does PFRS 9 distinguish between the measurement methods to be used?

a. By reviewing the business model of each entity and the risk and rewards of the transactions.

b. By reviewing the business model of each entity and the contractual cash flow characteristics of the
instrument.

c. By reviewing the realizability and the contractual cash flow characteristics of the instrument.

d. By reviewing the realizability of the instrument and risk and rewards of ownership.

129. Unrealized gains and losses on trading investments are included in earnings because

a. The gain and losses measure the success or failure of taking advantage of short term price changes.

b. The BIR mandates the inclusion.

C. The SEC mandates the inclusion.

d. The gains and losses measure the carrying amount of the investments.

130. Under what circumstances can the profit or loss on an equity instrument carried at fair value be
dealt with in other comprehensive income?

a. When the equity investment is not held for trading.

b. When the profit or loss is capable of recycling.

C. When the equity investment is available for sale.

d. When the equity investment is held for trading.

131. What is the effect of an increase in fair value of equity investment on shareholders equity?

a. Higher under FVOCI than FVPL

b. Lower under FVOCI than FVPL

C. The same under both FVOCI and FVPL

d. Not possible to identify given this information.

132. Under what circumstances can an entity classify financial assets that meet the amortized cost
criteria as at FVPL?

a. Where the instrument is held to maturity

b. Where the business model approach is adopted

C. Where the financial asset passes the contractual cash flows characteristics test

d. If doing so eliminates or reduces an accounting mismatch

133. When can the classification of an instrument on initial recognition be changed?

a. Reclassification is only permitted on the change of the contractual cash flows.

b. Reclassifications is only permitted on the change of an entity's business model and expected to occur
only infrequently.

C. Reclassification is only permitted where a category becomes tainted.

d. Reclassification is not permitted.

134. Which statement is incorrect about reclassification of financial asset?

a. When a debt investment at FVPL is reclassified to amortized cost, a new interest rate must be
computed.

b. When a debt investment at FVOCI is reclassified to amortized cost, the cumulative gain or loss
previously recognized in OCI is included in profit or loss.

C. When a debt investment at FVOCI is reclassified to FVPL, the cumulative gain or loss previously
recognized in OCI is included in profit or loss.

d. When a debt investment at FVPL is reclassified to FVOCI, a new effective rate must be computed.

135. An active market is

a. The market in which transactions for the asset take place with sufficient regularity and volume.

b. The market that maximizes the amount that would be received to sell the

C. The same as principal market.

d. Not considered in determining fair value.

136. Which of the following describes a principal market for establishing fair value of an asset?

a. The market that has the greatest volume and level of activity for the asset.
b. Any broker or dealer market that buys or sells the asset.

C. The most observable market in which the price of the asset is minimized.

d. The market in which the amount received would be maximized.

137. Which of the following is an assumption used in fair value measurement?

a. The asset must be in-use

b. The asset must be considered in-exchange

C. The most conservative estimate must be used

d. The asset is in the highest and best use

138. Which of the following would be considered a Level 2 input for fair value measurement?

a. Quoted market price on a stock exchange for an identical asset.

b. Quoted market price available from a business broker for a similar asset.

C. Historical performance and return on the investment.

d. All of these would be considered Level 2 input for fair value measurement.

139. Valuation techniques for fair value that include the Black-Scholes formula, a binomial model or
discounted cash flows are examples of which valuation technique?

a. Income approach C. Cost approach

b. Market approach d. Residual value approach

140. Which measure of fair value uses prices from identical or comparable transactions?

a. Market approach C. Cost approach

b. Income approach d. Residual approach

141. Under PFRS 15, the revenue recognition is applied following

a. Four-step model C. Three-step model

b. Five-step model d. Any model

142. A performance obligation is

a. A promise to deliver a distinct good in a contract with a customer

b. A promise to deliver an indistinct good in a contract with a customer

C. The consideration to which an entity is expected to be entitled

d. An onerous contract

143. When shall an entity recognize revenue from contract with a customer?
a. When it is probable that future economic benefits will flow to the entity.

b. When or as the entity satisfies the performance obligation by transferring control of a good or service
to a customer.

C. When the entity collected the consideration from the customer.

d. When the entity and the customer signed the contract.

144. Revenue shall be recognized at point in time under all of the following, except

a. The customer has legal title to the asset

b. The customer has physical possession of the asset

C. The entity has not transferred the significant risks and reward of ownership

d. The entity has the right to receive payment for the asset

145. Which statement is true regarding cash equivalents?

a. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for
investments or other purposes.

b. An investment normally qualifies as a cash equivalent when it has a short maturity of three months or
less from the date of acquisition.

c. Investment with longer maturity at inception may be included in cash equivalents only if there is
strong evidence to show that they are in substance cash equivalents.

d. All of these statements are true regarding cash equivalents

146. Which statement is true about open-ended or perpetual deposit accounts?

a. Open-ended or perpetual deposit accounts (for example, no stated maturity date) offer a marginally
better rate of interest but require a notice period for withdrawal without penalty.

b. Entities often use such accounts to temporarily hold cash required for working capital management if
the withdrawal period is reasonably short.

C. If the notice period is less than three months, such accounts can be classified as cash equivalents if
the cash is intended to meet short-term cash commitments.

d. All these statements are true about open-ended or perpetual deposit accounts.

147. Term deposits with original maturity of more than three months and with early withdrawal
provisions subject to penalty

a. Cannot classified as cash equivalents under all circumstances.

b. Must be classified as cash equivalents.

C. Can be converted into known amounts of cash with insignificant risk of change in value.
d. May qualify as cash equivalents provided the interest earned is substantially consistent with what
have been earned on a similar deposit with a similar term of less than three months.

148. Which statement is incorrect?

a. The Board of Accountancy is composed of a Chairman and six (6) members appointed by the
President of the Philippines.

b. The Chairman and members of the FRSC are appointed by the PRC upon the recommendation of the
BOA in coordination with the accredited professional organization (APO) of CPAs.

c. The principal objective of the Philippine Interpretations Committee is to issue implementation

guidance on PERSS.

d. The PICPA is the accounting standard setting body in the Philippines.

149. Which statement is correct?

a. PICPA is the accredited professional organization of CPAs by the PRC.

b.The Bangko Sentral ng Pilipinas is represented in the AASC.

c. The Chairman of the FRSC should have been or not presently a senior practitioner in the public
accountancy.

d. The Insurance Commission is not represented in the FRSC.

150. Which statement is correct regarding the accounting process?

a. An adjusted trial balance that shows equal debit and credit columnar totals proves the accuracy of the
adjusting entries.

b. The post closing trial balance is a listing of all the accounts and their balances in the order the
accounts appear on the statement of financial position.

c. Reversing entries are made at the end of the accounting cycle to convenience in the original recording
of transactions.

d. Each adjusting entry affects one statement of financial position account and on income statement
account.

151. The conceptual Framework addresses?

a. The objective of financial reporting.

b. The characteristics that make financial information useful.

c. The definition of assets, liabilities, equity, income and expenses, when should they be recognized and
how they be measured, presented and disclosed.

d. All of the above.

152. Which statement is incorrect regarding the Conceptual Framework?

a.The objective of general purpose financial reporting is the foundation of the Conceptual Framework.

b. It includes a cost-benefit constraint, which means that the benefits of the information must be
greater than the costs of providing it.

C. It serves as a guide in resolving accounting issues that are not addressed directly in existing PFRSs.

d. It may override a specific PFRS.

153. Qualitative characteristic(s) that make useful information more useful include

a. Relevance C. Comparability

b. Faithful representation d. All of these

154. In accordance with PAS 1, the general features of financial statements do not include:

1. Fair presentation and compliance with PERSS

II. Going concern

III. Accrual basis of accounting

IV.Materiality and aggregation

V. Offsetting

VI. Frequency of reporting

VII. Comparative information

VIII. Consistency of presentation

a. None, all are general features of FS

b. II, III and V only

c. I and V only

d. V only VI.

155. Which statement is incorrect concerning the rule on "offsetting"?

a. Assets and liabilities, and income and expenses, shall not be offset unless required or permitted by a
standard.

b. Gains and losses on disposal of noncurrent assets are reported by deducting from the proceeds on
disposal the carrying amount of the asset and related selling expenses.

C. Gains and losses arising from a group of similar transactions are reported on a net basis, for example,
foreign exchange gains and losses arising from trading financial instruments.

d. Measuring assets net of valuation allowances is offsetting.

156. Example of offsetting in the financial statements include the following except

a. Deducting the carrying amount of an asset sold from the proceeds on disposal.

b. Presenting cumulative effect of change in accounting policy net of tax.

c. Deducting foreign exchange gains from foreign exchange losses.

d. Presenting accounts receivable net of allowance for doubtful accounts.

157. Which of the following information is not specifically a required disclosure of PAS 1?

a. Name of the reporting entity or other means of identification, and any change in that information
from the previous year.

b. Level of rounding used in presenting the financial statements.

c. Whether the financial statements cover the individual entity or a group of entities.

d. Names of major/ significant shareholders of the entity.

158. An entity shall disclose comparative information in respect of the previous period for all amounts
reported in the current period's financial statements. When an entity applies an accounting policy
retrospectively, it shall present, as a minimum

a. Three complete sets of financial statements.

b. Three statements of financial position and cash flows, two of each of the others statements, and
related notes.

c. Three statements of financial position and statement of comprehensive income, two of each of the
other statements, and related notes.

d. Three statements of financial position, two of each of the other statements, and related notes.

159. Which statement is true according to PAS 10 events after the reporting period?

a. A decline in the market value of investments would normally be classified as an adjusting event.

b. The settlement of a long-running court case would normally be classified as a non-adjusting event.

c. Notes to the financial statements should give details of all material adjusting events included in those
financial statements.

d. Notes to the financial statements should give details of material non-adjusting events which could
influence the economic decisions of users.

160. Which of the following material events after the reporting date and before the financial
statements are approved are adjusting events?

I. A valuation of property providing evidence of impairment in value at the reporting date.

II. Sale of inventory held at the reporting date for less than cost.

III. Discovery of fraud or error affecting the financial statements.

IV. The insolvency of a customer with a debt owing at the reporting date w still outstanding.

a. I, II, III and IV c. I, II and III only

b. I, II and IV only d. I, III and IV only

161. The following are examples of non-adjusting events after the reporting period would generally
result in disclosure except

a. Entering into significant commitments or contingent liabilities, for example, by issuing significant
guarantees.

b. Changes in tax rates or tax laws enacted or announced after the reporting period that have a
significant effect on current and deferred tax assets and liabilities.

c. Abnormally large changes after the reporting period in asset prices or foreign exchange rates.

d. The determination after the reporting period of the amount of profit-sharing or bonus payments.

162. The profit or loss section or the statement of profit or loss shall include the following line items,
except

a. Gains and losses on distribution of non-cash assets to owners.

b. Gains and losses arising from the derecognition of financial assets measured at amortized cost.

c. Gains and losses on reclassification of financial assets out of the amortized cost measurement
category to FVTPL.

d. Impairment losses (including reversals of impairment losses or impairment gains) determined in

accordance with PFRS 9.

163. The components of other comprehensive income include:

I. Changes in revaluation surplus

II. Remeasurement of defined benefit plans

III. Gains and losses arising from translating the financial statements of a foreign operation

IV. Gains and losses from investments in equity instruments classified as held for trading

V. Ineffective portion of gains and losses on hedging instruments in a cash flow hedge

VI. For particular liabilities designated as at fair value through profit or loss, the amount of the change in
fair value that is attributable to changes in the liability's credit risk

a. I, II, III, IV, V and VI c. I, II, III and VI

b. I, II, III, V and VI d. I, II and III 341

164. Changes in economic resources and claims not resulting from financial performance are reported in

a. Statement of Financial Position

b. Statement of Profit or Loss and Other Comprehensive Income

C. Statement of Cash Flows

d. Statement of Changes in Equity

165. The information presented in the statement of changes in equity include:

a. Total comprehensive income for the period, showing separately the total amounts attributable to
owners of the parent and to non-controlling interests.

b. For each component of equity, the effects of retrospective application or retrospective restatement
recognized in accordance with PAS 8

c. For each component of equity, a reconciliation between the carrying amount at the beginning and
the end of the period.

d. All of the above.

166. Investment property includes.

a. Property occupied by an employee not paying rent.

b. Property occupied by an employee paying market rent.

C. Property occupied by an employee paying below market rent

d. None of the above.

167. Which statement is correct regarding intangible assets?

a. If an entity cannot distinguish the research phase of an internal project to create an intangible asset
from the development phase, the entity treats the expenditure for the project as if it were incurred in
the development phase only.

b. If payment for an intangible asset is deferred beyond normal credit terms, its cost is equal to the total
payments over the credits period.

C. Subsequent expenditure on brands, mastheads, publishing titles, customer lists and items similar in
substance (whether externally acquired internally generated) is always recognized in profit or loss as
incurred.

d. An entity should disclose a brief description of significant intangible assetcontrolled by the entity but
not recognized as assets because they did not meet the recognition criteria in PAS 38.

168. Rent received in advance by the lessor in an operating lease should be recognized as revenue
a. When received b. At the lease inception C. At the lease expiration

d. In the period specified by the lease

169. When should a lessor recognize in a income nonrefundable lease bonus paid by

lessee?

a. When received

b. At the inception of the lease

c. At the lease expiration

d. Over the lease term

170. Lease payments under an operating lease shall be recognized as an income by the

lessor on

a. Straight line basis over the lease term

b. Diminishing balance basis

C. Sum of units basis

d. Cash basis

171. In an operating lease that is recorded by the lessor, the equal monthly rental payments should be

a. Recorded as reduction of depreciation.

b. Allocated between reduction in lease receivable and interest expense.

c. Recorded as reduction in the lease receivable.

d. Recorded as a rental income.

172. An entity purchases a building and the seller accepts payment partly in equity shares and partly in
debentures of the entity. This transaction should be treated in the cash flow statement as follows:

a. The purchase of the building should be investing cash outflow and the

should be investing cash outflow and the issuance of shares and the debentures financing cash outflows.
b. The purchase of the building should be investing cash outflow of debentures financing cash outflows
while the issuance of shares investing cash outflow.

C. This does not belong in a cash flow statement and should be this disclosed the footnotes to the
financial statements.

d. Ignore the transaction totally since it is a noncash transaction .No mention is required in either the
cash flow statement or anywhere statements.

173. Which statement characterized an operating lease?

a.The lessee records depreciation and interest.

b. The lessee records a lease obligation.

c.The lessor transfer title of the underlying asset to the lessee for the duration of the lease term.

d. The lessor records depreciation and lease revenue.

174. The classification of a lease is normally carried out

a. At the end of the lease term.

b. After a "cooling off" period of one year

c. At the inception of the lease

d. When the entity deems it to be necessary

175. The classification of a lease as either operating or finance lease is based on

a. The length of the lease.

b. The transfer of the risks and rewards of ownership.

c. The lease payments being at least 50% of fair value.

d. The economic life of the underlying asset.

176. All of the following situations would prima facie lead to a lease being classified as a finance lease,
except

a. Transfer of ownership to the lessee.

b. Option to purchase at a value below the fair value of the underlying asset.

c. The lease term is for a major part of the asset's life.

d. The present value of the lease payments is 50% of the fair value of the asset.

177. In case of lease of land and building, the lease payments should be split

a. According to relative fair value of the two elements

b. Based on the useful life of the two elements.

c. Using the sum of digits method.

d. According to method devised by the entity.

178. Where there is a lease of land and building and the title to the land is not transferred, generally the
lease is treated as if

a. The land is finance lease.

b. The land is finance and the building is operating.

C. The land is operating and the building is finance.

d. The land and building are an operating lease.

179. The accounting concept that is principally used to classify leases into operating and finance on the
part of lessor is

a. Substance over form b. Prudence

c. Neutrality d. Completeness

180. Which statement is correct regarding the lease capitalization criteria?

a. The lease transfers ownership to the lessor.

b. The lease contains a purchase option.

c. The lease term is equal to at least 75% of the economic life of the underlying asset

d. The lease payments are at least 90% of fair value of asset.

181. Which condition would require lease capitalization?

a. The lease does not transfer title to the lessee.

b. There is an uncertain purchase option.

c. The present value of the lease payments is significantly more than the fair value of the asset.

d. The lease term is below the useful life of asset.

182. One of the four determinative criteria for a finance lease specifies that the lease term be equal to
or greater than

a. The economic life of the underlying asset.

b. 90 percent of the economic life of the asset.

c. 75 percent of the economic life of the asset

d. 50 percent of the economic life of the asset.

183. One of the four determinative criteria for a finance lease is that the present value at the beginning
of the lease term of the lease payments equals or exceeds

a. The fair value of the underlying asset

b. 90 percent of the fair value of the underlying asset

c. 75 percent of the fair value of the underlying asset

d. 50 percent of the fair value of the underlying asset

184. Gross investment in the lease equal to

a. Sum of the lease payments receivable by a lessor under a finance lease and any unguaranteed
residual value accruing to the lessor.

b. The lease payments under a finance lease of the lessor.

c. Present value of lease payments under a finance lease of the le unguaranteed residual value

d. Presents value of the lease payments under a finance lease of the lessor and any

185. Net investment in a direct financing lease is equal to

a.Cost of the asset

b. Cost of the asset plus initial direct cost paid by the lessor

c. Cost of the asset minus guaranteed residual value

d. Cost of the asset plus unguaranteed residual value

186.Which is the correct accounting treatment for finance lease in the accounts of a lessor ?

a Treat as a noncurent asset equal to net investment in lease and recognize all finance payments
income statement

b.Treat as a receivable equal to gross amount receivable on lease and recognize finance payments in
cash by reducing debt .

c.Treat as a receivable equal to net investment in the lease and recognize finance payments by reducing
debt and taking interest to income statement

d. Treat as a receivable equal to net investment in the lease and recognize finance payments in cash by
reduction of debt .

187. Lessor shall recognize asset held under a finance lease a receivable at an amount

a Gross investment in the lease

b.Net investment in the lease

c. Gross rentals

d. Residual value, whether guaranteed or unguaranteed

188. The lease receivable in a direct financing lease is

a The gross amount of lease payments. b. The difference between the gross rentals and the fair value of
the leased asset. c. The present value of lease payments. d. The cost of the asset less any accumulated
depreciation.

189. The primary difference between a direct financing lease and a sales type lease is the

a Manner in which rental collections are recorded as rental income. b. Depreciation recorded each year
by the lessor. c. Recognition of the manufacturer or dealer profit at the inception of the lease. d.
Allocation of initial direct costs incurred by the lessor over the lease term.
190. All of the following would be included in the lease receivable, except

a. Guaranteed residual value b. Unguaranteed residual value

C. A purchase option that is reasonably certain .d. All would be included

191. Under a direct financing lease, the excess of aggregate rentals over the cost of the underlying asset
should be recognized as interest income of the lessor?

a. In increasing amounts during the term of the lease

b. In constant amounts during the term of the lease

c. In decreasing amounts during the term of the lease

d. After the cost of the underlying asset has been fully recovered through rentals

192. Under a sales type lease, what is the meaning of gross investment in the lease?

a. Present value of lease payments

b. Absolute amount of lease payments

c.present value of lease payments plus present value of unguaranteed residual value

d. Sum of absolute amount of lease payments and unguaranteed residual value

193. Net investment in a sales type lease is equal to

a. Gross investment in the lease less unearned finance income

b. Cost of the underlying asset

C. The Lease payments

d. The lease payments less unguaranteed residual value

194. Which statement characterizes a sales type lease?

a. The lessor recognizes only interest revenue over the useful life of the asset.

b. The lessor recognizes only interest revenue over the lease term

C. The lessor recognizes a dealer profit at lease inception and interest revenue over the lease term.

d. The lessor recognizes a dealer profit at lease inception and interest revenue over

the useful life of the asset.

195. The profit on a finance lease transaction for lessor who are dealer should

a. Not be recognized separately from finance income

b. Be recognized in the normal way on the transaction

c. Only be recognized at the end of the lease term

d. Be recognized on a straight line basis over the lease term

196. The sales revenue recognized at the commencement of the la manufacturer or dealer lessor is the

a Fair value of the asset

b. Present value of the lease payments.

c.Fair value of the asset or present value of the lease payments, whichever is lower

d Fair value of the asset or present value of the lease payments, whichever is higher.

197. What is the treatment of an unguaranteed residual value in determining the cost of goods sold
under a sales type lease?

a. The unguaranteed residual value is ignored.

b. The unguaranteed residual value is added to the cost of the underlying asset

c. The unguaranteed residual value is deducted from the cost of the underlying asset at absolute
amount.

d. The unguaranteed residual value is deducted from the cost of the underlying asset at present value.

198. The excess of the fair value of underlying asset at the inception of the lease over the carrying
amount shall be recognized by the dealer lessor as

a. Unearned income from a sales type lease

b. Unearned income from a direct financing lease

c. Manufacturer profit from a sales type lease

d. Manufacturer profit from a direct financing lease

199. In a lease that is recorded as a sales type lease by the lessor, interest revenue

a. Does not arise

b. Shall be recognized over the lease term using the interest method

C. Shall be recognized over the lease term using the straight line method

d. Shall be recognized in full as revenue at the inception of the lease

200. Which entities are required to apply deferred tax accounting?

a. Public entities

b. Nonpublic entities

C. Both public and nonpublic entities

d. Neither public entities nor nonpublic entities

201. It is the profit for a period determined in accordance with the rules established by tax authorities
upon which income taxes are payable.

a. Accounting profit

c. Net profit b. Taxable profit

d. Accounting profit subject to tax

202. It is the profit for a period before deducting tax expense.

a. Accounting profit b. Taxable profit c. Gross profit d. Net profit mount in determining

203. These are differences that will result in future taxable amount in determining taxable profit of
future periods.

a. Temporary differences b. Taxable temporary differences c. Deductible temporary differences d.

Permanent differences

204. These are differences that result in future deductible amount in determining taxable profit in future
periods.

a. Taxable temporary differences

b. Deductible temporary differences

c. Taxable temporary and permanent differences

d. Deductible temporary and permanent differences

205. It is the deferred tax consequence attributable to a taxable temporary difference.

a. Deferred tax liability

C. Current tax liability b. Deferred tax asset

d. Current tax asset

206. It is the deferred tax consequence attributable to a deductible temporary difference and operating
loss carry forward.

a. Deferred tax liability

b. Deferred tax asset

C. Current tax liability

d. Current tax asset

207. It is the amount of income tax payable in respect of taxable profit

a. Current tax expense

b. Total income tax expense

c. Deferred tax expense

d. deferred tax benefit

208. It is the aggregate amount included in the determination of net profit for the period in respect of
current tax and deferred tax.

a. Tax expense b. Current tax expense

c. Deferred tax expense d. Deferred tax benefit

209. The deferred tax expense is equal to

a Increase in deferred tax asset less increase in deferred tax liability

b. Increase in deferred tax liability less increase in deferred tax asset

C. Increase in deferred tax asset.

d. Increase in deferred tax liability

210. A deferred tax asset recognized for deductible temporary differences and operating loss carry-
forward when

a. It is probable that taxable income will be available against which the deferred tax asset can be used.
B. it is probable that accounting income will be available against which the deemed tax asset can used.

b. It is possible that taxable income will be available against which the deferred tax asset can be used

d. c. It is possible that accounting income will be available against which the deferred

tax asset can be used.

211. An entity shall offset a deferred tax asset and deferred tax liability

a. When the income taxes are levied by different taxing authority

b. When the entity has no legal enforceable right to offset

c.When the income taxes are levied by the same taxing authority and the entity as a legal enforceable
right to offset a current tax asset against a current tax liability

d. Under all circumstances

212. Which is correct about deferred tax assets and liabilities?

a. Current deferred tax assets are netted against non current deferred tax liabilities

b. All noncurrent deferred tax assets are netted against noncurrent deferred tax liabilities

c. Deferred tax assets are never netted against deferred tax liabilities

d. Deferred tax assets are netted against deferred tax liabilities if they relate to the same tax authority.
213. Which statement is incorrect concerning tax assets and liabilities?

a. Deferred tax assets and liabilities shall be discounted.

b. Tax assets and liabilities shall presented separately from other assets and liabilities in the statement
of financial position.

c. Deferred tax assets and liabilities shall be distinguished from current tax assets and liabilities.

d. When an entity makes a distinction between current and noncurrent assets and liabilities, it shall not
classify deferred tax assets and liabilities as current

214. All of the following must be disclosed separately, except

a. The tax bases of major items on which deferred tax has been calculated.

b. The amount of deductible temporary differences for which no deferred tax asset is recognized.

c. The amount of taxable temporary differences associated with investments in

215. Justification for the method of determining periodic deferred tax expense on the concept of

a. Matching of periodic expense to periodic revenue.

b. Objectivity in the calculation of periodic expense.

c. Recognition of asset and liability.

d. Consistency of tax expense measurement with actual tax planning strategies.

216. Which of the following differences would result in future taxable amount?

a. Expense or losses that are deductible after they are recognized in accounting income.

b. Revenues or gains that are taxable before they are recognized in accounting income.

c. Expenses or losses that are deductible before they are recognized in accounting income.

d. Revenues or gains that are recognized in accounting income but are never included in taxable
income.

217. A temporary difference which would result in deferred tax liability is

a. Interest revenue on municipal bonds

b. Accrual of warranty expense

c. Excess tax depreciation over accounting depreciation

d. Subscription received in advance

218. A temporary which would result in a deferred tax asset is

a. Tax, penalty or surcharge.

b. Dividend received on share investment.

c. Excess tax depreciation over accounting depreciation.

d Rent received in advance included in taxable income at the time of receipt but deferred for
accounting purposes.

219. An entity, cash basis taxpayer, prepares accrual basis financial

year-end statement to the pares accrual basis financial statements. In the the deferred tax liabilities
increased compared would cause this increase in deferred tax liabilities?

An increase in prepaid insurance

An increase in rent receivable
An increase in warranty obligation
An increase in prepared insurance and increase in rent receivable
220.An entity reported deferred tax assets and deferred tax liabilities at the end of the prior
year and at the end of the current year. For the current year,. The entity should report deferred
income tax expense or benefit equal to the
a. Decrease in the deferred tax assets
b. Increase in the deferred tax liabilities
c. Amount of the current liability plus the sum of the net changes in deferred tax assets and
deferred tax liabilities.
d. Sum of the net changes in deferred tax assets and deferred tax liabilities
221. Because an entity uses different methods to depreciate equipment for accounting and
income tax purposes, the entity has temporary differences that will reverse during the next
year and add to taxable income. Deferred income taxes that are based on these temporary
differences shall be classifies as
a. Contra account to current assets
b. Contra account to noncurrent assets
C. Current liability
d. Noncurrent liability
222. At the current year-end, an entity had a deferred tax liability arising from accelerated
depreciation that exceeded a deferred tax asset relating to rent received in advance which is
expected to reverse in the next year.
Which of the following shall be reported in the current year-end statement of
financial position?
The excess of the deferred tax liability over the deferred tax asset as a noncurrent liability
b. The excess of the deferred tax liability over the deferred tax asset as a current liability
c. The deferred tax liability as a noncurrent liability.
d. The deferred tax liability as a current liability.
223. Which statement is true regarding reporting deferred income taxes in the financial
statements?
a. Deferred tax assets are always netted against deferred tax liabilities.
b. Deferred taxes of one jurisdiction are offset against another jurisdiction in the netting
process.
C. Deferred tax assets and liabilities may only be classified as noncurrent.
 d. Deferred tax assets and liabilities are classified as current and noncurrent on expiration
date. avear to year to smooth
of temporary differences
224. The purpose of interperiod tax allocation is to
a. Allow entities to utilize carryforward loss.
b. Allow entities whose tax liabilities vary significantly from year to year to smooth tax
payments
c. Recognize an asset or liability for the tax consequences of temporary differe that exist at
year-end.
d. Amortize the deferred tax liability.
225. Intraperiod tax allocation
a. Involves the allocation of income taxes between current and future periods.
b. Associates tax effect with different items in the income statement.
c. Is not generally acceptable
d. Arises because different income statement items are taxed at different rates.
226. Which is true about intraperiod tax allocation?
a. Intraperiod tax allocation arises because certain items are recognized for accounting and tax
purposes. b. Intraperiod tax allocation is required for the effect of accounting policy.
c. The purpose is to allocate is required income tax expense evenly over a number of
accounting periods.
d. The purpose is to relate the income tax expense to the items which affect the amount of tax.
227. All would require intraperiod tax allocation, except
a. Discounted operation
b. Prior period error
c. Change in accounting estimate
d. Income from continuing operations
228. Tax expense should be allocated to all, except
a. Discontinued operation
b. Prior period error
c. Gross profit
d. Other comprehensive income
229. Which statement characterizes define contribution plan?
a. Defined contribution plans are more complex than defined benefit
b. The employer's obligation is satisfied by making the appropriate periodic contribution.
c. The investment risk is borne by the employer.
d. Contributions are made in equal amounts by employer and and employees.
230.Which is not characteristics of defined contribution plan?

a.The employer contribution each period is based on a formula.

b.The benefits to be received are usually determined by an employee's highest salary.

c.The accounting for a defined contribution plan is straightforward and uncomplicated.

d.The benefit of gain or the risk of loss from the assets contributed to the plan is borne by the employee.

231 A formula in a defined contribution plan

Defines the benefits that the employee will receive at the time of retirement
b. Ensures that the defined benefit cost and funding are the same.

c. Requires an employer to contribute a certain sum each period based on the formula

d. Ensures that enough fund would be available

232. Which statement is true concerning the recognition and measurement of a defined contribution
plan?

a. The contribution shall be recognized as expense in the period it is payable. b. Any unpaid contribution
at the end of the period shall be recognized as accrued liability c. Any excess contribution shall be
recognized as prepaid expense but only to the extent that the prepayment will lead to a reduction in
future payments or cash refund. d. All of these statements are true about a defined contribution plan.

233. Which statement characterizes defined benefit plan?

a. Defined benefit plans are comparatively simple.

b. Retirement benefits are based on the plan's benefit formula.

c. Retirement benefits depend on how well pension fund assets have been managed

d. The investments risks is borne by the employee.

234. Which of the following terms would NOT result to recognition of Freight-in on the books of the
buyer? a. FOB Buyer
C. FOB Shipping point, freight prepaid b. FOB Seller

d. FOB Shipping point, freight collect

235. In a benefit plan, the process of funding refers to

a. Determining the defined benefit obligation.

b. Determining the accumulated benefit obligation.

c.Making the periodic contributions to a funding agency to ensure that fund available to meet claims.

d. Determining the amount reported for pension expense

236. In accounting for a defined benefit plan

a. An appropriate funding must be establish to ensure that enough fund available at retirement

b. The employer responsibility is simply to make contribution to the plan

C. The expense recognized each period is equal to the cash contribution to the

d. The liability is determined based upon variables that reflect current salary levels

237. The formula in a defined benefit plan

a. Requires that the benefit of gain or the risk of loss form the assets contributed to the plan should be
borne by the employee.

b. Defines the benefits that the employee will receive at the tine of retirement

c. Requires that the defined benefit cost and funding must the same.

d. Defines the contribution to be made by the employer and no promise is made concerning the
ultimate benefits to be paid out to the employees.

238. In rare circumstances, when a retirement benefit plan has a attributes of both defined contribution
and defined benefit plan, the plan is deemed

a. Defined benefit plan

b. defined contribution plan

c. Neither defined benefit nor defined contribution plan

d. Both defined benefit and defined contribution plan

239. The components of defined benefit cost include all, except

a. Service cost

c. Remeasurements

b. Net interest

d. Contribution to the plan

240. The service cost of a defined benefit plan comprises all, except

a. Current service cost b. Past service cost c.. Gain or loss on plan settle d.Net interest

241. Which of the following components of defined benefit cost shall be recognized through other
comprehensive income?

a. Current service cost b. Past service cost .c. Net interest d. Remeasurement

242 Remeasurements of defined benefit plan include

a. The difference between actual return and interest income on plan assets

b. Actuarial gain or loss on projected benefit obligation.

c. Change in the effect of asset ceiling minus interest expense on the beginning effect of asset ceiling

d. All of these are included in remeasurements of defined benefit plan

243. When an entity amends a pension plan, past service cost should be

a Treated as a prior period adjustment because no future periods are benefited,

Amortized over the remaining service period of employees.

c Recorded in other comprehensive income.

d. Reported as an expense in the period the plan is amended.

244. What is the meaning of net interest in relation to a defined benefit cost?

a. Interest expense on defined benefit liability

b. Interest income on the fair value of plan assets

c. The difference between interest expense on defined benefit liability, interest expense on effect of a
asset ceiling and interest income on plan assets

d. Interest expense on defined benefit liability less applicable income tax

245. Which of the following should be included in plan assets?

a Assets held by a long-term employee benefit fund

b. Oualifying insurance policy

c. Both assets held by a long-term employee benefit fund and qualifying insurance policy

d. Neither assets held by long-term employee benefit fund nor qualifying insurance policy

246. The return on plan assets

a. Is equal to the change in the fair value of the plan assets during the year

b. Includes interest, dividends and change in the fair value of the plan assets during the year

c. is equal to the discount rate times the fair value of the plan assets at the beginning of the period

d. is equal to the expected rate of return times the fair value plan of assets at the beginning of the
period.

247. Plan assets are assets held by a long-term fund and must satisfy all of the following conditions,
except

a.The assets are held by entity ,the fund itself ,that is legally separate from the reporting entity

b.the assets in the fund are available to pay only employee benefits

c.The assets in the fund can be returned to the entity even if the remaining assets are insufficient to
meet all employee benefit obligations

d.The assets in the fund can be returned to the entity even if the remaining assets are insufficient to
meet all employee benefit obligations .

248. It is an insurance policy issued by an insurer that is not related party of the reporting entity and the
proceeds of the policy can be used only top benefit under a defined benefit plan.

a.Qualifying insurance policy

b. Aggregate policy

c. Annuity

d. Unconditional insurance policy

249. A pension liability is reported when

a. The projected benefit obligation exceeds the fair value of plan assets

b. The accumulated benefit obligation is less than the fair value of plan assets

c. The pension expense reported for the period is greater than the funding amoun for the same period.

d. Cumulative other comprehensive income exceeds the fair value of plan assets

250. A pension asset is reported when

a. The accumulated benefit obligation exceeds the fair value of plan assets. b. The accumulated benefit
obligation exceeds the fair value of plan assets but a past service cost exists. c. Plan assets at fair value
exceed the accumulated benefit obligation.

d. Plan assets at fair value exceed the projected benefit obligation.

251. Which measure requires the use of future salaries in the computation of benefit obligation?

a Vested benefit obligation, b. Accumulated benefit obligation. c Projected benefit obligation. d. Current
benefit obligation.
252. What is the discount rate for pension plans?

a. The market yield at the end of the reporting period for high quality corpor bonds.

b. The expected rate of return on plan assets.

c. The weighted average interest rate

d.The bank prime interest rate

253. The interest on the projected benefit obligation

a. Reflects the incremental borrowing rate.

b. Reflects the rate at which retirement benefits could be effectively settled.

c. Is the same as the actual return on plan assets.

d. May be stated implicitly.

254. Interest cost included in the net pension cost recognized under a defined benefit plan represents
the

a. Shortage between the expected and actual returns on plan asset.

b. Change in the nature of benefits.

c. Increase in the projected benefit obligation due to the passage of time.

d. Increase in the fair value of plan assets due to the passage of time.

255. Vested benefits

a. Usually require a certain minimum number of years of service.

b. Are those that the employee is entitled to receive even if fired.

c. Are not contingent upon additional service under the plan.

d. Are defined by all of these.

256. What is the relationship between the amount funded and the amount reported for defined benefit
cost?

a. Defined benefit cost must equal the amount funded.

b. Defined benefit cost is less than the amount funded.

c. Defined benefit cost is more than the amount funded.

d. Defined benefit cost may be more than, equal to, or less than the amount funded.
257. The defined benefit obligation in the measure of pension obligation that

a. Is required to be used for reporting the current service cost component of pension expense.

b. Requires pension expense to be determined solely on the basis of the plan formula applied to years
of service to date and based on existing salary level.

C. Requires the longest possible period for funding to maximize the tax deduction.

d. Is not sanctioned under international financial reporting standards for reporting the current service
cost component of pension expense.

258. In computing the current service cost components of pension expense

a. The accumulated benefit obligation provides a more realistic measure of the pension obligation on a
going concern basis.

b. An entity should employ an actuarial funding method to report pension expense that best reflects the
cost of benefits to employees.

c. The defined benefit obligation using future compensation level provides a realistic measure of
present pension obligation and expense.

d. The actual and estimated return on plan assets should be recognized.

b 259. The present value of pension benefits accrued to date using assumptions as to future
compensation level is

a. Accrued pension cost

b. Projected benefit obligation

C. Past service cost

d. Accumulated benefit obligation

D 260. The vested benefits in a pension plan represent

a. Benefits to be paid to the retired employee.

b. Benefits accumulated in the hands of trustee.

C. Benefits to be paid to the retired employee in the current year

d. Benefits that are not contingent on the employee's continuing in the service of the employer.

C 261. In the calculation of pension expense under a defined benefit plan, which component will not be
included?
a. Actuarial present value of benefits attributed by the pension benefit formula to employee service
during current period

b. Interest cost on the projected benefit obligation

C. Actual return on plan assets

d. Gain or loss on plan settlement

D 262. When may the entity net assets and liabilities of the various retirement plans?

a. When the estimated cash inflows and outflows are similar in pattern.

b. When the assets and liabilities are both financial.

c. Assets and liabilities may always be netted.

d. Assets and liabilities may be netted when there is a legally enforceable right to use the assets of one
plan to settle the obligations ot another plan.

263. Retirement benefit plan investments shall be carried at

a. Fair value

b. Historical cost

C. Amortized cost

d. Value in user

C 264. Short-term employee benefits include all, except

a. Wages, salaries and social security contributions.

b. Short-term compensated absences

c. Profit-sharing bonus payable in more than twelve months after the end of reporting period

d. Nonmonetary benefits, Such as medical care, housing, car and free and subsidized

goods.

D 265. Shor-term employee benefits are described by all, except

a. No actuarial assumptions are required,

b. There is no possibility of any actuarial gain or loss.

c. Short-term employee benefits by definition are payable no later than twelve

after year-end.

d. short-term employee benefit obligations are measured on a discounted basis.

A 266. There are compensated or paid absences that are carried toward and can be used in future
periods and the employees are entitled to cash payment for unused entitlement on leaving the entity.

a. Accumulating and vesting

b. Accumulating and non vesting

C. No accumulating and vesting

d. No accumulating and nonvoting

C 267. Which of the following criteria is not required for the recognition of a liability for

compensated absences?

a. The amount of the obligation must be estimable.

b. Payment of the obligation must be probable.

C. Payment of the obligation will require the use ot current assets.

d. The compensation either vests with the employee or can be carried forward to

subsequent years.

A 268. These are employee benefits that are payable as a result of an employee' s decision to accept an
offer of benefits in exchange for termination of employment.

a. Termination benefits

b. Short-term employee benefits

c. The long-term employee benefits

d. Postemployment employee benefits

A 269. Employees are such entitled to 20 days of paid holiday leave per year. Unused holiday leave
cannot be carried forward and does not vest. what is the holiday leave?

a . Short-term employee benefit

b. Postemployment benefit

C. Other long-term employee benefit

d. Termination benefit

C 270. Employees are entitled to 10 days holiday leave per year. Unused holiday leave may be carried
forward until the employee leaves the employment of the entity, at which time the entity will pay the
employee for unused holiday leave. What is the holiday leave?

a. Short-term employee benefit

b. Postemployment benefit

C. Other long-term employee benefit

d. Termination benefit

D 271.An entity made a public announcement of a commitment to a voluntary redundancy a plan. The
entity has an obligation to pay employees that choose voluntary redundancy a lump sum equal to twice
their gross annual salary. VVhat is the obligation to pay employees that choose voluntary redundancy?

a. Short-term employee benefit

b. Postemployment benefit

C. Other long-term employee benefit

d. Termination benefit

C 272. A profit sharing plan requires an entity to pay a specified proportion of the cumulative profit for a
five-year period to employees who serve throughout the five-year period. What is the profit-sharing
plan?

a. Short-term employee benefit

b. Postemployment benefit

c. Other long-term employee benefit

d. Termination benefit

D 273. What are compensated absences?

a. Unpaid time off

b. A form of healthcare
c. Payroll deductions

d. Paid time off

C 274. A liability for paid absences should

a. Be accrued during the period when the compensated time is expected to be used

by employees.

b. Be accrued during the period following vesting.

c. Be accrued during the period when earned.

d. Not be accrued unless a written contractual obligation exists.

D 275. The amount of the liability for paid absences should be based

a. The current rate of pay in effect when employees earn the right to compensated absences.

b. The expected rate of pay expected to be paid when employees use compensated time.

c. The present value of the amount expected to be paid in future periods.

d. Either the current rate of pay in effect when the employees earn the right to compensated absences
or the expected rate of pay expected to be paid employee use compensated time.

B 276. If the payment of employees compensation for future absences is probable, the amount can be
reasonably estimated and the obligation relates to rights that accumulate, the compensation should be

a. Accrued if attributable to employees services not yet rendered.

b. Accrued if attributable to employees service already rendered.

c. Accrued if attributable to employees services whether already rendered or not.

d. Recognized when paid.

D 277. In determining whether to accrue employees compensation for future absences, one of the
conditions that must be met is that the employer has an obligation to make payment even if an
employee terminates. This is an example of what?

a. Accumulated right
b. Estimable right

C. Contingent right

d. Vested right

B 278. In accounting for paid absences, the difference between vested rights and accumulated rights is

a. Vested rights are normally for a longer period of employment than accumulated

rights.

b. Vested rights are not contingent upon an employee's future service

C. Vested rights are a legal and binding obligation whereas accumulated rights expire at year-end.

d. Vested rights carry a stipulated amount whereas accumulated rights are nonmonetary.

D 279. An employer offered special termination benefits. The employees accept the offer which
provided for immediate lump sum payments and future payments at the end of the next two years. The
amount of expense recognized in the current year should include.

a. The total of the lump sump and future payments

b. One third of the lump sump payments and one third of the present value of the future payments

c. Only the lump sum payments

d. The lump sum payments and the present value of the future payments

B 280. What is the requirement for the accrual of a sick pay?

a. Sick Pay benefits can be reliably estimated.

b. Sick pay benefits vest.

c. Sick pay benefits do not vest.

d. Sick pay benefits accumulate.

B 281. When shares with par value are sold, the excess of the proceeds over the par value is credited to

a. Share capital

b. Share premium

c. Retained earnings
d. Gain on issuance of Share capital

C 282. When shares without par value are sold, the proceeds shall be credit be credited to

a. Share capital

b. Shareholders equity

C. Share capital to the extent of the stated value and any excess is credited to share premium

d. Share premium

B 283. If shares are issued for noncash consideration, the proceeds shall be measured by the

a. Fair value or the shares issued

b. Fair value of the noncash consideration received

c. Par value of the shares is:

d. Cost of the noncash consideration received

B 284. If shares are issued to extinguish a financial liability, what is the initial

measurement of the shares issued?

a. Par value of the shares issued

b. Fair value of the shares issued

C. Fair value of liability extinguished

d. Book value of the shares issued

B 285. When shares are issued for services received, the least appropriate measure equal to

a. Fair value of such services

b. Par value of the shares issue

c. Book value of the shares issued

d. Fair value of the shares issued

C 286. What is the meaning of net assets ot a Corporation

a. Contributed capital

b. Retained earnings

c. Shareholder's equity

d. Legal capital

C 287. The two primary account classifications within shareholder' s equity are

a. Preference shares and retained earnings

b. Par value of ordinary shares and retained earnings

c. Contributed capital and retained earnings

d. Preference shares and ordinary shares

B 288. An entity is undertaking reorganization. Under the plan, part of the entity's business will be
demerged and will be transferred to a separate entity, Entity Z. This also will involve a transfer of part of
the pension obligation to Entity Z. Because of this, Entity will have a deducible temporary difference at
its year-end of December 31, 20x4. It is anticipated that Entity Z will be loss-making for the first four
years of its existence, but thereafter it will become a profitable entity. The future forecasted profit is
based on estimates of sales to intergroup companies. Should Entity Z recognize the deductible
temporary difference as a deferred tax asset?

a The entity should recognize a deferred tax asset.

b. Management should not recognize a deterred tax asset as future profitability is

not certain.

c. The entity should recognize a deferred tax asset if the authenticity of the budgeted profits can be
verified.

d. The entity should recognize a deferred tax asset if the intergroup profit in the

budgeted profit is eliminated.

C 289. Details of each class of share capital should be reported

a. On the face of the statement of financial position only.

b. In disclosure notes only.

c. On the face of the statement of financial position or disclosure notes.

d On the face of the statement of comprehensive income and in disclosure notes.

A 290. The corporate charter is known as

a. Articles of incorporation

b. Statement of organization

c. By- laws

d. Registration statement

B 291.Characteristics of the corporate form that have led to the growth of this form of business
ownership include all of the following, except

a. Ease or raising capital

b. Low government regulation

c. Limited liability

d. Ease of ownership transfer

D 292. Outstanding ordinary shares are

a. Shares that are performing well on the Philippine stock exchange

b. Shares that have been authorized by the state for issue.

c. Shares held in the corporate treasury

d. Shares in the hands of shareholders

A 293. Issued shares refer to the number of shares

A outstanding plus treasury shares

B. Shares issued for cash

C. In the hands of shareholders

d. That may be issued under state law

D 294. Authorized share capital refers to the total number of shares

a. Outstanding
b. Issued

C. Issued and outstanding

d. That can be issued

C 295.The share capital account is measured as

a. the number of shares outstanding multiplied by the par value

b. The number of shares outstanding multiplied by the market value

the number of shares issued multiplied by the par value

c. The number of shares issued multiplied by the par value

d. The number of shares issued multiplied by book value

B 296. The par value of shares issued is normally recorded in

a. additional paid in capital

b. Share Capital account

c. Retained earnings

d. Appropriated retained earnings account

C 297. Total shareholders equity represents

a. A claim against specific assets.

b. The maximum amount that can be borrowed

c. A claim against the total assets of an entity.

d. Only the amount or retained earnings.

C 298. In accounting for shareholders equity, the accountant is primarily concerned with which of the
following?

a. Determining the total amount of shareholders equity

B. distinguishing between realized and unrealized revenue

C. recording the source or each or the various elements of shareholder’s equity

d. Making sure that the directors do not declare dividends in excess of retained earnings

C 299. The term residual owner means that ordinary shareholders

a. Are entitled to a dividend every year in which the entity earns an income.

b. Have the rights to specific assets of the entity.

c. Bear the ultimate risks and uncertainties and receive the benefits oft ownership

d. Can negotiate individual contracts for the entity

D 300. Shares that have a fixe d per-share amount printed on the share certificate are

called

a. Stated value shares

b. Fixed value shares

C. Uniform value shares

d. Par value shares

C 301. The par value of an ordinary share represents

a. The liquidation value of the share

b. The book value of the share.

C. The legal nominal value assigned to the share.

d. The amount received by the corporation when the share is originally issued.

D 302. Contributed capital does not include

a. Share premium on ordinary and preference shares

b. Preference share capital

c. Capital resulting from reissuance of treasury shares at a price in excess or

acquisition cost

d. Capital accumulated by retention of earnings

D 303. Discount on share capital

a. May be recorded as either an asset or an expense

b. Should be closed to income summary account

c. May be offset against share premium on the same class of share capital

d. None of the above may be done

D 304. Which of the following is not one of the basic shareholders rights?

a. The right to participate in earnings

b. The right to maintain one's proportional interest.

c. The right to participate in the proceeds of the sale of corporate assets upon

liquidation of the corporation.

d. The right to inspect the accounting records.

C 305. An ordinary shareholder does not possess which of the following?

a. Thee right to share in the earnings of the corporation

b. The right to vote in the election of the board of directors.

C. The right to direct ownership of the corporate assets.

d. The right to share proportionately in corporate assets in case of liquidation.

B 306. The preemptive right of an ordinary shareholder is the right to

a. Share proportionately in corporate assets.

b. Share proportionately in any new issue of shares of the same class.

c. Receive cash dividends before they are distributed to preference shareholders.

d. Exclude preference shareholders from voting rights.

D 307. Share premium is reported

a. As a reduction of shareholders equity

b. As a noncurrent asset
c. As a noncurrent liability

d. As an increase in shareholders equity

A 308. Share issue cost are

a. Not recorded separately

b. Recorded as an asset

c. Recorded as a liability

d. Amortized over time

C 309. When more than one security is sold for a single price and the total selling price not equal to the
sum of the market prices, the cash received is allocated between the securities based on

a. Relative book value

b. Par value

c. Relative Value

d. The earnings per share

B 310.When shares traded on an active exchange are issued for an asset?

a. No entry is recorded until restrictions are lifted

b. An asset is recorded at the fair value of the shares

c. An asset is recorded at the appraised value

d. Share capital is increased by the appraised value of the asset.

D 311. When shares are issued in exchange for property, the best evidence of fair value

might be any of the following, except

a. The fair value of the property received

b. The selling price of the shares in a recent transaction

c. The price of the shares quoted on the stock exchange

d. The average book value of outstanding shares.

B 312. In terms of business volume, the dominant form of business organization is

a. Partnership

b. Corporation

c. Limited liability company

d. Proprietorship

B 313. Ordinary shareholders Usually have all or the following rights, except

a. To share in the net income

b. To share in the assets upon liquidation

c. To elect the board of directors

d. To participate in the day to day operations

D 314. When preference shares are retired by the issuer at a price below the original issue price, the
transaction

a. Increase net income for the year

b. Increase retained earnings

C. Increase revenue for the year

d. Increases contributed capital of ordinary shareholders

C 315.When preference shares carry a redemption privilege, the shareholders may

a. Purchase new shares when available

b. Exchange their preference shares for ordinary shares.

c. Surrender the preference share for a specified amount of cash

d. Purchase treasury shares ahead of ordinary shareholders

B 316. An entity that issued shares of Class B should report the share capital

a. Among liabilities under all circumstances.

b. As equity unless the shares are mandatorily redeemable.

C. As equity unless the shares are redeemable at the option of the issuer

d. Among liabilities unless the shares are mandatorily redeemable.

A 317. The issuance of preference shares

a. Increase preference shares outstanding

b. Has no effect on preference shares outstanding

C. Increased authorized preference share capital

d. Decrease authorized preference share capital

D 318. When an entity calls in all of the preference shares for more than the original issue price, the
excess over the original issue price should be

a. Accounted for a loss on exchange

b. Charged against share premium of ordinary shares

C. Charged to a discount on preference shares

d. Charged against retained earnings

B 319. When preference shares are called in by the issuing entity for less than original

issue price, proper accounting for the redemption

a. Increase the amount of dividends available to ordinary shareholders

b. Increase the contributed capital of the ordinary shareholders

C. Increases reported income for the period

d. Increases the treasury shares held by the entity

B 320. Convertible preference shares

a. Are compound financial instrument

b. Include an option for the holder to convert preference shares into a fixed number ordinary shares

C. Are accounted for as financial liability

d. All of the choices are correct.

B 321. Dividend paid on redeemable preference share shall be accounted for as

a. Direct deduction from retained earnings

b. Interest expense as component of finance cost

c. Component of other comprehensive income

d. Deduction from reserves

A 322. The cost of treasury shares acquired for non-cash consideration is usually

measured by

a. Carrying amount of the noncash asset surrendered

b. Fair value of the noncash asset surrendered

c. Fair value or the treasury shares

d. Book value or the treasury shares

A 323. The total cost of treasury shares shall be reported as

a. Deduction from shareholders' equity

b. Financial asset

c. Deduction from retained earnings

d. Deduction from share premium

B 324. If treasury shares are reissued tor noncash consideration, the proceeds shall be measured by

a. Fair value of the treasury shares

b. Fair value of the noncash consideration received

c. Carrying amount or the noncash consideration received

d. Carrying amount of the treasury shares

C 325. Which is not a method to account for treasury shares?

a. Cost method
b. Par value method

c. Retained earnings method

d. Constructive retirement method

C 326. "Loss" from sale of treasury shares shall be charged to

a. Loss on sale of treasury shares

b. Retained earnings and then share premium from treasury shares

C. Share premium from treasury shares and then retained earnings

a. Share premium from original issuance and then retained earnings

D 327. Loss or retirement of treasury shares is debited to

a. Retained earnings

b. Share premium from treasury shares and then retained earnings

c. Retained earnings and then share premium from treasury shares, share premium from original
issuance and then retained earnings

d. Share premium from original issuance, share premium from treasury shares and then retained
earnings

A 328. Gain on retirement of treasury shares shall credited to

a. Share premium

b. Retained earnings

c. Share capital

d. Income

C 329. Shares issued would exceeds shares outstanding as a result of

a. Declaration of share split

b. Declaration of share dividend

C. Purchase of treasury shares

d. Payment in full of subscribed shares

C 330. Where there is a lease of land and buildings and the title to the land is not transferred, generally
the lease is treated as if

a. The land is a finance lease the building is a finance lease.

b. The land is a finance lease; the building is an operating lease.

C. The land is an operating lease; the building is a finance lease.

d. The land is an operating lease; the building is an operating lease.

C 331. Which of the following transactions involving the issuance of shares does not come within the
definition of a "share-based" payment under IFRS 2?

a. Employee share purchase plans.

b. Employee share option plans.

C. Share-based payment relating to an acquisition of a subsidiary.

d. Share appreciation rights.

B 332. A newly set up dot-com entity has engaged you as its financial advisor. The entity has recently
completed one of its highly publicized research and development projects and seeks your advice on the
accuracy of the following statements made by one of its stakeholders. Which one is it?

a Costs incurred during the "research phase" can be capitalized.

b. Costs incurred during the "development phase" can be capitalized if criteria

such as technical feasibility of the project being established are met.

C. Training costs of technicians used in research can be capitalized.

d. Designing of jigs and tools qualify as research activities.

C 333. What is the accounting treatment of the hedging instrument and the neuge

under cash flow hedge accounting?

a. The hedged item and hedging instrument are both measured at fair value with respect to the hedged
risk, and changes in fair value are recognized in profit or loss.

b. The hedged item and hedging instrument are both measured at fair value with respect to the hedged
risk, and changes in fair value are recognized directly in equity.
c. The hedging instrument is measured at fair value, with changes in fair value recognized directly in
equity to the extent the hedge is effective. The accounting for the hedged item is not adjusted.

d. The hedging instrument is accounted for in accordance with the accounting requirements for the
hedged it. (i.e. , at fair value, cost or amortized cost, as applicable), if the here is effective.

B 334. An entity has bought a 25% share in another entity with a view to selling that

investment within six months. he investment has been classified as held for sale in accordance with iFRS
S. How should the investment be treated in the final year

accounts

a. It should be equity accounted.

b. The assets and liabilities should be presented separately from other assets in

the balance sheet under IFRS 5.

C. The investment should be dealt with under IAS 29.

d. Purchase accounting should be used for this investment.

A 335. The excess of the investor's share of the net fair value of the associate's net assets over the cost
of the investment is

a. Included in the determination of the investor's share of the associate's profit or

loss in the period in which the investment is acquired.

b. Credited to retained earnings directly

C. Credited to equity and amortized over the useful life

d. A deferred gain
C 336. Joyce, a public limited company, has granted share options to its employees prior to the date
from which IFRS 2 became applicable (November 7, 2002). The company decided after the issuance of
IFRS 2 to reprised the options. The original exercise price of P20 was reprised at P15 per option. IFRS2
would require the company to

a. Apply the Standard to the share options from the original grant date and ignore

the reprising.

b. Apply the Standard to the share options from the original grant date, taking i

account the reprised award.

c. Apply the Standard to the reprised award only.

d. Ignore the standard for the while award of share options.

B 337. An investor must apply the requirement of IAS 39 in determining whether it is necessary to
recognize and impairment loss in the investment in an associate. How is the impairment test carried
out?

a. The goodwill is separated from the rest of the investment and is impairment tested liability

b. The entire carrying amount of the investment is tested for impairment under IAS 36 by comparing its
recoverable amount with its carrying amount.

c. The carrying value of the investment should be compared with its market value.

d. The recoverable amounts of all investments in associates should be assessed together to determine
whether there has been an impairment on all investments .

A 338. What should happen when the financial statements or an associate are not

prepared to the same date as the investor's accounts?

a. The associate should prepare financial statements for the use of the investor at

the same date as those of the investor.

b. The financial statements of the associate prepared up to a different accounting

date will be used as normal.

C. Any major transactions between the date of the financial statements of the
investor and that of the associate should be accounted for.

d. As long as the gap is not greater than three months, there Is no problem.

A 339. At issuance date, the present value of a promissory note will be equal to its face amount if the
note

a Bears stated rate of interest which is realistic.

b. Bears a stated rate which is less than the prevailing market rate for similar notes.

C. Is noninterest bearing and the implicit interest rate is less than the prevailing

market rate for similar notes.

d. Is noninterest bearing and the implicit interest rate is equal to the prevalns

market rate for similar notes.

D 340. When treasury shares are sold at a price above cost

a. A gain account is credited

b. A loss is reported

C. A revenue account is credited

d. Contributed capital is increased

C 341. VWhich statement is incorrect in reation to treasury shares?

a. Treasury chares shall be recorded at cost irrespect OT whether acquired below

or above par vatue.

b. Total cost of treasury shares Shal be deducted trom shareholders equity.

c. Treasury shares nay oe recOgnized as financial asset.

d. Gain or loss on sale of treasury stnares shat hot de Credited or charged to income.

C 342. An entity makes only a memorandum entry when

a. Entities give Warrants to executives compensation.

b. Entities include warrants to make a security more attractive.

c. Entities issue rights to existing shareholders.

d. All of the choices are correct.

B 343. Which of the following is issued to shareholders of a corporation to acquire

unissued shares within a specified time at a specified price?

a. Share Option

b. Share warrant

c. Share subscription

d. Share appreciation right

B 344. An entity issued rights to the existing shareholders to purchase unissued ordinary shares at more
than par value. Share premium would be recorded when the rights

a. Expire

b. Are exercised

C. Become exercisable

d. Are issued

D 345. Share warrants outstanding account shall be reported as

a. liability

b. Reduction of share premium

c. share capital

d. Share premium

D 346. Share split is issued primarily to

a. Increase the number of outstanding shares

b. Increase the number of authorized shares

C. Increase legal capital

d. Induce a decline in market value per share

B 347. When collectability is reasonably assured, the excess of the subscription price over the stated
value of no par ordinary share subscribed shall be recorded as

a. No par ordinary share capital

b. Share premium when the subscription is recorded

C. Share premium when the subscription is collected

d. Share premium when the ordinary share is Issued

C 348. The purchase of treasury ordinary shares

a. Decreases authorized ordinary share capital

b. Decrease issued ordinary shares

C. Decreases outstanding ordinary shares

d. Has no effect on ordinary sthares outstanding

C 349. When treasury shares are purchasea for more than par value, what account o accounts shall be
debited

a. Treasury shares for the par value and share premium for the excess price over the par value.

b. Share premium for the purchase price.

C. Treasury shares for the purchase price.

d. Treasury shares for the par value and retained earhings for excess of the price over the par value.

C 350. Which statement best describes the net erfect on retained earnings of the

purchase and subsequent sale of treasury shares?

a. Retained earnings may never be increased but sometimes decreased

b. Retained earnings sometimes may never be increased or decreased

c. Retained earnings sometimes may be increased but never decreased

d. Retained earnings account is always affected unless the sale price is exactly equal cost

C 351. Treasury shares were acquired tor cash at a price in excess of par value. The

treasury shares were subsequently sold for cash at a price in excess of acquisition cost.

What is the effect on total shareholders equity?

Purchase of treasury Sale of Treasury

a. Increase Decrease

b. Decrease No effect

c. Decrease Increase

d. No effect No effects

C 352. Treasury shares were acquired for cash at more than par value, and tne

subsequently sold for cash at more than acquisition price. What is the errect o

premium from treasury shares?

Purchase of treasury shares sales of treasury share

a. Increase Increase

b. Decrease No effect

a.Increase

b.No effect

c. No effect

d. No effect

353. How would a share split in w old a share split in which the par value per share decreases in
proportion number of additional shares issued affect share premium and retained earnings,
respectively?

a. Increase and No effect

b. No effect and No effect

. No effect and Decrease

d. Increase and Decrease

354. How would a share split affect asset and shareholders equity, respectively?

a. Increase and Increase

b. No effect and No effect

c. No effect and Increase

d. Increase and Decrease

355. Retained earnings represents

a. Earned capital

b. Cash

c. Assets

d. Net Assets

356. Retained earnings represents

a. Undistributed net income

b. Undistributed net assets

C. Extra contributed capital

d. Undistributed cash 3

357. The total retained earnings balance typically is not affected by

a. Net income c. Dividends paid

b. A prior period error d. Restrictions

358. When a property dividend is declared, the dividend payable should be measured based on the fair
value of property on

a. Record date

b. Distribution date

c. Declaration date, reporting date and distribution date

d. Reporting date .

359.The declaration and issuance of a share dividend on ordinary shares

a. Has no effect on assets, liabilities and total shareholders' equity.

b. Decreases total shareholders' equity and increases ordinary shares.

c. Decreases assets and total shareholders' equity.

d. Does not change retained earnings or ordinary shares.

360. Nonstock dividends shall be recognized as liabilities on the

a. Date of declaration

b. Date of record

c. Date of payment

d. Date of issuing check dividend

361. When shareholders may elect receive cash in lieu of share dividend the be charged to retained
earnings is equal to the

a. Optional cash dividends C. Par value of the shares

b. Fair value of the shares d. Book value of the shares

362. Treasury shares may be reissued as dividends, in which case what amount shall be charged to
retained earnings?

a. Cost of treasury shares

b. Par value of the treasury shares

c. Fair value of the treasury shares on the date of declaration

d. Fair value of the treasury shares on the date of issuance

363. If the share dividend is less than 20%, how much of the retained earnings shall be capitalized?

a. Par value of the shares

b. Fair value of the shares on the date of declaration

c. Fair value of the shares on the date of record

d. Fair value of the shares on the date of issuance

364. At what amount should retained earnings be reduced if the share dividend is 20% or more?

a. Zero

b. Par Value

C. Market value at the declaration

d. Market value at the date of issuance nan

365. An entity declared a cash dividend on a certain date, payable Retained earnings would

a. Increase on the date of declaration

b. Not be affected on the date of declaration

c. Not be affected on the date of payment

d. Decrease on the date of payment

366. The actual total amount of a cash dividend to be paid is deter paid is determined on the date of

a. record

b. declaration or record, whichever is earlier

c. Declaration

d. Payment.

367. A dividend which is ar investment is

a. Liquidating dividend

b. Patronage dividend

c. Liability dividend

d. Participating dividend

368. Total shareholders' equity is not affected by the

a. Issuance of a share dividend

b. Conversion of bonds payable into share capital

c. Sale of treasury shares at more than cost

d. Declaration of cash dividend

369. How would the declaration and subsequent issuance of a 10% share dividend affect share capital
and share premium, respectively, when the fair value of the shares exceeds par value?

a. No effect and No effect

b. No effect and Increase

C. Increase and No effect

d. Increase and Increase

370. An entity declared a dividend, a portion of which was liquidating. How would this declaration affect
each of the following?

Contributed capital Retained earnings

a. Decrease No effect

b.Decrease Decrease

c.No effect Decrease

d.Decrease No effect

371. How would the declaration of a liquidating dividend affect each of the following?

Contributed capital Retained earnings

a.No effect Decrease

b.Decrease No effect

c. No effect No effect

d. Decrease Decrease

372. The issuer shall directly charged retained earnings for the fair value of the shares issued in

a.Two for one share split

b. Share options

C. Ten percent share dividend

d. Share appreciation right

373. The issue shall directly charge retained earnings for the par value of the she issued in

a. 1 for 5 share dividend c. 4 for 1 share split

b. 1 for 8 share dividend d. 2 for 1 share split

374. If the issuing entity has only one class of share capital, a transfer from retained earnings to share
capital equal to the fair value of the shares issued is ordinarily a characteristic of

a. Either a share dividend or share split

b. Neither a share dividend nor share split

C. Share split but not a share dividend

d. Share split but not a share split

375. An entry is not made on the

a. Date of declaration

b. Date of record

c. Date of payment

d. An entry is made on all of these dates

376. Cash dividends are paid on the basis of the number of shares

a. Authorized

b. Issued
C. Outstanding

d. Outstanding less the number of treasury shares

377. Undistributed share dividends shall be reported as

a. A current liability.

b. An addition to share capital outstanding.

C. A reduction in total shareholders' equity.

d. A note to the financial statements.

378. Which of the following would not affect retained earnings?

a. Conversion of preference share into ordinary share.

b. Share split

C. Treasury share transaction

d. Share dividend

D 379. How would retained earnings be affected by the declaration of share dividend and

share split, respectively?

a. Decrease and Decrease

b.No effect and Decrease

c. No effect and No effect

d. Decrease and No effect

C 380. Which statement about property dividend is not true?

a. A property dividend is usualy in the form of securities of other entities.

b. A property dividend is also called a dividend in kind.

c. The accounting for a property aividend should be based on the carrying amount of

the noncash asset transferred.

d. All of these statement are true.

B 381. Which of the tollowing is a capítalization of retained earnings?

a. Cash dividends

b. Share dividend

c. Property dividend

d. Liquidating dividend

C 382. Liquidating dividends

a. Are prohibited under IFRS

b. Require a credit to share capital

c. Reduce amounts paid in by shareholders

d. All of the choices are correct

D 383. Unlike a share split, a share dividend requires a formal journal entry because

a. Share dividends increase the relative book value of share capital.

b. Share dividends increase shareholders equity.

C. Share dividends are payable on the date of declaration.

d. Share dividends represents a transfer from retained earnings to share capital.

A 384. When a share dividend is declared

a. Total shareholders' equity does not change.

b. Total shareholders' equity decreases.

C. The current ratio increases.

d. The amount of working capital decreases.

D 385. A retained earnings appropriation is used to

a. Absorb afire loss when an entity is self-insured.

b. Provide for a contingent loss that is probable and measurable.

c. Smooth periodic income

d. Restrict earnings available for dividends

Pg 73

D 379. How would retained earnings be affected by the declaration of share dividend and

share split, respectively?

a. Decrease and Decrease

b.No effect and Decrease

c. No effect and No effect

d. Decrease and No effect

C 380. Which statement about property dividend is not true?

a. A property dividend is usualy in the form of securities of other entities.

b. A property dividend is also called a dividend in kind.

c. The accounting for a property aividend should be based on the carrying amount of

the noncash asset transferred.

d. All of these statement are true.

B 381. Which of the tollowing is a capítalization of retained earnings?

a. Cash dividends

b. Share dividend

c. Property dividend

d. Liquidating dividend

C 382. Liquidating dividends

a. Are prohibited under IFRS

b. Require a credit to share capital

c. Reduce amounts paid in by shareholders

d. All of the choices are correct

D 383. Unlike a share split, a share dividend requires a formal journal entry because

a. Share dividends increase the relative book value of share capital.

b. Share dividends increase shareholders equity.

C. Share dividends are payable on the date of declaration.

d. Share dividends represents a transfer from retained earnings to share capital.

A 384. When a share dividend is declared

a. Total shareholders' equity does not change.

b. Total shareholders' equity decreases.

C. The current ratio increases.

d. The amount of working capital decreases.

D 385. A retained earnings appropriation is used to

a. Absorb afire loss when an entity is self-insured.

b. Provide for a contingent loss that is probable and measurable.

c. Smooth periodic income

d. Restrict earnings available for dividends

Pg 73

D 379. How would retained earnings be affected by the declaration of share dividend and

share split, respectively?

a. Decrease and Decrease

b.No effect and Decrease

c. No effect and No effect

d. Decrease and No effect

C 380. Which statement about property dividend is not true?

a. A property dividend is usualy in the form of securities of other entities.

b. A property dividend is also called a dividend in kind.

c. The accounting for a property aividend should be based on the carrying amount of

the noncash asset transferred.

d. All of these statement are true.

B 381. Which of the tollowing is a capítalization of retained earnings?

a. Cash dividends

b. Share dividend

c. Property dividend

d. Liquidating dividend

C 382. Liquidating dividends

a. Are prohibited under IFRS

b. Require a credit to share capital

c. Reduce amounts paid in by shareholders

d. All of the choices are correct

D 383. Unlike a share split, a share dividend requires a formal journal entry because

a. Share dividends increase the relative book value of share capital.

b. Share dividends increase shareholders equity.

C. Share dividends are payable on the date of declaration.

d. Share dividends represents a transfer from retained earnings to share capital.

A 384. When a share dividend is declared

a. Total shareholders' equity does not change.

b. Total shareholders' equity decreases.

C. The current ratio increases.

d. The amount of working capital decreases.

D 385. A retained earnings appropriation is used to

a. Absorb afire loss when an entity is self-insured.

b. Provide for a contingent loss that is probable and measurable.

c. Smooth periodic income

d. Restrict earnings available for dividends

Pg 73

D 379. How would retained earnings be affected by the declaration of share dividend and

share split, respectively?

a. Decrease and Decrease

b.No effect and Decrease

c. No effect and No effect

d. Decrease and No effect

C 380. Which statement about property dividend is not true?

a. A property dividend is usualy in the form of securities of other entities.

b. A property dividend is also called a dividend in kind.

c. The accounting for a property aividend should be based on the carrying amount of

the noncash asset transferred.

d. All of these statement are true.

B 381. Which of the tollowing is a capítalization of retained earnings?

a. Cash dividends

b. Share dividend

c. Property dividend

d. Liquidating dividend
C 382. Liquidating dividends

a. Are prohibited under IFRS

b. Require a credit to share capital

c. Reduce amounts paid in by shareholders

d. All of the choices are correct

D 383. Unlike a share split, a share dividend requires a formal journal entry because

a. Share dividends increase the relative book value of share capital.

b. Share dividends increase shareholders equity.

C. Share dividends are payable on the date of declaration.

d. Share dividends represents a transfer from retained earnings to share capital.

A 384. When a share dividend is declared

a. Total shareholders' equity does not change.

b. Total shareholders' equity decreases.

C. The current ratio increases.

d. The amount of working capital decreases.

D 385. A retained earnings appropriation is used to

a. Absorb afire loss when an entity is self-insured.

b. Provide for a contingent loss that is probable and measurable.

c. Smooth periodic income

d. Restrict earnings available for dividends

D 379. How would retained earnings be affected by the declaration of share dividend and

share split, respectively?

a. Decrease and Decrease

b.No effect and Decrease

c. No effect and No effect

d. Decrease and No effect

C 380. Which statement about property dividend is not true?

a. A property dividend is usualy in the form of securities of other entities.

b. A property dividend is also called a dividend in kind.

c. The accounting for a property aividend should be based on the carrying amount of

the noncash asset transferred.

d. All of these statement are true.

B 381. Which of the tollowing is a capítalization of retained earnings?

a. Cash dividends

b. Share dividend

c. Property dividend

d. Liquidating dividend

C 382. Liquidating dividends

a. Are prohibited under IFRS

b. Require a credit to share capital

c. Reduce amounts paid in by shareholders

d. All of the choices are correct

D 383. Unlike a share split, a share dividend requires a formal journal entry because

a. Share dividends increase the relative book value of share capital.

b. Share dividends increase shareholders equity.

C. Share dividends are payable on the date of declaration.

d. Share dividends represents a transfer from retained earnings to share capital.

A 384. When a share dividend is declared

a. Total shareholders' equity does not change.

b. Total shareholders' equity decreases.

C. The current ratio increases.

d. The amount of working capital decreases.

D 385. A retained earnings appropriation is used to

a. Absorb afire loss when an entity is self-insured.

b. Provide for a contingent loss that is probable and measurable.

c. Smooth periodic income

d. Restrict earnings available for dividends

b. Lack of competence. company.

d. They are employees of the

410. The principles which constitute the ground rules for financial reporting are termed accepted
accounting principles. To qualify as generally accepted, an generally accepted accounting principle
accounting principle

a. must guide corporate managers in the preparation of financial statements which should be
understood by wide scattered stockholders.

b. Must guide corporate managers in the preparation of financial statements which will be used in
making collective bargaining agreements with trade unions.

C. Must guide entrepreneurs in the choice of investment.

d. Must receive substantial authoritative support from the public and the members of the profession.

411. The opinions and pronouncements of the Accounting Standards Council of the Philippine Institute
of Certified Public Accountants provide the highest authoritative pronouncements on accounting
principles. The authority of these opinions rests upon their

a. Rules and regulations of the Securities and Exchange Commission.

b. Management and their internal accounting staff.

C. General acceptability.

d. Integrity of the Board.

e. Opinions of authors.
412. Under Statement of Financial Accounting Concept No. 2, which of the following interacts with both
relevance and reliability to contribute to the usefulness of information?

a. Comparability

b. Timeliness

C. Neutrality

d. Predictive value

413. The total represents the percentages of sales, profit and segment assets tha attributable to the
different segments. The entity wants to present bed linen and single segment but is wondering whether
the information can be aggregated. How would the segmental information be presented in the financial
statements?

a. Bed linen and cloth, suits, and shirts, would all be shown as separate wi in the other category.

b. All of the segments shall be presented separately.

c. Suits, shirts, and bed line would be separate segments with Di shown as a single segment.

d. Suits and cloths as other separate segments.

414. Under Statement of Fina tatement of Financial Accounting Concepts No. 2, the ability through
ncensus among measurers to ensure that information represents what is aurports to represent is an
example of the concept of

a. Relevance.

b. Verifiability.

C. Comparability.

d. Feedback value.

415 According to Statement of Financial Accounting Concepts No. 2, relevance and reliability are the two
primary qualities that make accounting information useful for decision making. Predictive value is an
ingredient of Relevance

d. yes, no

416. Under Statement of Financial Accounting Concepts No. 2, which of the following is an ingredient of
the primary quality of relevance?

a. Predictive value

c. Understandability

b. Materiality

d. Verifiability

417. which inventory costing method is most conservative in periods of declining inventory costs?
a. Weighted average

b. first-in, First-Ot (FIFO)

c. Last - in, First - Out (LIFO)

d. Cannot be determined without more information

418. Which statement a. Information is m economic decision of user Materiality depends on particular
circumstance statement is incorrect concerning materiality?

a. material if its omission or misstatement could influence the decision of users taken on the basis of the
financial statement.

b. materiality depends on the relative size of the item or error judged in the circumstances of its
omission or misstatement.

a. Makes it incumbent upon the plan to obtain an actuarial valuation

b. Does not make it incumbent upon the plan to obtain an actuarial valuation

c. Allows the plan to estimate the present value of future benefits ba valuations done by other similar
plans.

d. Allows the plan to add a percentage based on consumer price index to the previous year's valuation
of actuarial valuation.

445 Is there any exception to the requirement to measure at fair value financial assete classified as at
fair value through profit or loss or available for sale?

a. No. Such assets are always measured at fair value.

b. Yes. If the fair value of such assets increases above cost, the resulting unrealized holding gains are not
recognized but deferred until realized.

C. Yes. If the entity has the positive intention and ability to hold assets classified in those categories to
maturity, they are measured at amortized cost.

d. Yes. Investments in unquoted equity instruments that cannot be reliablymeasured at fair value (or
derivatives that are linked to and must be settled in such unquoted equity instruments) are measured at
cost.

446. Under IAS 39, all of the following are characteristics of a derivative except:

a. It is acquired or incurred by the entity for the purpose of generating a profit from short-term
fluctuations in market factors.

b. Its value changes in response to the change in a specified underlying (e.g., interest rate, financial
instrument price, commodity price, foreign exchangerate, etc.).
C. It requires no initial investment or an initial net investment that is smaller than would be required for
other types of contracts that would be expected to have a similar response to changes in market factors.
d. It is settled at a future date

447.under IAS 39, is a derivative (e.g., an equity conversion option) that is embedded in contract (e.g., a
convertible bond) accounted for separately from that other contract?

a. Yes. IAS 39 requires all derivatives (both freestanding and embedded) to accounted for as derivatives.
b. No. IAS 39 precludes entities from splitting financial instruments andfor the components
separately.Tinancial instruments and accounting

C. It depends. IAS 39 requires embedded derivatives to be accounted for parately as derivatives if, and
only if, the entity has embedded the derivative in order to avoid derivatives accounting and has no
substantive business purpose for embedding the derivative.

D. It depends. IAS 39 requires embedded derivatives to be accounted for separately if, and only if, the
economic characteristics and risks of the embedded derivative and the host contract are not closely
related and the combined contract is not measured at fair value with changes in fair value recognized in
profit or loss.

448. Which of the following is not a condition for hedge accounting?

a. formal designation and documentation of the hedging relationship and the entity's risk management
objective and strategy for undertaking the hedge at inception of the hedging relationship.

b. The hedge is expected to be highly effective in achieving offsetting changes in fair value or cash flows
attributable to the hedged risk, the effectiveness of the hedge can be reliably measured, and the hedge
is assessed on an ongoing basis and determined actually to have been effective.

C. For cash flow hedges, a forecast transaction must be highly probable and must present an exposure
to variations in cash flows that could ultimately affect profit or loss.

d. The hedge is expected to reduce the entity's net exposure to the hedged risk, and the hedge is
determined actually to have reduced the net entity-wide exposure to the hedged risk.

449. What is the accounting treatment of the hedging instrument and the hedged item under fair value
hedge accounting?

a. The hedging instrument is measured at fair value, and the hedged item is measured at fair value with
respect to the hedged risk. Changes in fair value are recognized in profit or loss.

B.the hedging instrument is measured at fair value, and the hedged item is neasured at fair value with
respect to the hedged risk. Changes in fair value are ecognized directly in equity to the extent the hedge
is effective.

c.The hedging instrument is measured at fair value with changes in fair value ed directly in equity to the
extent the hedge is effective. The accounting for the hedged item is not adjusted.

d. The hedging instrument is accounted for in according requirements for the hedged item (i.e., at fair
value, cost applicable), if the hedge is effective.ading interim financial reports will
450 IAS 34 states a presumption that anyone reading interim financial

a. Understand all International Financial Reporting Standards.

b. Have access to the records of the entity.

C. Have access to the most recent annual report.

d. Not make décisions based on the report.

451. IAS 36 applies to which of the following assets?

a. Inventories.

b. Financial assets.

C. Assets held for sale

d. Property, plant, and equipment.

452. When can a "provision" be recognized in accordance with IAS 37?

a. When there is a legal obligation arising from a past (obligating) event, the probability of the outflow of
resources is more than remote (but less than probable), and a reliable estimate can be made of the
amount of the obligation

b. When there is a constructive obligation as a result of a past (obligating) event.the outflow of

resources is probable, and a reliable estimate can be made of the amount of the obligation.

C. When there is a possible obligation arising from a past event, the outflow is a resource is probable,
and an approximate amount can be set aside toward the obligation.

d. When management decides that it is essential that a provision be made for unforeseen circumstances
and keeping in mind this year the profits were enough but next year there may be losses.

453. A competitor has sued an entity for unauthorized use of its patented technology The amount that
the entity may be required to pay to the competitor if the com succeeds in the lawsuit is determinable
with reliability, and according to according to the legal remote) that an outflow of the resources would
be needed to meet the obligation. The entity that was sued should

a. Recognize a provision for this possible obligation.

b. Make a disclosure of the possible obligation in footnotes statements. In footnotes to the financial

c. Make no provision or disclosure and wait until the lawsuit is finally decided and then expense the
amount paid on settlement, if any.

d. Set aside, as an appropriation, a contingency reserve, an amount based on the best estimate of the
possible liability.

454. A newly set up dot-com entity has engaged you as its financial advisor. The entity has recently
completed one of its highly publicized research and development projects and seeks your advice on the
accuracy of the following statements made by one of its stakeholders. Which one is it?
a. Costs incurred during the "research phase" can be capitalized.

b. Costs incurred during the "development phase" can be capitalized if criteria such as technical
feasibility of the project being established are met.

C. Training costs of technicians used in research can be capitalized.

d. Designing of jigs and tools qualify as research activities.

455. A gain arising from a change in the fair value of an investment property for which an entity has
opted to use the fair value model is recognized in

a. Net profit or loss for the year.

b. General reserve in the shareholders' equity.

C. Valuation reserve in the shareholders' equity.

d. None of the above.

456. An investment property should be measured initially at

a. Cost

b. Cost less accumulated impairment losses.

C. Depreciable cost less accumulated impairment losses.

d. Fair value less accumulated impairment losses.

457. Which of the following is not dealt with by IAS 41?

a. The accounting for biological assets.

b. The initial measurement of agricultural produce harvested from the entity's biological assets.

C.The processing of agricultural produce after harvesting.

d.The accounting treatment of government grants received in respect of biological assets.

458. Which of the following transactions involving issuance of shares does not come within the
definition of a "share-based" payment under IFRS 2?

a. Employee share purchase plans.

b. Employee share option plans.

C. Share-based payment relating to an acquisition of a subsidiary.

d. Share appreciation rights.

459. Which of the following is true regarding the requirements of IFRS 2?

a. Private companies are exempt.

b. "Small" companies are exempt.

C. Subsidiaries using their parent entity's shares as consideration for goods and services are exempt.

d. There are no exemptions from IFRS 2.

460. On June 1, 20x4, an entity offered its employees share options subject to the award being ratified in
a general meeting of the shareholders. The award was approved by a meeting on September 5, 20X4.
The entity's year-end is June 30. The employees were to receive the share options on June 30, 20X6. At
which date should the fair value of the share options be valued for the purposes of IFRS 2?

a. June 1, 20X4.

b. June 30, 20X4.

c. September 5, 20X4.

D. June 30, 20X6.

461. Many shares and most share options are not traded in an active market. Therefore, it is often
difficult to arrive at a fair value of the equity instruments being issued. Which of the following option
valuation techniques should not be used as a measure of fair value in the first instance?

a. Black-Scholes model.

b. Binomial model.

C. Monte-Carlo model.

D. Intrinsic value.

462. Which of the following accounting methods must be applied to all business combinations under
IFRS 3, Business Combinations?

a. Pooling of interests method.

b. Equity method.

C. Proportionate consolidation.

D. Purchase method.

463. Purchase accounting requires an acquirer and an acquire to be identified for every es combinations.
Where a new entity (H) is created to acquire two preexisting s. S and A, which of these entities will be
designated as the acquirer?

a. H

b.s

C. A

d. A or s

464 Then deciding on the discount rate to be used in calculating value in use, which factor should not be
taken into account?
a. Pre-tax rate.

b. The time value of money.

c. Risk specific to the asset for which future cash flow estimated have been adjusted.

d. Risk specific to the asset for which future cash flows estimates have not been adjusted.

465. All of the following could be valid reasons why the expected revenue from a fixed price
construction contract has increased from the original contract price except

a. The contractor has agreed variations to the contract with the client

b. The contractor has incurred additional costs due to errors made by its employees

C. The contractor would receive an incentive payment if work continues ahead of schedule

d. The costs in the contract have increased and the contract includes cost escalation clauses

466. When it is probable that contract costs exceed contract revenue the expected loss should be

a. Recognized as an expense immediately

b. Set off against profit of other contracts where available

C. Apportioned to the years of the contracts according to the stage of completion

d. Recognized as an expense immediately unless revenue to date exceeds costs to date

467. in relation to construction contracts all of the following shall be disclosed except

a. The method used to determine the stage of completion

b. Total amount of contract revenue recognized in the period

C. The method used to determine the contract revenue in the period

d. Advances received in cash analyzed according to each material contract

468. For reporting purposes currencies are defined as

a. Domestic and international

b. International and functional

C. Foreign functional and presentation

d. Operating international and presentation endently from the parent

469. Under PAS21 where a foreign operation functions independently from the functional currency is

a. That of the parent

b. That of the country of incorporation

C. The same as the presentation currency

d. Determined using the guidance for determining an entity's functional currency

470. Which of the following considerations would not be relevant in determining the entity's functional
currency?

a. The currency that influences the costs of the entity

b. The currency in which finance or funds is generated

C. The currency that is the most internationally acceptable for trading

d. The currency is which receipts from operating activities are retained.

471. An entity has a subsidiary that operates in a country where the exchange rate fluctuates wildly and
there are seasonal variations in the income and expenditures patterns. Which of the following rates of
exchange would probably be used to translate the foreign subsidiary's income statement?

a. Year-end spot

b. Average for the year

C. Average for the quarter-end rate

d. Average rate for each individual month of the year

472. At which rate should noncurrent assets be translated when the function figures are being
translated into a different presentation currency?

a. The average rate

b. The closing rate ted when the functional currency

c. The historical exchange rate

d. The spot exchange rate

473 An entity has several subsidiaries that operates in a "hyperinflationary economy" which uses the
zloty as the local currency. Management wishes to show the financial atements in U.S dollars. Many of
the operation are within countries that are not hyperinflationary and these subsidiaries use the euro as
the functional currency. Under PAS29 what currency should the entity use to present the consolidated
financial statements?

a. The us dollar

b. The zloty

c. The euro

d. The entity may use any currency

474. An entity has a subsidiary that operates in a hyperinflationary economy The subsidiary's financial
statements are measured in terms of the local currency, which is the zloty. The parent is located in the
united states and prepares the consolidated financial statements in us dollars. Which procedures is
correct in terms of the consolidation of the subsidiary's financial statements?
a. The subsidiary's financial statements should be deconsolidated

b. The subsidiary's financial statements should be retranslated to USA dollars

C. The subsidiary's financial statements should be restated in accordance with PAS 29 and retranslated
to USA dollar.

d. The subsidiary's financial statements should be premeasured in USA dollars and restated in
accordance with PAS29.

475. An entity is reporting in a hyperinflationary economy. The monetary assets exceed the monetary
liabilities. Which of the following statements is true?

a. There is a loss on the net monetary position

b. There is a gain on the net monetary position

C. The gain or loss on the net monetary position is recognized in other comprehensive income

d. All of the statements are true.

476. Under PFRS 10 an investor controls an investee if the investors has all of the following except

a. The power over the investee

b. Exposure or rights to variable returns from the involvement with the

C. The ability to use the power over the investee to affect the amount investors returns

d. All of these indicate control

477. If the investors owns 60% of the investee's outstanding ordinary shares, the investor should
generally account for this investment under the

a. Consolidation method
b. Consolidation equity method

C. Cost method

d. Fair value method.

478. The non-controlling interest should be recorded at what amount?

a. The fair value of the shares not held by the acquirer

b. The fair value of the shares not held by the acquirer or the proportionate share of the fair value of net
identifiable assets of the acquire

C. The proportionate share of the carrying amount of net identifiable assets of the acquire

d. The fair value of the shares held by the non-controlling interest plus good will

479. Which of the following conditions are required to exclude a subsidiary from consolidation?

a. The parent must own 100% of the subsidiary

b. The parent makes an election not to consolidate

C. The other owners do not object to the non-consolidation

d. The other owners do not object to the consolidation and the subsidiary does have any publicly traded
debt or equity instruments.

480. This is defined as "the payments to which a particular policyholder has a unconditional right that is
not subject to the contractual discretion of the ins

a. Executory benefits

b. Guaranteed benefits.

C. Proceeds of policy

d. Unconditional benefits I

481. it is the insurer net contractual right under an insurance contract

a. Insurance asset

b. Insurance liability

C. Reinsurance asset

d. Reinsurance liability

482. Which of the following accounting practice has been outlawed in relation to insurance contracts?

a. Shadow accounting

b. Catastrophe provisions

C. An impairment test for reinsurance assets

d. A test for the adequacy of recognized insurance liabilities.

483. Which of the following types of contracts would probably not be covered by PFRS4?

a. Life insurance

b. Medical insurance

C. Motor insurance

d. Pension plan

484. Under IFRIC2 members shares in cooperative may give the holder the right to request redemption
for cash or other financial asset. Such members shares shall be accounted for as

a. Equity

b. Liability

C. Either as equity or liability

d. Partly equity and partly liability

485. Members shares in cooperation shall be classified as equity when

a. The redemption of members shares is unconditionally prohibited by law

b. The entity has the unconditional prohibited by law

c. either the entity has the unconditional right to refuse redemption of members shares the redemption
of members shares is unconditionally prohibited by law

d. None of these

486. Entities that attempt to exploit inefficiencies in various derivate markets by attempting to lock in
profits by simultaneously entering into transaction in two or more markets are called

a. Arbitrageurs

b. Gamblers

c. Hedgers

d. Speculators

487. Which embedded derivative should not be accounted for separately?

a. An investment in a convertible bond that is classified as available-for-sale.

b. An investment in a bond whose interest payments are linked to the price of gold and the bond is
classified as available-for-sale.

C. An investment in a bond whose interest payments are linked to the price of silver and the bond is
classified as at fair value through profit of loss.

d. A call option in an investment in an equity instrument that allows the issuer to repurchase the
instrument.

488. Which of the following is one of the conditions that must exist for an entity to recognize revenue on
separate units a multiple deliverables arrangement?

a. The delivered item is not returnable

b. Collection has occurred for all of the separate items

C. The delivered item has value on a stand-alone basis and can be sold separately

d. The separate units must be delivered within 90days of the end of the accounting period

489. An entity has come out with an offer to refund the cost of purchase within one month of sale if the
customer is not satisfied with the product. When should the entity recognize the revenue?

a. After a month of sale

b. When goods are sold to the customers

C. Only if goods are not returned by the customers after the period of one month

d. At the time of sale along with an offset to revenue of the liability of the same amount for the
possibility or the return.

490. The criteria for recognition of revenue at the completion of production of precious methods include
which of the following?

a. Units are interchangeable

b. Sale price is reasonably assured

c. No significant costs are involved in distributing the product

d. All of these

491. For which of the following products is it appropriate to recognize revenue at the completion of
production even though no sale has been made?

a. Automobiles

b. Large appliances

C. Precious metals

d. Single family residential units

492. The milestone method of revenue recognize provides that if substantive milestone is achieved what
amount of revenue is recognized?

a. Contingent revenue is recognized in its entirely

b. Revenue is recognized up to the amount of cash collected

C. A prorate revenue based upon the percentage delivered to date

d. A percentage of total revenue based on the separate units delivered.

493. Which of the following is not an accurate statement concerning revenue recognition?

a. Revenue from selling products is recognized at the date of the sale.

b. Revenue from disposing of assets other than products is recognized at the date of sale

C. Revenue from permitting others to use entity asset is recognized as time passes or as the assets are
used

d. Revenue from services rendered is recognized when cash is received or when services have been
performed.

494. If an entity cannot estimate reliably the outcome of a transaction involving the providing of a
service it should recognize revenue

a. Only to the extent of the expenses recoverable

b. Straight line over the period of the service contract

c. By recording an equal amount of revenue for each service performed

d. By using the percentage of completion method based on costs incurred compared to total estimated
cost

495. The milestone method of accounting may be used to recognize revenue for

a. Franchise arrangements

b. Long-term construction contracts

c. Multiple deliverable products or services

d. Research and development arrangements

496. An entity installed a new production facility and incurred a number of expenses the point of
installation. The entity's accountant is arguing that most expenses de not qualify for capitalization.
Included in those expenses are initial operating losses These should be

a. Deferred and amortized over a reasonable period of time.

b. Expensed and charged to the income statement.

C. Capitalized as part of the cost of the plant as a directly attributable cost.

d. Taken to retained earnings since it is unreasonable to present it as part of the current year's income
statement.

497. An entity classifies a lease of land and buildings as an investment property under IAS 40. The entity
has adopted the fair value model. In this case

a. Separate measurement of the lease of land and buildings is compulsory.

b. Separate measurement of the lease of land and buildings is not required.

C. The lease is treated as an operating lease.

d. The lease cannot be treated as an operating lease.

498. How should repayment of a long-term loan comprising repayment of the principal amount and
interest due to date on the loan be treated in a cash flow statement?

a. The repayment of the principal portion of the loan is a cash flow belonging in the "investing activities"
section; the interest payment belongs either in the "operating activities" section or the "financing
activities" section.

b. The repayment of the principal portion of the loan is a cash flow belonging in the "investing activities"
section; the interest payment belongs either in the "operating activities" section or the "investing
activities" section.
C. The repayment of the principal portion of the loan is a cash flow belonging" the "investing activities"
section; the interest payment belongs in the "operaung activities" section (because IAS 7 does not
permit any alternatives in case of interest payments).

d. The repayment of the principal portion of the loan is a cash flow belonging in the "investing activities"
section; the interest payment should be netted against interest received on bank deposits, and the net
amount of interest should be disclosed in the "operating activities" section.

499. A new drug named "EEE" was introduced by Genius Inc. in the market on December 1, 2005.
Genius Inc.'s financial year ends on December 31, 2005. It was the only company that was permitted to
manufacture this patented drug. The drug is used by patients suffering from an irregular heartbeat. On
March 31, 2006, after the drug was introduced, more than 1,000 patients died. After a series of
investigations, authorities discovered that when this drug was simultaneously used with "BBB," a drug
used to regulate hypertension, the patient's blood would clot and the patient suffered a stroke. A
lawsuit for P100,000,000 has been filed against Genius Inc. The financial statements were authorized for
issuance on April 30, 2006. Which of the following options is the appropriate accounting treatment for
this post-balance sheet event under IAS 10?

a. The entity should provide P100,000,000 because this is an "adjusting event" and the financial
statements were authorized to be issued after the accident.

b. The entity should disclose P100,000,000 as a contingent liability because it is an "adjusting event."

C. The entity should disclose P100,000,000 as a "contingent liability" because it is a present obligation
with an improbable outflow.

d. Assuming the probability of the lawsuit being decided against Genius Inc. is remote; the entity should
disclose it in the footnotes, because it is a nonadjusting material event.

500. In accounting, those standards and practices that have won acceptance because of their logic and
proven usefulness are referred to as

a. Accounting dogmas.

b. Accounting principles.

c. Accounting procedures.

d. Accounting theories.

501. An accounting entity is created whenever there is a need to understand the economic and financial
activities of

a. An economic unit.

b. A corporation.

C. A financial unit.

d. A partnership
502. If the Construction-in-Progress (CIP) account for a construction project is higher than the Progress
Billing (PB) account, then

a. It should be presented as CIP (net of PB) under the current asset section

b. It should be presented as CIP (net of PB) under the non-current asset sectis

C. It should be presented as CIP (net of PB) under the current liability section

d. It should be presented as CIP (net of PB) under the non-current liability Section

503. Which of the following is the primary element that distinguishes accounting corporations from
accounting for other legal forms of business organization (such as partnerships)?

a. The entity theory relates primarily to the other forms of business organization

b. The corporation draws a sharper distinction in accounting for sources of capital

C. Generally accepted accounting principles apply to corporations but have relatively little applicability
to other forms of business organization.

504. Under this theory of accounting equity, the assets belong to the accounting unit. and the liabilities
and capital are perceived as having equitable claims against the accounting unit and its assets.

a. Proprietary theory

b. Funds theory

c. Corporate theory

d. Entity theory

e. Financial theory

505. The theory of accounting which best describes the accounting equation expressed as Assets equals
Liabilities plus Proprietorship is the

a. Entity theory.

b. Proprietary theory.

c. Fund theory.

d. Residual equity theory.

e. Going concern theory.

506. The accounting equation " Assets - Liabilities = Proprietorship" is explaine

a. Entity theory.

b. Proprietary theory.

c. Fund theory.
d. Residual equity theory.

e. Cash theory.

507. What theory at theory of ownership equity is enumerated by the following equation : Assets us
Liabilities minus Preferred stock equity equals Common stock equity?

a. Fund

b. Enterprise

c. Entity

d. Residual equity

508. During the lifetim During the lifetime of a business entity. its accountant prepares financial ents at
arbitrary points in time in accordance with which basic accounting concept?

a. Objectivity

b. Periodicity

c. Conservatism

d. matching

509. Which of the following items is not presented under the equity section of the statement of financial
position?

a. Share dividends payable/ distributable

b. Share appreciation rights payable

C. Share warrants outstanding

d. Share options outstanding

510. Continuation of an accounting entity in the absence of evidence to the contrary is an example of
the basic concept of

a. Accounting entity.

b. Consistency.

c. Going concern.

d. Substance over form.

511. This is an assumption by accountants that a business will continue to operate indefinitely unless
specific evidences to the contrary exist, as for example, an impending bankruptcy.

a. Matching principle

b. Going concern principle

C. Cost principle

d. Objectivity principle

512. Which of the following falls within the definition of related parties as defined in PAS 24?

a. Government departments and agencies

b. The husband of the first female chief executive officer

c. providers of finance in the course of their normal dealings with an enterprise

d. A supplier with whom the reporting entity has a one-year contract for the supply of raw materials

513. Under the accounting der the accounting concept of continuity, the accountant does not assure, in
aring the financial statements, that

a. the firm is suffering from large and persistent losses.

b. firm cannot fulfill existing commitments.

c. firm operations are soon to be terminated.

d. All of the above.

514. The "summary of significant accounting policies" section of the notes to the financial statements
shall include

a. Measurement basis used in preparing financial statements

b. Non-adjusting events occurring after the reporting period

c. Disaggregation of amounts included in cash and cash equivalents

d. Related party disclosures, contingent liabilities and restriction on cash balances

515. Financial statements that are expressed assuming a stable monetary unit are

a. General price-level financial statements.

b. Historical peso financial statements.

c. Current-value financial statements.

d. Fair-value financial statements.

516. Historical cost is a measurement base currently used in financial accounting. Which of the following
measurement bases is (are) also currently used in financial accounting?

b. yes,yes,yes

517. The effect of a change in accounting policy that is inseparable from the effect of a change in
accounting estimate should be reported

a. In the period of change and future periods of the change affects both
b. By restating the financial statements of all prior periods presented

C. By showing the pro forma effects of retrospective application d. As a correction of error

518. Imputing interest for certain assets and liabilities is primarily based on the concept of

a. Valuation.

b. Conservatism.

C. Consistency.

d. Stable monetary unit.

519. The valuation basis on conventional financial statements is

a. Replacement cost.

b. Market value.

c. Original cost.

d. Home consumption value.

e. A mixture of cost and other values

520. The use of original historical cost in the matching process is commonly refereed to as an application
of the concept of

A. Conservatism

B. Consistency

C. Cost

D. Answer not given

521. This type of valuation is primarily justified by the fact that it is objectively determinable with regard
to single cash price at acquisition

A. Current selling price

B. Discounted cash flow valuation

C. Historical cost valuation

D. Replacement cost

522. For general- purpose financial accounting, the advocates of the historical cost approach say that
this valuation method is

A. Relevant

B. Subjective
C. Conservative

D. Objective

523. As compared with the other valuation alternative that are used in the preparation of general-
purpose financial statement, historical cost is more

A. Objective

B. Relevant

C. Indicative of the entity's purchasing power

D. Conservative

524. Which of the following asset valuation methods is not a violation of the accounting concept of
historical cost?

A. Net present value of the future cash flows

B. Replacement cost

C. Market value

D. General price- level restatement

525. Which of the following would not be considered an element of working capital?

A. Investments securities ( current)

B. Organization costs

C. Accrued interest on notes payable

D. Work in process inventories

526. Objectivity, in accounting, means that the data which enter Into the accounting process are based
on

A. Opinion of the auditor

B. Objective and verifiable evidences

C. Opinions of the management

D. Inferences and interpretations.

E. Conservative estimates

527. Objectivity is assumed to be achieved when an accounting transaction

A. Is recorded in a fixed amount of peso

B. Involves the payment or receipt of cash

C. Involves an arms-length transaction between two independent parties

D. Allocates revenues or expenses in a rational and systematic manner

E. Furthers the objective of the company

528. The principle of objectivity includes the concept of

A. Summarization

B. Classification

C. Conservatism

D. Variability

529. Which of the following accounting concepts states that an accounting transaction should be
supported by sufficient evidence to allow two or more qualified individuals to arrive at essentially similar
measures and conclusions?

A. Matching

B. Objectivity

C. Periodicity

D. Stable monetary unit

530. The consistency standard of reporting requires that

A. Accounting procedures once adopted should give a consistent rate of return

B. Extraordinary gains a d losses should not appear on the income statement

C. The effect of changes in accounting principles should be properly disclosed

D. Expenses should be reported as charges against the period in which they are incurred

E. The reports should be submitted monthly if they are prepared monthly, or annually if they are
prepared on a yearly basis.

531. An accounting change may be made and it's monetary impact is reflected on the financial
statements of a company even though, in theory, this may be a violation of the accounting concept of

A. Materiality

B. Consistency

C. Conservatism

D. Objectivity

532. A policy of choosing the acceptable alternative methods or presentation that will give the least
favorable effect on the owners equity is an application of

A. Conservatism
B. Concept

C. Principle

D. Disclosure

533. Uncertainty and risks inherent in business situations should be adequately considered in financial
reporting. This Statement is an example of the concept of

A. Conservatism

B. Completeness

C. Neutrality

D. Representational faithfulness

534.which of the following is an example of the concept of conservatism?

A. Stating inventories at the lower cost or market

B. Stating inventories using the FIFO method in periods of rising prices

C. Using the percentage of completion method in the first year of a long term construction contract

D. Using the interest method instead of the straight- line method to record interest in the first year of
long term receivable

535. The conservative approach in the measurement of financial position is best illustrated in the
following practice:

A. Arbitrary reduction of property items to report a conservative asset position

B. Recognition of fictitious liabilities

C. Inventories valued at cost or market, whichever is lower

D. Intangible assets are reported at normal amounts

E. All of the above

536. Which of the following is considered a pervasive constraint by statement of financial accounting
concepts no. 2?

A. Benefits/costs

B. Conservatism

C. Timeliness

D. Verifiability

537. The cost of an inexpensive fountain pen which has an estimated life of five years was treated as an
expense of the period when purchased. It is an example of the application of the
A. Consistency principle

B. Matching principle

C. Materiality principle

D. Cost principle

538.overstating an expense in the current period is

A. Acceptable because it relieves the future period of additional burden

B. Acceptable because it is conservative

C. Acceptable only when the amount involved is immaterial

D. Acceptable as long as it is consistently done

539. Part of the internal control that deals particularly with the accounting activities of a business

A. Accounting system

B. Check and balance principle

C. Internal accounting control

D. Internal audit

540. A system or method wherein the petty cash fund is replenished by writing a check equal to the
payments that have been made

A. Fluctuating fund method

B.Imprests system

C. Internal control system

D. Voucher system

541. Bank overdraft should be reported on the balance sheet as

A. Cash deduction

B. Current liability

C. Other liability

D. Sinking

542. Postage stamps and IOUs found in the company's cash drawers should be reported as

A. Supplies and receivables

B. Cash because they represent the equivalent of money

C. Petty cash fund

D. Investments

543. On the balance sheet, what is the preferable presentation of notes or accounts receivable from
officers, employees, or affiliated companies?

A. As trade notes and accounts receivable, if they otherwise qualify as current assets

B.as assets but separately from other receivables

C. As offsets to capital

D. By means of supplementary notes or footnotes

544. Advances by officers from corporate funds are taken up under

A. Capital stock

B. Retained earnings

C. Cash dividends

D. Loans

545. The balance of trade accounts receivable in the amount of P250,000 includes customers credit
balances totaling P1,500. The credit balances in customers' accounts should be

A. Shown as a current asset

B. Shown as a current liability

C. Offset against accounts receivable

D. Disclosed in a footnote to the balance sheet

546. The total accounts receivable of the Acne corporation were as follows: on January 1, P3,800; on
January 31, P4,700. In January, P9,000 was collected on accounts; P700 was received from cash sales;.
Account of P600 was written off as uncollectible; and allowance granted on sales, P250. The total sales
in January was

A. P10,200

B. 9,250

C. P12,400

D. P10,400

E. P11,450

547. Which of the following statements is not valid in determining balance sheet disclosure of accounts
receivable

A. Accounts receivable should be identified on the balance sheet as pledged if they are used as security
for a loan even though the loan is shown on the same balance sheet as a liability
B. That portion of installment accounts receivable from customers which falls due more than twelve
months from the balance sheet date usually would be excluded from current assets.

C. Allowances may be deducted from the accounts receivable for discounts, returns and adjustments to
be made in the future on accounts shown on the current balance sheet

D. Trade receivables are best shown separately from nontrade receivables where amounts of each are
material

548. The allowance for cash discounts, which would appear as a deduction from accounts receivable on
a balance sheet and would be based on an estimate of cash discount to be taken on accounts receivable,
is an effect of the application of the

A. Consistency principle

B. Matching principle

C. Materiality principle

D. Revenue principle

549. When a specific customers'accounts receivable is written off as uncollectible, what will be the effect
on net income under each of the following methods of recognizing bad debt expense?

Allowance. Direct write-off

A. None. Decreased

B. Decreased. None

C. Decreased. Decreased

D. None. None

550. From the standpoint of accounting theory, the allowance method of accounting for uncollectible
accounts expense is much better than the direct write-off method because

A. Uncollectible accounts are merely charged to expense in the period when such receivables are
determined to be uncollectible

B. The receivables are not stated at their probable realizable value

C. Uncollectible accounts are recorded as expense in the period in which the individual accounts are
determined to be worthless

D. Expenses are matched with related revenues

551. A valuation account set up to reduce the recorded amount of notes and accounts receivable to the
amount anticipated as collectible is called

A. Allowance for uncollectible accounts

B. Bad debts expense

C. Customers'accounts written off

D. Notes receivable discounted

552 from the standpoint of account classification, the allowance for doubtful accounts is included in
which account category?

A. Assets

B. Liabilities

C. Owner's equity

D. As a footnote on the financial statement

553. A method of estimating bad debts that focuses on the income statement rather than the balance
sheet is the allowance method based on

A. Direct write off

B. Aging the trade receivable accounts

C. Credit sales

D. The balance in the trade receivable accounts

554. When bad debts expense is estimated on the basis of the percentage of past actual losses from bad
debts to past bet credit sales, and this percentage is adjusted for anticipated conditions, the accounting
concept of

A. Matching is being followed

B. Matching is not being followed

C. Substance over from is being followed

D. Going concern is not being followed

555. One of the objective for the creation of allowance for uncollectible accounts is to be able to charge
the loss against the income of the period to which the loss is associated. The method which should be
used to attain this objective is

A. Percentage of sales

B. Percentage of open accounts

C. Aging of accounts receivable

D. Direct write-off of bad debts

556. Matching principle relayes to the proper identification of expenses and revenues associated with a
particular period. Which of the following methods of determining annual bad debts expense best
achieves this concept?

A. Percentage of sales
B. Percentage of ending accounts receivable

C. Percentage of average accounts receivable

D. Direct write-off

E. Percentage of sales returns and allowances

557. There are two methods of estimating uncollectible accounts expense. One method consists of
adjusting the valuation account to a new balance equal to the estimated uncollectible portion of the
existing accounts receivable. An alternative method is

A. The balance sheet approach

B. The aging of the accounts receivable approach

C. The income statement approach

D. Estimating the percentage of probable expense for each age group of accounts receivable

558. The advantage of relating s company's bad debt experience to it's accounts receivable is that this
approach

A. Is the only generally accepted method for valuing accounts receivable

B. Makes estimates of uncollectible accounts unnecessary

C. Gives a reasonably correct statement of receivables on the balance sheet

D. Related bad Debts expense to the period of sale

559. Which of the following methods of determining bad Debts expense does not match expense and
revenue?

A. Charging bad Debts with a percentage of sales under the allowance method.

B. Charging the bad debt with a percentage of accounts receivable under the allowance method

C. Charging bad Debts with an amount derived from aging the accounts receivable under the allowance
method

D. Charging bad Debts as accounts are written off as uncollectible

560. Domino farms uses the allowance method of accounting for uncollectible accounts. In 19-8, they
charged to uncollectible accounts expense P50,000 and wrote off as uncollectible accounts receivable
P30,000. These transactions decreased the working capital by

A. P50,000

B. P30,000

C. P80,000

D. P20,000
561. When an accounts receivable aging schedule is prepared at the end of the fiscal year, a series of
computations like the following is sometimes made: 5% of the total peso balance of accounts from 1 to
30 days past due, plus 10% of the total peso balance of accounts from 31 to 60 days past due, etc. Which
of the following statements best describes. How the sum of the amounts determined in this series of
computations is used?

A. When added to the total of accounts written off during the year, this new sum is the desired credit
balance of the allowance for doubtful accounts to be reported on the year-end financial statement

B. It is the amount of bad debts expense for the year

C. It is the amount that should be added to the allowance for doubtful accounts at year end

D. It is the amount of the desired credit balance of the allowance for doubtful accounts to be reported
on the year-end financial statement

562. When the allowance method of recognizing bad debt expense is used, the typical write off of a
specific customers account

A. Has no effect on net income

B. Decreases net income

C. Decreases current assets

D. Decreases working capital

563. The valuation of a promise to receive cash in the future at present value on the financial statement
of a business entity is valid because of the accounting concepts of

A. Entity

B. Materiality

C. Going concern

D. Neutrality

564. X company issued a note solely in exchange for Cash. Assuming that the items listed below differ in
amount, the present value of the note at issuance is equal to the

A. Face amount.

B. Proceeds received

C. Proceeds received discounted at the prevailing interest rate for similar notes

D. Face amount discounted at the prevailing interest rate for similar notes

565. On July 1, 19-3, a company received a one-year note receivable bearing interest at the market rate.
The face amount of the note receivable and the entire amount of the interest are due on June 30, 19-4.
When the note receivable was recorded in July 1, 19-3, which of the following were debited?

Interest receivable. Unearned discounted on note receivable

A. Yes. No

B. Yes. Yes

C. No. No

D. No. Yes

566. On July 1 of this year, a company received a one year note receivable bearing interest at the market
rate. The face amount of the note receivable and the entire amount of the interest are due on june 30 of
next year. At December 31 of this year, the company should report on its balance sheet

A. A deferred credit for interest applicable to next year

B. No interest receivable

C. Interest receivable for the entire amount of the interest due on June 30 of next year

D. Interest receivable for the interest accruing this year

567. Fisher company sold equipment to feind company, taking in exchange a noninterest bearing note,
the face amount of which was in excess of the fair market value of the equipment. On a balance sheet
prepared immediately after receipt of the note, Fisher should present the note at it's face amount

A. Without adjustments

B. Less implicit interest

C. Plus implicit interest

D. Plus the anticipated net earnings related to the note

568. if burgos company recorded the asset and the note at P11,800, the overall effects of this
transaction are:

A. A correct acquisition cost and a correct interest expense

B. A correct acquisition cost and an understated interest expense

C. An understated acquisition Cost and an understated interest expense

D. An overstated acquisition cost and an understated interest expense

569. Unearned discount, finance charges and unearned interest included in the face of notes receivable
should be reported on the financial statement as

A. Deferred credits

B. Deferred charges

C. A deduction from the related receivable

D. An appropriation of retained earnings

E. Current liability
F. Within the stated amount of the receivable

570. The practice of realizing cash from trade receivables prior to their maturity dates is widespread. A
term which is not associated with this practice is

A. Defalcation

B. Pledging

C. Factoring

D. Hypothecation

571. In pledging accounts receivable,

A. Account receivable are sold on a conditional basis. Collections may be made by either party

B. A loan is taken on the accounts receivable with a condition that the borrower becomes liable for the
replacement of the loan if the customers fail to pay their accounts. The lender and borrower can collect
from the customer

C. Accounts receivable are transferred to the buyer on a conditional basis. It may be with recourse or
without recourse

D. Accounts receivable are set aside as collateral for a loan. Collections are made by the borrower and
receipts from such collections are normally used to pay the loan

572. When a note receivable of a company is sold with recourse before maturity, the note receivable
has been

A. Pledged

B. Assigned

C. Factored

D. Discounted

573. Accounts receivable which are sold outright to a financing company on a without recourse basis are
said to have been

A. Pledged

B. Assigned

C. Factored

D. Collaterized

574. The equity is assigned accounts receivable account is classified on the balance sheet as

A. An asset account

B. A contra- asset account

C. A liability account

D. A contra- liability account

575. After being held for 30 days, a 90 day 15% interest- bearing note receivable was discounted at a
bank at 18%. The proceeds received from the bank upon discounting would be the

A. Maturity value less the discount at 18%

B. Maturity value plus the discount at 18%

C. Face value less the discount at 18%

D. Face value plus the discount at 18%

576. Tangible goods used in the productive process and directly related to the products being
manufactured are called

A. Factory supplies

B. Finished goods

C. Raw materials

D. Goods in process

577. When a portion of inventories has been pledged as security on a loan payable

A. The value of the portion pledged should be subtracted from the debt

B. An equal amount of retained earnings should be appropriated

C. The fact should be disclosed but the amount of current assets should not be affected

D. The costs of the pledged inventories should be transferred from current assets to noncurrent assets

578. Slow moving and obsolete inventory items should be priced for balance sheet purposes at

A. Retail inventory price

B. Cost or market, whichever is lower

C. Moving average

D. At an amount not in excess of possible realizable value.

579. Subnormal or obsolete goods, either under the cost or the lower of cost of market basis,

A. Should be taken up as an unrealized inventory loss.

B. Should be valued at bona - fide selling price less direct cosr of display

C. Should be valued by applying an inventory method that uses a constant or nominal value for the
normal inventory level

D. Should be adjusted in the cost of good sold

580. Merchandise which a trader contracted to purchase but which was not delivered or identified in
the year should

A. Not be included in the inventory

B. Be included in the inventory at cost

C. Be included in the inventory at it's probable retail value

D. Be included in the inventory at nominal price

581. Which of the following items should not be included in the inventory account?

A. Good in the possession of agents and salesmen

B. Goods under a sales contract but not yet segregated , unless the present possession is one of deposit
or trust

C. Goods for future delivery, although segregated, unless the present possession is one of deposit or
trust

D. Answer not given

582. An inventory determined by observation and evidenced by a listing of the actual count, weight, or
measure is called

A. Continuos inventory

B. Perpetual inventory

C. Physical inventory

D. Spot check inventory

583. When using the periodic inventory method, which of the following generally would not be
separately accounted for in the computation of cost of goods sold?

A. Trade discounts applicable to purchases during the period

B. Cash (purchase) discounts taken during the period

C. Purchases returns and allowance of merchandise during the period

D. Cost of transportation in for merchandise purchased during the period

584. From a theoretical viewpoint, which of the following costs would be considered inventoriable?

Freight. Warehouse

A. No. No

B. No. Yes

C. Yes. No
D. Yes. Yes

585. The transportation charges on inbound shipment ( transportation in) is combined with the balance
of the purchases account on the income statement in determining the costs of good available for sale.
What is the rationale for using a separate ledger account for this type of expenses?

A. To control cost effectively

B. To debit the expense directly to the purchases account

C. In case of goods purchased which are not entirely satisfactory, the purchaser can be refunded the
price paid to the supplier

D. The expense is similarly treated as transportation out. I.e., freight charges and other expenses
incurred in making deliveries to customers

586. The use of discounts lost account implies that the cost of purchased inventory items is the

A. Invoice price of item

B. List of price of the item

C. Invoice price less the purchase discount taken on the item

D. Invoice price less the purchase discount

587. The modern and preferred treatment of the amount of purchase discount available is

A. As sales

B. As other revenue or income

C. As a cost reduction

D. As an extraordinary item of income

588. Sylvia system corporation received an invoice for 12,000 from lydon enterprise company for a
shipment of speciality supplies, FOB destination, terms, 2/10 invoice from lydon is paid 15 days after the
invoice date, Sylvia must pay

A. P12000-P800- ( 12000x 2%) or 10,960

B. P12000- 800 or P 11200

C. P12000-800/.98 or 11200

D P12000-800-(P11200x2%) or P 10,976

E. P12000-800-(12,800x2%) or P 12,544

589. Cost is assigned to inventory and to cost of sales on the basis of assumptions as to the flow of costs
are called

A. Derived cost
B. Current cost

C. Predeterminated cost

590. Which of the following inventory methods developed from the consideration of the flow of goods
rather than the flow of costs?

A. First in, first out

B. Last in, first out

C. Standard cost

D. Weighted average cost

E. Answer not given

591. Inventories are an important element in determining the gross income of a business. However,
there are certain types of businesses wherein inventories are not an income determining factor. One of
this type of businesses is

A. Real estate business with reference to the real estate held for sale

B. Retail department store with reference to the merchandise held for sale

C. Food processor with reference to the meat products held for sale

D. Shoe manufacturer with reference to the leather goods held for sale

592. Which method of inventory pricing best approximates specific identifications of the actual flow of
costs and units in most manufacturing situation?

A. Avarage cost

B. First in, first out

C. Last in, last out

D. Base stock

593. It is a valuable management tool and may be used for valuation of certain inventories for internal
reporting but not an acceptable basis for external reporting purposes.

A. Historical cost

B. Current replacement cost

C. Prime cost

D. Current selling price less cost disposal

594. Which of the following statements is not valid as it applies to inventory costing method?

A. If inventory quantities are to be maintained part of the earnings must be invested (plowed back) in
inventories when FIFO is used during a period of rising prices
B. LIFO tends to smooth out the net income pattern since it matches current cost of goods sold with
current revenue when inventories remain at constant quantities.

C. When a firm using the FIFO method fails to maintain it's usual inventory position ( reduces stock on
hand below customary levels) there may be a matching of old cost with current revenue.

D. The use of a FIFO permit some control by management over the amount of net income for a period
through controlled purchases which is not true with LIFO.

595. The best method of inventory valuation for a dealer in jewelries is

A. Specific identification

B. Last invoice price

C. Base stock

D. Weighted average

596. Cost method which is to be regarded as applicable to the inventory which is determined by adding
the unit price of all purchase and the beginning inventory, and dividing the total by the number times of
purchases plus 1, is known as

A. Weighted average method

B. Moving average method

C. Simply average method

D. Gross profit method.

597. The moving average inventory cost flow method is applicable to which of the following inventory
system

Periodic. Perpetual

A. Yes yes

B. Yes. No

C. No. No

D. No. Yes

598. The pricing of issue of stock inventory must be deferred until the end of the accounting period
under which method of inventory valuation

A. Weighted average

B. LIFO
C. FIFO

599.in a periodic inventory system which uses the LIFO inventory cost flow method, the cost of goods
sold is the total cost of goods available for sale

A. Plus the ending inventory

B. Minus the ending inventory

C. Plus the beginning inventory

D. Minus the beginning inventory

600. In a periodic inventory system which uses the FIFO cost flow method, the cost of goods available
for sale is net purchases

A. Plus the ending inventory

B. Plus the beginning inventory

C. Minus the ending inventory

D. Minus the beginning inventory

601. In a periodic inventory system which uses the weighted average cost flow method, the beginning
inventory is the

A. Net purchases minus the cost of goods sold

B. Net purchases minus the ending inventory

C. Total goods available for sale minus the net purchases

D. Total goods available for sale minus the cost of good sold

602. An inventory pricing procedure. In which the oldest costs incurred rarely have an effect on the
ending inventory valuation is

A. LIFO

B. Conventional retail

C. Weighted average

D. FIFO

603. Method of allocating costs whereby the most current costs are charged out first, the units
remaining on hand being reported at the earliest costs

A. First in, first out

B. Next in, first out

C. Last in, first out

D. Last invoice pricing

604. The LIFO inventory cost flow method may be applied to which of the following inventory system?

Periodic. Perpetual

A. No. No

B. No. Yes

C. Yes. Yes

D. Yes. No

605. A company that uses the last in first out (LIFO) method of inventory pricing finds at an interim
reporting date that there has been a partial liquidation of the base period inventory level. The decline is
considered temporary and the partial liquidation will be replaced prior to year end. The amount shown
as inventory at the interim reporting date should.

A. Not give effect to the LIFO liquidation and cost of sales for the interim reporting period should include
the expected cost of replacement of the liquidate LIFO base

B. Ba shown at the actual level and cost of sales for the interim reporting period should reflect the
decrease in LIFO base period inventory level.

C. Not give effect to the LIFO liquidation and cost of sales for the interim reporting period should reflect
the decrease in the LIFO base period inventory level.

D. Be shown at the actual level and the decrease in inventory level should not be reflected in the cost of
sale for the interim reporting period.

606. Base stock method may be used to value inventory under this method

A inventory is expressed in term of the recent prices while the cost of goods is representative of the
earlier prices

B. The unit cost of the last purchase is multiplied by the units on hand to get the inventory value.

C when various commodities are bought at a lump sum, the single cost is apportioned among the goods
based on their respective sales prices

D. A predetermined rate is multiplied by the units on hands.

607. Estimates of price le changes for secili inventaries are the following inventory methods?
a Peso Value LIFO C. FIFO
b. Weled veraje cost d. Comentional

608. The double dension method and the m ain method are two win which of the following
inventory cost flow methods?
a. Moving average c. Peso value LIFO
b. FIFO d. Conventional flower of castoral
609. The pole value UFO inventory cost flow method uses which of the following
a. Specific methods (single item ) pool. c. Double extension method
b. Specific cost identification method d. Moving average method

610. Which of the following inventory cost flow methods could use peso value pools?
A.Conventional (lower of Cost or market) retail c. FIFO
b. WeighteD average d. LIFO

611. Gross profit sales is one of the most significant figures on the income statemen for a
merchandising enterprise. However, for an enterprise that uses the periodic inventory system the
amount of the gross profit is an acute figure because
a. Net sales is usually not accurate
b. There is no factual record of the cost of goods sold
c. Merchandise inventory wale at the end of a period is always estimate.
d. inventory vauationvat the end of a period is always at the beginning ang the end of accounting
properly.

612. The press gross of inventary valuation is invalid when

a. A portion of the inventory is destroyed
b. There is a substantial increase in invertory during the year
c. There is no beginning inventory because it is the first year of operations
d. Answer not given

613. The cast of merchandise that the Rome Co purchased during the months 15.000. The
markup on costs . The percentage of cost selling price is
a. 33 1/3%

b. 125%

c. 75%

d. 133 1/3%

614. If the markup based on cost is 25%, the markup applied to sales price is

c.60%

d. 20%

a. 25%

b. 40%

615. As of January 1, 19-0, the merchandise inventory of Linda Flor Company was p
300,000. During 19-0, Linda Flor bought merchandise of P 1,900,000 and recorded sales
of P 2,000,000. The gross profit rate on these sales was 20%. What is the merchandise
inventory of the company as of December 31, 19-0?
a. P 300,000
c. P 400,000
b. P 200,000
d. P 600,000

616. In 19-7, the selling expense of Alpha Co. were 12% of sales. General expenses were
15% of sales and also equal to 25% of cost of sales. Merchandise inventory on January 1
was P 160,000 which was 20% less than the December 31 inventory. Income before
income tax was P 140,000. Purchases during the period were
a. P 600,000
d. P 106,800
b. P 400,000
e. P 686,000
c. P 440,000
617. The retail inventory method is based on the assumption that
a. The final inventory and the total of goods available for sale contain the same
proportion of high cost and low cost goods.
b. The ratio of gross margin to sales is approximately the same each period.
c. The ratio of cost to retail price changes at a constant rate.
d. The proportions of markups and markdowns to selling price are the same.

618. A major advantage of the retail inventory method is that it

a. Hides costs from customers and employees.
b. Provides a method for inventory control, and facilitates determination of the
periodic inventory for certain types of companies.
c. Gives a more accurate statement of inventory costs than other methods.
d. Permits companies which use it to avoid taking an annual physical inventory

619. Reductions in selling price below the original retail is called

a. Markdown cancellations
b. Markup cancellations
c. Markdowns

620. Original retail price plus net markups less cost is called
a. Additional markups c. Markup cancellation

b. Maintained markup d. Accumulated markup or markon

621. Under the retail inventory method freight in would be included in the calculation
of the goods available for sale for which of the following?
Cost Retail
a. No No
b. No Yes
C. Yes No
d. Yes Yes
622. The retail inventory method would include which of the following in the
calculation of the goods available for sale at both cost and retail?
a. Freight in
b. Purchases returns
c. Markups
d. Markdowns

623. When the conventional retail inventory method is used, markdowns are commonly
ignored in the computation of the cost to retail ratio because
a. There may be no markdowns in a given year.
b. Markups are also ignored.
c. This tends to give a better approximation of the lower of cost or market value
of the ending inventory.
d. This tends to result in the showing of a normal profit margin in a period when
no markdown goods have been sold.

624. With regard to the retail inventory method, which of the following is the most
accurate statement?
a. Generally, accountants ignore net markups and net markdowns in computing
the cost price percentage.
b. Generally, accountants include both net markups and net markdowns in
computing the cost-price percentage.
c. This method results in a lower ending inventory cost if net markups are
included but net markdowns are excluded in computing the cost-price
d. It is not adaptable to LIFO costing.
Percentage

625. An inventory method which is designed to approximate inventory valuation at the

lower of cost or market is
a. First-in, first-out
b. Last-in, first-out
c. Retail method
d. Specific identification

626. In using the retail inventory method which conforms with the lower cost-or-market
approach, the cost ratio should be computed after ignoring
a. Markdowns
c. Markdown cancellations..
b. Markups.
d. Net markdowns.

627. When markdowns and markdown cancellations are excluded in the computation of
the cost ratio that will be used to get the estimated value of the ending inventory, the
method is called
a. Gross profit method.
b. Conventional retail method.
c. Retail inventory method.

628. To produce an inventory valuation which approximates the lower of cost or market
using the conventional retail inventory method, the computation of the ratio of cost to
retail should
a. Include markups but not markdowns.
b. Include both markups and markdowns.
c. Include markdowns but not markups.

629. If the conventional (lower of cost or market) retail inventory method is used, which
of the following calculations would include (exclude) net markdowns?
Cost ratio (percentage)
Cost Ratio(percentage) Ending Inventory at retail
Include Include
Include Exclude
Exclude Include
Exclude Exclude

630. The unit-livestock-price method of farm inventory valuation is another kind of

reporting income on
a. Cash method of reporting.
b. Accrual method of reporting.
reporting.
c. Hybrid method of reporting.
d. Crop-basis method of reporting

631. The primary basis of accounting for inventories is cost. A departure from the cost
basis of pricing inventory is required when
a. The general price level has changed materially.
b. There is evidence that the utility of the goods, in their disposal in the ordinary
course of business, will be less than cost.
C. There is evidence that the replacement cost of the goods when they are sold
will be less than their cost.
There is evidence that the goods will not be sold at a profit.

632. Lower of cost is an example of which concept?

a. Consistency.
b. Conservatism.
c. Realization.
d. Matching

633. Which of the following is true in applying the lower of cost or market rule to work
process inventory?
a. This category of inventory is an exception and the rule does not apply.
b. Costs of completing the inventory are added to costs of disposal and both
deducted from estimated selling price when computing realizable value.
c. Market value cannot ordinarily be determined.
d. Equivalent production is multiplied by the selling price.

634. Where the market price of goods contracted for falls below the contract price and
title has passed to the buyer and he values goods at cost or market, whichever is lower,
the loss
a. Will be deferred until such time that these goods become obsolete and
unsalable.
b. Will be reflected at some future time when the market price improves.
c. Will be reflected immediately because of the reduced value of the closing
d. Will not be considered in view of the inventory valuation of cost or market,
inventory
whichever is lower.

635. An inventory method which is designed to approximate inventory valuation at the

a. Base Stock
b. Last-in, first-out
c. First-in, first-out
d. Conventional Retail

636. The inventory cost method which cannot be used in combination with valuation at
the lower of cost or market is
a. First-in, first-out
b. Last-in, first-out
c. Weighted average cost
d. Specific Identification

637. When valuing raw materials inventory at lower of cost or market, what is the
meaning of the term market
a. Net realizable value
b. Net realizable value less a normal profit margin
c. Current replacement cost
d. Discounted present value
638. The term market, as commonly used in the phrase cost or market, whichever is
lower, means current replacement cost, except that
a. Changes in replacement cost, except that
b. Market should not be less than net realizable value.
C. Market should not be exceed the estimated selling price less reasonably
predicted costs of completion and disposal.
d. Market should not exceed cost plus an allowance for an approximately
normal profit margin.
Markup, if any, should not be allowed.

639. In no case can the market in the lower-of-cost-market rule be more than
a. Estimated selling price in the ordinary course of business
b. Estimated selling price in the ordinary course of business less reasonably predictable costs of
completion and disposal and an allowance approximately normal profit margin.
c. Estimated selling price in the ordinary course of business predictable costs of completion and
disposal.
d. Estimated selling price in the ordinary course of business less predictable costs of completion and
disposal, an allowance for an approximately serve for possible future losses. (historical) cost, and this
decline is um amount that the inventory can

640. When inventory declines in value below original (historical) cost considered other than temporary,
what is the maximum amount that be valued at?
a. Sales price net of conversion costs.
b. Net realizable value.
c. Historic cost.
d. Net realizable value reduced by a normal profit margin.

641. The replacement cost of an inventory item is below the net realizable value and above the net
realizable value less the normal profit margin. The original cost of the inventory item is above the
replacement cost and below the net realizable value. As a result, under the lower of cost or market
method, the inventory item should be valued at the (m.c)
a. Replacement cost
b. Original cost.
c. Net realizable value.
d. Net realizable value less the normal profit margin.

642. a unit of inventory has declined in value below original cost, but the market value exceeds net
realizable value, the amount to be used for purposes of inventory valuation is
a. Net realizable value.
b. Original cost.
c. Market value.
d.Net realizable value less a normal profit margin.

643. An item inventory purchased this period for Php his period for Php 15 has been written down to its
Php10. It sells for Php 30, with disposal costs of Php 3, profit of Php 12.
Which of the following statements is not true?
a. The cost of sales of the following year will be understated
b. The Income of the following year will be understated
c. The current year's net income is understated,
d. The closing inventory of the current year is understated.
644. Accruing net losses on firm purchase commitments for inventory is an example of accounting
concept of
a. Conservatism
b. Realization
c. Consistency
d. Materiality

645. The credit balance in the account that arises at a time when a net loss on a purchase commitment
is recognized should be
a. Presented as a current liability.
b. Subtracted from ending inventory.
c. Presented as an appropriation of retained earnings.
d. Presented on the income statement.

646. The use of the percentage-of-completion of accounting for long-term construction contracts is a
measurement of revenue under the
a. Cost principle. c. Objectivity principle
b. Realization principle d. Matching principle.

647. The completed-contract method of accounting for long-term construction-type contracts is

preferable when
a. A contractor is involved in numerous projects.
b. The contracts are of a relatively long duration
c. Estimates the cost to complete the extent of progress towards completion are reasonably
dependable.
d. Lack of dependable estimates or inherent hazards cause forecast to be doubtful

648. The percentage of completion method of accounting for long-term construction type contracts is
preferable when
a. Estimates of costs to complete and extent of progress for long-term construction reasonably
dependable.
b. The collectability of progress billings from the customer is reason assured.
c. A contractor is involved in numerous projects.
d. The contractors are of a relatively short duration.
649. The percentage-of-completion method of inventory valuation of long-term contracts
a. Recognizes income upon the completion of work.
b. Recognizes income based on the collected billings.
c. Recognizes income based on the progress of work.
d. Does not recognize income at the balance sheet date.

650. The principal disadvantage of using the percentage-of-completion method of recognizing revenue
from long-term contracts is that it
a. Gives results based upon estimates which may be subject to considerable uncertainty.
b. Is likely to assign a small amount of revenue to a period during which much revenue was actually
earned.
c. May require that interperiod tax allocation procedures to be used.
d. Is unacceptable for income tax purposes.

651. In accounting for a long-term construction-type contract using the percentage-of-completion

method, the gross profit recognized during the first year would be estimated total gross profit from the
contract multiplied by the percentage of the costs incurred during the year to the
a. Total costs incurred to date.
b. Total estimated cost.
c. Unbilled portion of the contract price.
d. Total contract price.

652. The calculation of the income recognized in the second year of a fourth-year construction contract
which is accounted for using the percentage-of-completion method is based on
a. Latest available estimated costs
b. Cumulative actual costs incurred only
c. Incremental cost for for the second year only.
d. Estimated costs at the inception of the contract

653 Which of the following would be used in the calculation of the income recognized in the third and
final year of a construction contract which is accounted for using the percentage-of-completion
method?
Contract Price Actual Total Cost Income previously recognized
Yes Yes No
Yes Yes Yes
Yes No Yes
No No Yes

654. When should an indicated loss on a long-term contract be recognized under the completed-
contract method and the percentage-of-completion method, respectively?
Completed-contract Percentage-of-completion
a. Immediately Immediately
b Immediately Over the life of the project
c. Completion of contract Over the life of the project
d. Completion of contract Immediately

655. In accounting for a long-term construction contract for which there is a projected pront, the
balance in the appropriate asset accounts at the end of the first year of work using the completed-
contract method would be
a. Zero
b. The same as the percentage-of-completion method
C. Higher than the percentage-of-completion method
d. Lower than the percentage-of-completion method.
656. when progress billings are sent on a long-term contract, what type of account should be credited
under the completed-contract method and percentage-of-completion method?
Completed-contract Percentage-of-completion Revenue
Revenue Revenue
Revenue Contra sheet
Contra Sheet Revenue
Contra sheet Contra sheet

657. How should the balances of progress billing and construction in progress be shown at reporting
dates prior to the completion of a long-term contract?
a. Progress billings as deferred income, construction in progress as on in progress as a deferred expense
b. Progress billings as billings as income, construction in progress as inventory
c. Net, as a current asset if debit balance, and current liability if credit balance
d. Net, as income from construction if credit balance, and loss from construction if debit balance.

658. The balance of the costs of uncompleted contracts in excess of related billings in most cases, is
shown as a (an)
a. Current liability, i.e., Unearned revenue
b. Long-term debt, i.e., Notes payable
c. Current asset, i.e., Inventories
d. Investment, i.e., Construction in progress

659. The balance of the billings on uncompleted contracts in excess of related costs, in most cases, is
shown as a (an)
a. Current liability, i.e., Unearned revenue.
b. Long-term debt, i.e., Notes payable.
c. Current asset, i.e., Inventories.
d. Investment, i.e., Construction in progress.

660. An entity shall offset a deferred tax asset and deferred tax liability when
I. The deferred tax asset and deferred tax liability relate to income taxes levied by the same taxing
authority.
II. The entity has a legal enforceable right to offset a current tax asset against a current tax liability.
a. I only
b. Both I and II
c. Il only
d. Neither i nor II

661. The accounting equation must remain in balance

a. Throughout each steps of the accounting cycle
b. Only when jou sly when journal entries are recorded
c. Only at the time the trial balance is prepared.
d. Only formal financial statements are prepared
662. Complete the sentence: adjusting entries
a. Are often prepared after the statement of of the statement of financial position date. but dated as of
the statement of financial position date
b. Are necessary to enable the financial statement to conform to International Financial Reporting
c. Include both accruals and deferrals
d. Are all of (A).(B) and (C) above

663. Adjustments are often prepared

a. After the statement of financial position date, but dated as of that date
b. After the statement of financial position date, and dated after that date
c. Before the statement of financial position date, but dated as of that date
d. Before the statement of financial position date, and dated after that date

664. Which of the following statement about Philippine GAAP is (are) false?
I. The Philippine Interpretation Committee issuances are an indication that the IFRSs (or PFRSs) are rules-
based.
II. The Securities and Exchange Commission (SEC) allows micro entities to use cash basis of accounting.
III. All reporting enterprises entities in the Philippines including regulated entities are required to follow
full Philippine Financial Reporting Standards (PFRSs) in the preparation of financial statements.
a. a. I only
b. Ill only
c. I and Ill only
d. lll, and Ill

665. Which of the following statemen

The acounting cycle that Luca Pacioli designed is exactly the same as that which the accounting
professional is adopting today
A milestone for the accountancy profession in the current millennium is the uniform
adoption of international accounting standards by all countries of the world.
Adoption of the same accounting standards worldwide would have the advantage comparability across
entities and lower costs in the preparation of financial information
assets of P300 M and total liabilities of

Statement I Statement II Statement III

a. False True True
b. False False True
c. True True False
d. True True True

666. Which of the following entities are required to apply the PFRS forSME’s Philippine financial
reporting?
a. EN's Corner, a Novelty Store with total assets of P300 M and total liabilities P160 M.
b. ABE Insurance Company with total assets of P 420 M and total liabilities of P195M.
C. Rural Bank of Atimonan, Quezon, with total assets of 300 M and total liabilities of P120 M.
d. Cl Foodhouse retail foods. It is in the process of issuing securities in a domestic stock exchange.

667. The Financial Accounting Standards Board employs a "due process" system which
a. Is an efficient system for collecting dues from members.
b. Enables interested parties to express their views on issues under consideration.
C. Identifies the accounting issues that are the most important.
d. Requires that all accountants must receive a copy of financial standards.

668. What is the relationship between the Securities and Exchange Commission and accounting
standard setting in the Philippines?
a. The SEC requires all companies listed on an exchange to submit their in statements to the SEC.
B. The SEC coordinates with the FRSC in establishing accounting standards
c. The SEC has a mandate to establish accounting standards to be followed by enterprises under its
jurisdiction.
d. The SEC reviews financial statements for compliance.

669. The Financial Reporting Standard Council (FRSC)

a. Works under the direct supervision of the Professional Regulation Commission
b. Has a power to issue and revoke CPA license
c. is the authority of accounting standards in the Philippines
d. Crafted the Crafted the implementing Rules and Rules and Regulations (IRR) of the Philippine
Accountancy Act of 2004.

670. Which of of the following statements about about "due process" in accounting standard setting
and the Conceptual Framework is (area) false?
I. The exposure draft issued by the n accounting standard-setting body before an approved for the
implementation gives CPA professionals the opportunity to participate in the standard-setting process.
II. FRSC has approved an accounting standard, it should be automatically implemented by all reporting
enterprises in the Philippines
III. The Conceptual Framework constitute the accounting laws of the countancy profession and
violations of its provision will be meted corresponding sanctions by the regulatory bodies
I and II are false
II and III are false
c. I and Ill are false
d. All statements are false

671. A soundly developed conceptual frameworks of concepts and objectives should

a. Increase financial statement users' understanding of and confidence in financial reporting
b. Enhance comparability among companies' financial statements.
C. Allow new and emerging practical problems to be more quickly solved
d. All of these
672. The use of special journal system of recording transaction and events is an application of which of
the following qualities of financial reporting?
a. Faithful representation
b. Relevance
C. Timeliness
d. Completeness

673. All of the following will justify the recognition of an asset by an accounting entity
there except when:
a. It acquires legal ownership of the asset
b. It has legal control of the asset
C. It has exclusive Knowledge and control of expected benefit flow even without legal right
d. It acquires physical possession of the asset with or without legal ownership or legal control

674. Which of the following global phenomenon is the primary factor that accelerated
what is known as "borderless accounting"?
a. Information technology
b. Globalization
c. Uniform international financial reporting standards
d. Uniform international education standards

675. Accountable events must meet three criteria for recognition. Which of following selected business
documents of Asintado Company that are that are presented to you by its management in 2017 will
quality as an accountableevent(s)?
A purchase commitment signed on December 28, 2016 for P1,000,000 merchandise inventory to be
delivered on April 30, 2017.
A purchase order for P500,000 worth of merchandise
A Meralco bill for December 2017 amounting to P120,000 remains unpaid at year-end 2017
A sales invoice for P400,000 under terms 2/10, n/30
A delivery truck purchased and delivered on January 1, 2017 under a 3-year annual installment plan for
P3,000,000 for which Asintado Corporation issued a 10% interest bearing note.
The accountable events that should be recognized in the books of Asintado
a. 520,000
b. 3,400,000
c. 3,520,000
d. Answer not given

676. The following are the application of the art aspect of accounting except
a. Acountants use creative skills and judgment in the choice of the appropriate fair market value to be
use in the recognition and measurement of an asset acquired through a non-reciprocal transfer.
b. Accountants interpret the information presented in the financial statements through ratios and trend
analysis. et the information
c. External auditors attest to the fairness presentation of financial condition and operating results. \
D. Accountants use duality and equality principles in the analysis and recognition
of presentation and of accountable events

677. Internal events are

a. Not recorded since they happened only within the business
b. Not recorded because they are not capable of money measurement
c. Recorded because they involve changes in values of the elements of accounting
d. Recorded because they involve exchange of values between the entity and another party

678. Which TWO of the following areas of an accountant' work are not part of financial accounting?
1 Reporting on parent and subsidiary relationship and transactions
2 Reporting on installment sales and long-term construction contracts
3 Reporting on profitability trends as well as ratios and measurements
4 Reporting on the fairness of presentation of financial position and performance of an entity in
conformity with GAAP.
a. (1) and (2)
b. (3) and (4)
C. (1) and (3) d
. (2) and (3)

679. The basis financial statements, according the PAS 1, include all of the following except:
a. Statement of Changes in Financial Position
b. Statement of Comprehensive Income
C. Statement of Financial Position
d. Statement of Changes in Equity

680. Which of the following statements about financial statements is (are) correct?
I. They show the results of the stewardship of management for the resources entrusted to it by the
capital providers.
II. They are the primary responsibility of both management and the external auditor after audit.
III. They are prepared at least annually and are directed to the common information needs of a wide
range of statements users.
IV. The financial statements prepared by banks, cooperatives and insurance companies should comply
first with the generally accepted accounting
principles of the accountancy profession before they comply with regulatory accounting principles
Statements I and II only
Statements I and III only
Statements I., III and IV only
Statements III and IV only

681. Which of the following statements about financial accounting is incorrect?

I. General purpose financial statements must be prepared by certified public accountant
II. Financial accounting is a social science that can be influenced by changes in the legal political and
business environment
III. Financial statements can be stated in any language or dialect of geographical jurisdiction. \
 IV. All significant information useful to users can be displayed on the face of the have financial
statements
Statements I and II only
Statements I, II and III only
Statements I., III and IV only
Statements III and IV only

682. Which of the following types of acquisition of asset and measurement base is(are) not property and
locally matched?
Mode acquisition Measurement base
1. Acquisition of land invested by the owner 1. Cost of the cute
2. Acquisition of equipment by no monetary rechange 2. Net realuable value
3. Acquisition of asset by long term credit 3. Equivalent cash price
A. 1 and 2 only
b. 1 and only
C. 2 and 3 only
d. 1,2 and 3

653 Which of the following accounting measurements may be made with the greatest degree of
objectivity
Bad debt expers for the year
Cost of land owned as at year-end
Apraised value of land at year-end
Net income

684, In which step/s of the accounting cycle is GAAP and the qualitative objectives most applied?
a. Journalizing and adjusting the books
b. posting and preparing trial balance
c. Journalizing and preparing closing entries
d. Preparing the financial statements

Which of the following statements about the accounting cycle is true?

The first step in posting is to transfer the debit account from the journal to the ledger
A periodic adjusting entry affects both a balance sheet and income statement accounts, or in some rare
instances, only income statement accounts
Selecting and analyzing accountable events are part of the recording phase of the accounting cycle.
Adjusting entries are part of the recording phase of accounting

The financial information qualities of faithful representation, verifiability and freedom from error are
typically applied in which of the following steps of the accounting cycle?
Journalizing
Posting
Trial balance preparation
Adjusting entries

Which of the following statement is not a reason for preparing end-of-period adjusting entries?

Some transaction extends beyond one accounting period.

They help to properly measure the period's net income or net loss
Mixed accounts should be split into their real and nominal elements.
d. Errors discovered at the end of the period should be corrected in order to generate more reliable
financial reports

Which of the following statements does not pertain directly to the Going-Concern assumption of
accounting?
Assets and liabilities should be classified in the statement of financial position as to "current" or "non-
current"
Threats to the ability of an entity to operate as a going concern, such as a troubled-debt restructuring
arrangement should be disclosed in the notes of financial statements
Income and expenses should be recognized as these events occur, even if cash is not yet received or paid.
Conceptually, the accrual assumption is related to the Going Concern assumption

Accrual accounting is used because

Cash flows are considered less important.
It provides a better indication of ability to generate cash flows than the cash basis.
It recognizes revenues when cash is received and expenses when cash is paid
It is less costly to apply

Which of the following basic accounting assumptions is threatened by the existence of severe inflation in
the economy?
Monetary unit assumption
Periodicity assumption

Going-concern assumption
Economic entity assumption

Under the revised conceptual framework, which of the following are among the enhancing qualitative
objectives of financial accounting?

Relevance
Neutrality
Understandability
Faithful representation
Verifiability
Timeliness
Comparability
Freedom from error Completeness
A, D and F c. C, E, F and G
b.E, G and H d. C, D, E and F
The international accounting standards board’s conceptual framework includes a cost benefit constraint.
Which of the following best describes the cost-benefits constraint?
The benefits of the information must be greater than the costs of providing it.
Financial info should be free from cost to users of the information.
Costs of providing financial information are not always evident or measurable but must be considered.
All the choices are correct

Which of the following statement about the bases of accounting for income and expense is false?
Total operating expenses will be the same under pure cash, and modified cash basis.
Income and expense with cash flows are recognized in cash, modified and accrual basis.
Modified cash basis will yield the same cost of sales amount as accrual basis
Cash basis of accounting does not recognize any adjusting entry at year end.
Ms. D. Marawi , the accountant of AlaChamba Corp. discovered a purchase invoice for some small items of
the office equipment amounting to 15,000 which was omitted from the books. She was already doing the
summarizing stage of the recording process and has prepare the financial statements for submission to
management. She did not see the need to include the omitted transaction in the records as she reasoned
that the amount involved is not material. The total assets of the corporation as of balance sheet date is
500,000,000. This situation is.
An application of the materiality principle
A violation of the materiality principle
An application of cost benefit constraint in financial reporting
A violation of the recognition principle for accountable events
The purpose of the international accounting standards is to
Develop a single set of high-quality IFRS
Issue enforceable standards which regulate the financial accounting and reporting of multinational
corporations
Develop a uniform currency in which the financial transactions of companies through-out the world would be
measured.
Arbitrate accounting disputes between auditors and international companies
X has control over the composition of Y’s board of directors. X owns 49% of Y and is the largest shareholder. X
has agreement with Z, which owns 10% of Y, whereby Z will always vote in the same way as Y. Can X exercise
control over Y?
X cannot exercise control because it owns 49% of the voting rights
X cannot exercise control because it can control only the makeup of the board and not necessarily the way
the directors vote
X cannot exercise control solely because it has an agreement with Z for the voting rights to be used in
whatever manner X wishes
X cannot exercise control because it controls more than 50% of the voting power, and it can govern the
financial and operating policies of Y through its control of board of directions.
A joint venture is exempt from using the equity method or proportionate consolidation in certain
circumstances. Which of the following circumstances is not a legitimate reason for not using the equity
method or proportionate consolidation?
Where the interest is held for sale under IFRS 5
Where the exception in IAS 27 applies regarding an entity not being required to present consolidated
financial statements
Where the venture is wholly owned, is not a publicly traded entity and does not intend to be, the ultimate
parent produce consolidated accounts, and the owners do not object to non-usage of accounting methods.
Where the joint ventures activities are dissimilar from those of the parent.
Which of the following is not a difference between the percentage of completion and completed contract
methods of accounting for a long term construction contracts?
One requires estimates of completion during the construction period and other does not.
One records income(loss) each period during the construction period and the other does not
They report different inventory amounts during the construction period
They cause a different cash inflow during the construction period
Revenue may not be recognized in which of the following transactions.
A department store operates a customer loyalty program. It grants loyalty point to its program
members whenever they spend a specified amount in one of its stores. The points can be
redeemed for further products in its stores.
A restaurant distributes "money-off" vouchers. It grants vouchers free of charge to people
walking on the streets near the restaurant. The vouchers can be redeemed for discounted
meals in the restaurant.
A book retailer participates in a customer loyalty program operated by an airline.
It grants loyalty air miles to its program members whenever they spend a specified amount in
one of its stores. The points can be redeemed for air travel with the airline.

d. Revenue may not be recognized in any of the above transactions.

700. Which of the following statements is incorrect?

 I. Financial accounting is the process of identifying, measuring, analyzing, and
communicating financial information needed by management to plan, evaluate, and
control an organization's operations.
II. Financial statements are the principal means through which financial information
is communicated to those outside an enterprise.
III. Users of the financial information provided by a company use that information
make capital allocation decisions.
IV. An effective process of capital allocation promotes productivity and provides an
efficient market for buying and selling securities and obtaining and granting credit.
V. Financial reports in the early 21st century did not provide any information about a
company's soft assets.
VI. Accounting standards are now less likely to require the recording or disclosure of fair
value information due to its inherent subjectivity.

II,III,IV

I,II,III,IV

I,V,VI

I,III,V,VI

701. Which of the following statement is incorrect regarding noted to financial statements.
a. PRFS requires specific noted disclosure including disaggregation of inventories into classification such as
merchandise, production supplies, work in progress and finished goods.
b. PFRS requires a maturity analysis for receivables.
c. PFRS requires that all notes be clear, simple to understand and nontechnical in nature.
d. All of the choices are correct regarding notes to financial statements.

At the middle of the current year, an entity granted employees compensatory share options. How should
the entity account for the outstanding options in calculating earnings per share for the current year
if the options are not anti-dilutive?
Include the options in the denominator of basic and diluted earnings per share for the entire year.
Include the options in the denominator of diluted earnings per share weighted by the number of months
outstanding.
Ignore the options in the calculation of diluted earnings per share.
Include the options in the denominator of diluted earnings per share for the entire year.

Which of the following qualifies as an operating segment?

Corporate headquarters
North American segment whose assets are 12% of the combined assets of all segments and management
reports to the chief operating officer.
Eastern Europe segment which reports its results directly to the manager of the European division, and
has 20% of the entity's assets, 12% of revenue and 11% of the profit
South American segment whose results of operations are reported directly to the chief operating officer,
and has 5% of the entity's assets, 9% of revenue and 8% of the profit.

At current year-end, an entity was holding long-lived assets that it intended to sell. The entity
appropriately recognized a loss in the current year related to these assets. In the income statement
for the current year, the loss should be reported as
Extraordinary item
b. Component of income from continuing operations before tax
Component of discontinued operations net of tax
Component of selling or administrative expenses net of tax

Which disposal could qualify as discontinued operation?

Disposal of a component that is similar in nature to other components but has operations and cash flows
distinguishable from the rest of the entity
Disposal of a component due to a major change in business strategy
Disposal of a small component within the current business strategy
Disposal of a component with distinguishable operations and cash flows from the rest of the entity

Which Recognize is a true a statement loss for all regarding recognized disclosure and unrecognized
for subsequent subsequent events?
Recognition a loss for all and unrecognized subsequent events in the current year
Recognize a gain or loss for any recognized subsequent event in the current year
Recognize a loss for a recognized subsequent event in the financial statements in the year when the
subsequent event occurs.
Recognize a loss for a recognized subsequent event in the current year financial statements

When an entity makes a voluntary change in its accounting policy that has an effect

on the current period, it is required to disclose all of the following, except

The nature of the change
The amount of the adjustment for each financial statement line item affected
The reasons why the change will provide more relevant information
The reasons why the previous policy no longer provides reliable information.

Which of the following statements are in accordance with PAS 28?

I When the associate has cumulative preference shares, the investor computes its share in
the profit or loss of the investee after deducting the preferred dividends, only when
such dividends are declared.
When the associate has non-cumulative preference shares, the investor computes its
share in the profit or loss of the investee after deducting the preferred dividends,
true, true c. false, true
true, falsed. false, false

709 When a public shareholding company changes an accounting policy voluntarily, it has to
Treat the effect of the change as an extraordinary item
Account for it retrospectively
Treat it prospectively and adjust the effect of the change in the current period
and future periods.
d. Inform shareholders prior to taking the decision

710. When land and building are acquired for a lump sum price and the building is
demolished, the material salvaged from the building that were used in the construction of a
new building should be.
a. Deducted from the cost of the land and added to the cost of the building.
Included as income from continuing operations.

Ignored when the demolition costs, net of actual sale proceeds of salvaged materials, are capitalized as cost
of the new building.
Added to the cost of the new building.

Under PAS 16, revaluation of property, plant and equipment to appraised value is an acceptable
alternative to historical cost provided certain requirements are complied with. Which of the following is
not one of the requirements?

The revaluation surplus should be presented in equity.

Appropriate disclosures should be made in the financial statements.

The appraisal should be made by a competent and independent specialist once a year at each end of
reporting period.

Depreciation to be charged to operations should be based on appraised values or its equivalent.

 The entity's current ratio is 4:1. Which of the following transactions would normally increase current
ratio?
Purchasing inventory on account c. Collecting an account receivable.
Purchasing machinery for cash. d. Selling inventory on account

When the equity method is used to account for investments in common stock, which of the following
affects the investor's reported investment income?
Equipment amortization related to purchase (Yes); Cash dividends from invest ee (Yes)
Equipment amortization related to purchase (Yes); Cash dividends from investee (No)

c. Equipment amortization related to purchase (No); Cash dividends from investee (No)

d. Equipment amortization related to purchase (No); Cash dividends from investee

(Yes)

How should repayment of a long-term loan comprising repayment of the principal amount and interest
due to date on the loan be treated in a cash flow statement?
The repayment of the principal portion of the loan is a cash flow belonging in investing activities section; the
interest payment should be netted against interest received on bank deposits, and the net amount Of
interest should be disclosed in the operating activities section.

The repayment of the principal portion of the loan is a cash flow belonging in the investing activities section,
the interest payment belongs either in the operating activities section or the financing activities section

c.The repayment of the principal portion of the loan is a cash flow belonging in
the investing activities section; the interest payment belongs in the operating activities section
because PAS 7 does not permit any alternatives in case of interest payments.
d. The repayment of the principal portion of the loan is a cash flow belonging in the investing
section; the interest payment belongs either in the operating activities section or the investing
section.

Which of the following is not a valid condition that will exempt an entity from preparing consolidated
financial statements? a. The ultimate parent entity produces consolidated financial statements available
for public use that comply with PFRS.
The parent entity's debt or equity capital is not traded on the stock exchange.
The parent entity is in the process of filing its financial statements with a securities commission.
The parent entity is a wholly owned subsidiary of another entity.

Provisions shall be recognized for all of the following except:

Rectification costs relating to defective products already sold.
Cleaning up costs of contaminated land when an oil entity has a published policy that it will
undertake to clean up all contamination that it causes.
 c. Future refurbishment costs due to introduction of a new computer system.
d. Restructuring costs after a binding sale agreement has been signed.

In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification
of the cash flow arising from the proceeds from an earthquake disaster settlement would be most
appropriate?
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Does not appear in the cash flow statement

718. Which of the following statements reflects the accounting for financial instruments under the
PFRS for SMEs?
All financial instruments should be measured at fair value.
Reversal of an impairment loss is not allowed.
c. All amortized cost instruments must be tested for impairment.
d. The hedge accounting requirements of PAS 39 must be followed in full.
At the beginning of year 1, an SME acquired a tract of land for an undetermined purpose. The entity started
constructing a building on the land for use as its administrative headquarters at the beginning of year 4.
The entity's administrative staff moved into that building at the beginning of year 5.

Three years later, at the beginning of the year 8, the entity's administrative staff moved
into newly acquired premises. The old building was immediately rented to an independent
third party under an operating lease.

At the end of year 9, the entity accepted an unsolicited offer from the tenant to purchase the
building from the entity with immediate effect.

The fair value of the property (land and related buildings) can be measured reliably without
undue cost or effort on an ongoing basis.

The entity shall account for the tract of land and the related building as:
Investment property from year 1 to year 9.

Investment property during year 1 to 3 and year 8 to 9 and as property, plant and equipment during year 4
to 7.
Investment property during year 1 to 3 and as property, plant and equipment during year 4 to 9.

d. Property, plant and equipment during year 1 to 7 and as investment property during year 8 to 9.

Which statement is correct regarding IFRS for SMEs?

Adoption of the IFRS for SMEs implies that full IFRS are not appropriate for SMEs•

Determination of taxable income and determination of distribution income are specific objectives of the
IFRS for SMEs.

Providing information to owner-managers to help them make management decisions is a purpose of the
IFRS for SMEs.

The IFRS for SMEs is appropriate for an entity that does not have public accountability.

Which is true about the revaluation model for valuing plant, property, and

Revaluation of assets must be made on the last day Of the fiscal year.

Revaluation of assets must be made on the same date each year.

There is no rule for the frequency or date revaluation.

Revaluation of assets must be made every three to five years.

Which statement is correct regarding exploration for and evaluation of mineral resources?
Exploration activities include determining volume and grade of deposits.
PFRS 6 requires an entity to recognize exploration and evaluation expenditures as assets only to the
extent that such expenditure is recoverable in future period.
An exploration and evaluation asset shall know longer be classified as such when the technical feasibility
and commercial viability of extracting a mineral resource are demonstrable.
Using a tangible asset to develop an intangible asset changes a tangible asset into an intangible asset.

Which statement is correct regarding impairment of nonfinancial assets?

External resources of information indicating that an asset may be impaired include evidence of
obsolescence or physical damage of an asset.
Am impairment loss shall be recognized immediately in profit or loss, even if the asset is carried at
revalued amount.
All intangible assets shall be tested for impairment annually, irrespective of whether there is any
indication of impairment.
An entity shall disclose the amount of impairment losses recognize in profit or loss during the period and
the line item(s) of the statement of comprehensive income in which those impairment losses are
included.

724.1nvestment property includes.

Property occupied by an employee not paying rent.
Property occupied by an employee paying market rent.
Property occupied by an employee paying below market rent None of the above.

None of the above

 725. Which statement is incorrect regarding a non-current asse held for sale?
a. An entity shall classify a non-current asset as held for sale when the carrying amount of the
asset will be recovered principally through a sale transaction.
Non-current asset classified as held for sale shall not be depreciated.
Classification as asset held-for —sale will most likely result in an immediate charge to profit or loss for
property, plant and equipment using the revaluation model.

In the period in which the criteria are no longer met, any required adjustment to the carrying amount of a
non-current asset that ceases to be classified as held for sale shall be included in profit or loss from
discontinued operations.

726. Under PFRS 8, which is not a required reconciliation of segment information?

a. The total of the reportable segments' revenue to the entity's revenue.
b. The total of the reportable segments' profit or loss to the entity's profit or loss before tax
expense and discontinued operations.
c.The total number of major customers of all segments to the total number of major customers of
the entity.

d.The total of the reportable segments' assets to the entity's assets.

Which quantitative threshold is not a requirement in qualifying a reportable segment?

The segment revenue, both external and internal, is 10% or more of the combined external and internal
revenue of all operating segments.

The segments profit or loss is 10% or more of the greater between the combined profit of profitable
segments and combined loss of unprofitable segments.

The segment assets are 10% or more of the combined assets of all operating segments.

The segments assets are 20% or more of the combined assets of all operating segments.

Which of the following is not a required disclosure about operating segments?

The total of revenue from major external customers exceeding 50% of the entity's revenue.
The identity of a major customer that accounts for 20% of the entity's revenue.
Revenue from external customers attributable to the entity's country of domicile and attributed to all
foreign countries in total from which the entity derives revenue.
Revenue from external customers for each product and service.

Under PFRS 9, what is the principle for the recognition of a financial asset?

A financial asset is recognized when it is probable that the future economic benefits will flow to the
entity and the cost of the instrument can be measured reliably.
A financial asset is recognized when the entity obtains control of the instrument
 A financial asset is recognized when the entity obtains the risks and rewards of ownership of the
financial asset and has the ability to dispose the financial asset.

A financial asset is recognized when the entity becomes a party to the contractual provisions of the
instrument.

How does PFRS 9 distinguish between the measurement methods to be used

By reviewing the business model of each entity and the risk and rewards of the transactions
BY reviewing the business model of each entity and the contractual cash flow characteristics of the
instrument.
c. By reviewing the realizability and the contractual cash flow characteristics of the instrument.
d. BY reviewing the realizability of the instrument and risk and rewards of ownership

Unrealized gains and losses on trading investments are included in earnings because

The gain and losses measure the success or failure of taking advantage of shortterm price changes.

The BIR mandates the inclusion.

The SEC mandates the inclusion.

The gains and losses measure the carrying amount of the investments.

Under what circumstances can the profit or loss on an equity instrument carried at fair value be dealt
with in other comprehensive income?

When the equity investment is not held for trading.

When the profit or loss is capable of recycling.

When the equity investment is available for sale.

When the equity investment is held for trading.

What is the effect of an increase in fair value of equity investment on shareholders' equity?

Higher under FVOCI than FVPL

Lower under FVOCI than FVPL

The same under both FVOCI and FVPL

Not possible to identify given this information.

Under what circumstances can an entity classify financial assets that meet the amortized cost criteria as
at FVPL?

Where the instrument is held to maturity

 Where the business model approach is adopted

Where the financial asset passes the contractual cash flows characteristics test

If doing so eliminates or reduces an accounting mismatch

When can the classification of an instrument on initial recognition be changed?

a Reclassification is only permitted on the change of the contractual cash flows.
reclassifications is only permitted on the change of an entity's business model and expected to occur only
infrequently
Reclassification is only permitted where a category becomes tainted.
Reclassification is not permitted.

Which statement is incorrect about reclassification of financial asset?

When a debt investment at FVPL is reclassified to amortized cost, a new interest must be computed.
When a debt investment at FVOCI is reclassified to amortized cost, the cumulative gain or loss previously
recognized in OCI is included in profit or loss.
When a debt investment at FVOCI is reclassified to FVPL, the cumulative gain or loss previously
recognized in OCI is included in profit or loss.
When a debt investment at FVPL is reclassified to FVOCI, a new effective rate must be computed.

Which of the following statements regarding cash equivalents is correct?

A one-year Treasury note could not qualify as a cash equivalent.
All investments meeting the FASB Is criteria for cash equivalents must be reported as such.
The date a security is purchased determines its "original maturity" for cash equivalent classification
purposes.
Once established, management's policy for classifying items as cash equivalents cannot be changed.
Which of the following should be reported as a change in accounting estimate?
Change in the reported beginning inventory amount due to a discovery of a bookkeeping error
Change from the completed-contract method to the percentage-of- completion method for revenue
recognition on long-term construction contracts
Increase in the rate applied to net credit sales from 1 percent to 1-1/2 percent in determining losses
from uncollectible receivables
Change made to comply with a new FASB pronouncement

An active market is
The market in which transactions for the asset take place with sufficient regularity and volume.
The market that maximizes the amount that would be received to sell the asset
The same as principal market.
Not considered in determining fair value.

Which of the following describes a principal market for establishing fair value Of an asset?
The market that has the greatest volume and level of activity for the asset
b.Any broker or dealer market that buys or sells the asset.
c. The most observable market in which the price of the asset is minimized.
d. The market in which the amount received would be maximized.

741.Which of the following is an assumption used in fair value measurement?

The asset must be in-use
The asset must be considered in-exchange
The most conservative estimate must be used
The asset is in the highest and best use

Which of the following would be considered a Level 2 input for fair value measurement?
Quoted market price on a stock exchange for an identical asset.
Quoted market price available from a business broker for a similar asset.
Historical performance and return on the investment.
All of these would be considered Level 2 input for fair value measurement.

Valuation techniques for fair value that include the Black-Scholes formula, a binomial model or discounted
cash flows are examples of which valuation technique?
a.Income approach c. Cost approach
b. Market approach d. Residual value approach

Which measure of fair value uses prices from identical or comparable transactions?
a. Market approach c. Cost approach
b. Income approach d. Residual approach

Under PFRS 15, the revenue recognition is applied following

Four-step model c. Three-step model LFive-step model d. Any model

A performance obligation is
A promise to deliver a distinct good in a contract with a customer
A promise to deliver an indistinct good in a contract with a customer
The consideration to which an entity is expected to be entitled
An onerous contract

When shall an entity recognize revenue from contract with a customer?

When it is probable that future economic benefits will flow to the entity.
When or as the entity satisfies the performance obligation by transferring control
When the entity collected the consideration from the customer.
 When the entity and the customer signed the contract.

Revenue shall be recognized at point in time under all of the following, except

The customer has legal title to the asset

The customer has physical possession of the asset

The entity has not transferred the significant risks and reward of ownership

The entity has the right to receive payment for the asset

Which statement is true regarding cash equivalents?

Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for
investments or other purposes. b. An investment normally qualifies as a cash equivalent when it has a
short maturity of three months or less from the date of acquisition.

Investment with longer maturity at inception may be included in cash equivalents only if there is
strong evidence to show that they are in substance cash equivalents.
All of these statements are true regarding cash equivalents

The effect of a change in accounting policy that is inseparable from the effect of a change in accounting
estimate should be reported

In the period of change and future periods of the change affects both
By restating the financial statements of all prior periods presented

By showing the pro forma effects of retrospective application

As a correction of error

What specific account is not allowed by PAS 1 to be classified as current? a. Provisions

a. Provisions c. Deferred tax assets

b. Prepayments d. Cash and cash equivalents

For purposes of reporting in the statement of financial position, cash and receivables denominated in Euros
are translated using
Forward rate

Closing rate
c. Historical rate
d. Average spot rate
The following statements are based on PAS 34 (Interim Financial Reporting): Statement l: An interim financial
report is prepared on a consolidated basis if the entity's most recent annual financial statements were
consolidated statements
 Statement Il: If an entity publishes a complete set of financial statements in its interim
financial report, the form and content of those statements shall conform to the
requirements of PAS 1 for a complete set of financial statements statement Ill: An entity
shall apply different accounting policies in its interim financial statements and in its annual
financial statements.
Only statement I is true c. only statement Ill is false

Only statement Il is true d. Both statements are false

The following statements are based on P FRS 5 (Non-current Assets Held for Sale and Discontinued
Operations):
Statement l: An entity shall classify a non-current asset or disposal group as held for sale if its
carrying amount will be recovered from continuing use rather than from a sale transaction.
Statement Il: An entity shall measure a non-current asset or disposal group classified as held
for sale at the lower of its carrying amount and value in use.
Only statement I is false c. Both statements are true
Only statement Il is false d Both statements are false

Which of the following is not part of the minimum lease payments from the standpoint of the lessee?
The minimum rental payments called for by the lease.
Any guarantee the lessee is required to make at the end of the lease term regarding any
deficiency from the specified minimum.
c. Any estimated residual value at the end of the lease term.
d. Any payment the lessee must make at the end of the lease term to purchase the leased
property under a bargain purchase option.
756, The entity made an advanced rent payment for one year and recognized an expired rent
at the end of the accounting period. This transaction is an example of expense recognition
principle based on
a. Revenue realization
b. Immediate recognition
c. Cause and effect association
d. Systematic and rational allocation

757. Which of the following items is NOT included in computing the net realizable value of
accounts receivable?
a. Provision for bad debts
b. Provision for sales returns
c. Provision for sales discount
d. Provision for purchase returns
758. Sydney company has a loan due for repayment in six months, but it has the discretion
to refinance for repayment two years later, which Sydney exercised by
enteringinto a refinancing statements agreement were authorizedthat was signed for issue, after the In
balance which section sheet date of butthe before statement financial of financial position should this
loan be c. presented?

Current assets c. Current liabilities

Non-current assets d. Non-current liabilities
759.. The statement of financial position may include unrealized gains and losses from which type of
investment securities

a. Trading securities only

Available-for-sale securities only securities

Held-to-maturity securities only
Trading and Available-for-sale
760. The enhancing qualitative characteristics of financial information include

a. Relevance and comparability c. Understandability and timeliness

b. Verifiability and faithful representation d. relevance and verifiability

761. "Provisions" under PAS 37 are liabilities of

a. Certain timing or amount c. Certain timing but uncertain amount

b. Uncertain timing or amount d. Uncertain timing but certain amount

762. Which of the following statements concerning guaranteed residual value is appropriate for the
lessee?

a. The asset and related liability shall be increased by the absolute amount of the residual value.

B The asset and related liability shall be decreased bytheabsoluteamountofthe residual value

C. The asset and related liability shall be decreased by the present value of the residual value

d. The asset and related liability shall be increased by the present value of the residual value the meets

763. A significant operating segment for segment reporting purposes is one which meets any of the
three criteria to revenues, earnings and identifiable assets. Which of the following is the percentage
used to measure each of these criteria?

10% or more
20% or more
More than 10%
More than 20%
764. Which of the following cannot be shown as part of cash in the current asset section of the balance
sheet?

a. Customer’s check in payment of past due account

b. Unrestricted compensating balance for a loan

C. Cash in a special checking account for payroll

D. Cash deposited with a utility company

765. Under PAS 1, which of the following items is not included in the computation of profit or loss?

A. Unrealized fair value gain of available-for-sale securities

B. Investment income fromassociates under equity method

C. Unrealized fair value gain of biological assets

D. Post-tax gain on discontinued operations

766. An entity has 25% investment in ordinary share and 20% investmentinpreference share over the
investee. Which of the following is TRUE?

A. Both investments may be classified as Investment in Associate

B. Both investments may be classified as Investment at Fair value

C. The 20% may be classified as Investment at amortized cost and 25% may be classified as Investment
at fair value

D. The 25% interest may be classified as Investment at fair value and 20% may be classified as
Investment in Associate

767. The phrase “more likely than not” is also known under PFRS as

A. Remote c. Highly probable

B. Probable d. Reasonably possible

768. Total receivables will remain unchanged for which if the following?

A. Factoring of receivables c. Assignment of receivables

B. Note discounting without recourse d. Collection of trade account receivable

769.The most useful information to investors in predicting future cash flows is

a.Information about current cash flows

B. Current earnings based on accrual basis accounting

C. Information regarding the accounting policies and principles usedby management

D. Information regarding the results obtained by using a wide variety of accounting policies and
principles

770. Consistency is an important factor in comparability within a single entity. The consistency standard
of reporting requires that.

A. Some association cost should with specific

berecognizedrevenue.asexpensesonthebasisofapresumeddirect
B. Assets transfer whose should prices be retained or utility in the are
increasedbyexternaleventsotherthan until they are exchanged. Accounting
recordsattheirrecordedamounts

C. Historical intangible assets cost should and property, betheplant primaryand

equipment.basisusedinmeasuringinventory.

D. Changes be disclosed.in circumstances or in the nature of the underlyingtransactionsshould

771. The following is considered statements false? Relate to the standards of adequate disclosure.
Which statement

A. In complying with the standard of adequate disclosure, accountantsareguidedby the doctrine that
more information is always better than less.

B. Financial accounting information that meets the qualitative objectives of financial accounting also
meets the reporting standard of adequate disclosure.

c.Adequate disclosure is concerned not only with the kind of information contained in financial
statements but also with the manner in which that information is presented.

The disclosure standard calls for financial reporting of any financial facts significant enough to influence the
judgment of an informed reader of the statements.

772. The following statements relate to share options granted to employees in exchange for their
services. What statement is true?

The services received shall be measured at the fair value of the employees’Services.
II. Fair value shall be measured at the date the options vest.

I only c. Both I and II

Il only d. Neither I nor II
773.What is the basis in recording transactions in the journals?

Journal entry voucher c. Journal and analysis of obligations

Journal of checks issued d. Journal of bills rendered
774. Which constitutional provision is incorrect?

A. All money collected on any tax levied for a special purpose shall be treated as a general fund and paid
out for the special purpose only.

B. No money shall be paid out of the National Treasury except in pursuance of an appropriation made by
law.

c.Aspecialappropriation bill shall specify the purpose for which it is intended and shall be supported a by
corresponding funds actually revenue available proposal as certified therein.by the National
Treasurerortoberaised by

D No law shall be passed authorizing transfer of appropriations.

775.The President of the Philippines shall submit to Congress as a basis of the general appropriation bill
a budget of expenditures and sources of financing within how many days?

a.30 days from the opening of every regular session

B.30 days from the beginning of the fiscal year

C.60 days from the opening of every regular session

D. 60 days from the beginning of the fiscal year

776. Which statement is incorrect concerning budget preparation?

A. Budget preparation is done by the Congress of the Republic of the Philippines

B. The budget preparation begins with the issuance of a “budget call” issued by the Department of
Budget and Management.

C. Budget preparation covers estimation of government revenue, determination of budgetary priorities

and activities and the translation of approved priorities and activities into expenditure levels.

D. Zero base budgeting may be used in the budget preparation.

777. Which is true about the revaluation model for valuing plant, property and equipment?

A. Revaluation of asset must be made every two years

B. There is no rule for the frequency or date of revaluation

Revaluation of asset must be made on the same date each year

Revaluation of asset must be made on the last day of the fiscal year.
778.Budgetaccountabilitymeans any of the following, except

Periodic reporting by the government agencies of performance under the

b. approved Top management budget. Review of government activities and the fiscal and policy
Implication thereof.by

The carrying action out of the COA intent in assuring of Congress fidelity in of regard government to
theirofficials handlingand ofemployees receiptsand Expenditures
Establishments of obligational authority ceilings, and regulation of fund release and implementation of cash
payment schedule.

779. An entity is in the entertainment industry and organizes outdoor areas of the world. Europe, North
America, Australia and Japan.To the board of directors on the basis of each of the four regions. The the
profitability for each of the four regions. The concerts are two types: and classical music. What is the
appropriate basis for segment

A. The segments shall be reported by class of business, that is popular and music.

B. The segments shall be reported by region, so Australia and Japan combined.

The segment information shall be reported as North America and the world.
Segment information shall be reported for each of the four different
780.Under IFRS, an entity

A. Should evaluate every investment for impairment

B. Accounts for an impairment as an unrealized loss as a part of comprehensive income until realized

C. Calculates the impairment loss on debt investment as the difference the carrying amount plus
accrued interest and the expected future discounted at the investment historical effective interest rate

D. All of the choices are correct

781.The expected rate of return on the common stock of Northwest Corporationis14 percent. The
stock’s dividend is expected to grow at a constant rate of 8 percent a year The stock currently sells for
$50 a share. Which of the following statementsismost

A. The stock’s dividend yield is 8 percent.

B. The stock’s dividend yield is 7 percent.

C. The stock price is expected to be $54 a share in one year.

D. The stock price is expected to be $57 a share in one year.

782. A pension liability would result at the end of the year if the

A. Amount of employer contribution exceeds the pension expense

B. Fair value of the plan assets exceeds the projected benefit obligation

C. Projected benefit obligation exceeds the fair value of the plan assets.

D. Amount of pension expense exceeds the amount of employer contribution

783. Which of the following statements is most correct?

A. Assume that the required rate of return on a given stock is 13 percent. If the stock’s dividend is
growing at a constant rate of 5 percent, its expected dividend yield is 5 percent as well.

B. The dividend yield on a stock is equal to the expected return less the expected capital gain.

C. A stock’s dividend yield can never exceed the expected growth rate.

D. Statements b and c are correct.

784.Whichofthefollowingmay be optionally measured at Fair value in the Statement Of

FinancialPosition?

I. Held for Trading Securities

II. Property and Equipment

III. Biological Assets, current

IV. Non-current Assets HeldforSale

V. Intangible Assets

I and II only b. Il and V only c. 1, Il andIIIonly d. Il, IV and V only

785.Your bank account pays an 8 percent nominal rate of interest. The interest is compounded
quarterly. Which of the following statements is most correct ?

A. The periodic rate of interest is 8 percent and the effective rate of interest is greater than 8 percent.

B. The periodic rate of interest is 4 percent and the effective rate of interest is 8 percent.

C. The periodic rate of interest is 8 percent and the effective rate of interest is 8 percent.

DThe periodic rate of interest is 2 percent and the effective rate of interest is greater than 8 percent.

786. For a nonmonetary exchanged, the configuration of cash flows includes which of the following?

A. The entity-specific value of the asset

B. The estimated present value of the assets exchanged

c. The risks, timing and amount of loan cash and flows amount of the of assetloan

D The implicit, maturity date of loan and amount of loan.

787. Which of the following statements about prudence and conservatism is (are) true?

I. Conservatism is not a concept in the IASB Conceptual Framework

II. Prudence is the same as conservatism

III. Conservatism is intentional bias ---- downward bias in recognizing profits and assets and an upward
bias in recognizing expenses and liabilities

IV. Prudence is the inclusion of a degree of caution in the exercise of judgments needed in making the
estimates required under conditions of uncertainty.

I, Il and ill only

Il, Ill and IV only
I, Ill and IV only
I, II III and IV
788. One of the conditions that must be satisfied in order to recognize revenue in a transaction involving
the rendering of services is that the stage of completion of the transaction at the end of the reporting
completion of a contract involving the rendering of services are specifically referred to in PAS 18
Revenue, as acceptable?

I. Cost incurred to date as a percentage of the estimated total costs of the transaction

II. Advances received to date as a percentage of the total amount receivable

III. Surveys of work performed

IV. Revenue o date divided by total contract revenue

I and II
I and III
Il and III
Ill and IV

789.Are the following statements true or false, accounting to current PFRS’s?

(1) Biological assets should be shown in the statement of financial position either in current assets or
non-current assets or both.

(2) The number of shares authorized for issue should be shown in the statement of financial position or
the statement of changes in equity, or The notes.

Statement (1)Statement (2)

Statement (1) Statement (2)

Which of the following is

False flase c. True False

B False Ture d. True true
790. Which of the following is about intra-period tax allocation?

A. The purpose is to relate the income tax expense to the items which affect Income tax.

B. The purpose is to allocate income tax expense evenly over a number of accounting periods.

C. It is required for the cumulative effect of accounting changes but not for prior period adjustments.

D. It arises because certain revenue and expenses items appear in the income statement either before
or after they are included in the tax return.

791. An entity has entered into a contract with another entity which will supply a range of services the
payment for those services will be in cash and based upon the price of the entity’s ordinary shares on
completion of the contract. What type of share based payment transaction does this represent?

A. Asset-settled share-based payment transaction

B. Cash-settled share-based payments transaction

C. Equity-settled shared-based payments transaction

D. Liability-settled share-based payments transaction

792.Under a sales-type lease

A. The sale price includes the present value of the unguaranteed residual value.

B. The gross profit is the same whether the residual value is guaranteed or unguaranteed.

C. The present value of guaranteed residual value is deducted to determine the cost of goods sold.

D. None of these.
793. Analyzing days sales outstanding (DSO) and the aging schedule are two common methods for
monitoring receivables. However, they can provide erroneous signals to credit managers when

A. Customers’ payments patterns are changing.

B. Sales fluctuate seasonally.

C. Somecustomerstake the discount and others do not.

d. Sales are relatively constant, either seasonally or cyclically.

794 The deferred tax expensed is the

Increase in deferred tax asset plus the increase in deferred tax liability.
Increase in deferred tax asset minus the increase in deferred tax liability.
Increase in deferred tax liability minus the increase in deferred tax asset
Decrease in deferred tax asset minus the increase in deferred tax liability.
795. According to PAS 1 Presentation of financial statements, which of the following must be included in
an entity’s statement of financial position?

A. Cash and cash equivalents

B. Property, plant and equipment analyzed by class

C. Share capital and reserves analyzed by class

D. Deferred tax

A. A and B

B. A and D

C. B and C

DB and C

796.As a significant component of the notes to financial statements, the “accounting section” should
describe

A. Only the measurement basis used in preparing the financial statements.

B. Only the specific accounting policies followed by the enterprise.

C . Both the measurement bases and the accounting policies followed.

DThe nature enterprise’s operations and its principal activities.

797.Which is not include in service cost?

A. Current service cost

B. Interest cost

C. Pastservice cost.
D. Plan settlement gain or loss

798. A debt instrument who no ready market is changed for real property whose fair value is current
indeterminable. When such a transaction takes place.

A The present value of the debt instrument must be approximatedusingan imputed-interest rate.

The debt instrument should not be recorded on thebooksof eitherpartyuntil the fair value of the property
becomes evident.
The board of directors of the entity receiving the property should estimate a value for the property that will
serve as a basis for the transaction.
the accounting policy of standards-setting result in information bodiesthat is relevant reliable
d. The value directors to be assigned of both to entities the property.involved in the transaction should
negotiable a

799.Partofthenotesto financial statements are events after the reporting period whichpertain to those
events, both favourable and unfavourable that occur.

After the balance sheet date

After the issuance of the statements
C. Between the balance sheet date and the date when the financial statements are authorized for issue
d. After the balance sheet date but prior to issuance of financial statements

800.Which ofthe following cost should be excluded from research and development expensee?

A. Modification of the design of a product.

B. Cost of marketing research for a new product.

C. Acquisition of R&D equipment for use on a current project only.

D. Engineering activity required to advance the design of the product to the manufacturing stage.

801. There are call options on the common stock of XYZ Corporation.Whichofthefollowing best describes
the factors affecting the value of these call options?

A. The price of the call options is likely to rise if XYZ's stock price rises.

B. The higher the strike price on the call option, the higher the call option price.

C. Assuming the same strike price, a call option that expires in one month will sell for a higher price than
a call option that expires in three months.

D. All of the statements above are correct.

802. According to PAS18 Revenue, which of the following criteria must be satisfied before revenue from
the sale of goods should be recognized in profit or loss?

A. Ownership has been transferred to the buyer

B. The outcome of the transaction is certain

C. Revenue can be reliably measured

d. Managerial control over the goods sold has been relinquished

803. An entity is required is consider which of the followingindevelopingaccounting for exploration and
evaluation activities?

836. Under PFRS for SMEs the following are considered basic financial instruments except
a. Cash
b. Investment in convertible preference shares
c. accounting receivable
d. Investment in bonds
837. The computation of impairment loss on basic financial instruments of SMEs is (are) true?
(1) The impairment loss is the difference between the carrying amount and the best estimated
of the amount that would be received if the asset were sold
(2)The impairment future cash flows at market rate of interest for similar asset Statement
(2) false Statement (1) Statement (1) Statement (2) True
A. True, False
C. True True .
b. False True
d. false false
838. Which types of entities are required to apply PAS 30?
a. All entities
b. Banks, insurance companies and other financial institutions that are subject to prudential
supervision by regulators
c. Banks and similar financial institutions, one of whose principal activities is to take deposits
and borrow with the objective of lending and investing, and which are within the scope of
banking or similar legislation
d. Internationally active banks and similar financial institutions
839. What type of information does PAS 30 require to be disclosed about the concentration of
assets and liabilities?
a. Concentrations of credit risk
b. Concentrations of assets, liabilities, and off-balance sheet items
c. Concentration of liquidity risk of.
d. Concentrations of net foreign currency positions
840. Money loses purchasing power at such a rate that comparison accounting seating. This
financial accounting problem is addressed through
a. Fair value accounting 1711Theory of Accounts
b. Revolution of Property
C. Price-level accounting
d. Peso AccountinE
841. All of the following are classified as investment Property except
a. Land held for long term capital appreciation rather than for short-term sale in the ordinary
course of business
b. A building owned by the entity (or held by the entity under a finance lease) and leased out
under one or more operating lease
C. A building that is vacant but is held to be leased out under one or more operating lease
d. Property being constructed or developed on behalf of third parties
842. Which of the following is classified as investment property?
a. Owner-occupied property
b. Property that is being constructed or developed for future use as investment property
c. Property that is leased to another entity under a finance lease
d. A building owned by the entity and leased out under one or more operating leases
843. Millennium Corporation owns an office building where nine out of ten floors are leased out
to a third party an operating lease, while the 10 floor is occupied by Millenium as its head
office. What is the proper accounting treatment for this in Millenium's financial statements?
a. Nine floors are reported as Investment Property while the tenth floor as Property and
equipment
b. Nine floor are reported as Property and Equipment while the tenth tloor as Investment
Property
c. The entire building id reported as Investment Property
d. The entire building is reported as Property and Equipment owing
844, With respect to the computation of earnings per share, which ot the to would be most
indicative of a simple capital structure?
a. Common stock, preferred stock, and convertible securities outstan
b. Earning derived from one primary line of the business
C. Ownership interests consisting solely common stock
d. Equity represented materially by liquid assets
845. All of the following are included in short-term employee benetits exed.

a. Wages, salaries, social security contributions

b. Non-monetary benefits such as, medical care, housing, cars, subsidized goods for current
employees
c. Termination benefits and post-employment benefits
d. Profit sharing and bonuses payable, short-term compensated absences
846.Which one of the follOwing is not one of the six components of pension expense (or part of
it?)
a. Amortization of unrecognized gain or loss
b. Initial transition asset
c. Actual return on plan asset
d. Growth (interest cost) in person obligation since the beginning of the period
847. A deferred tax consequence attributable is computed using
a. The current tax laws, regardless of expected or enacted future tax laws.
b. Expected future tax laws, regardless of whether those expected laws have been enacted
C.Current tax laws, unless enacted future tax laws are different.
d. Either current or expected future tax lawS, regardless of whether those expected laws have
been enacted.
848. For interim financial reporting, an gain on expropriation of property OCcurring in the
second quarter should be
a. Recognized ratably over the last three quarters
b. Recognized ratably over all four quarters with the first quarter being restated
c. Recognized in the second quarter
d. Disclosed by footnote in the second quarter
849. Are the following statements about a cash-settled share-based payment transaction true
or false, according to PFRS2 Share-based payment? 1) The fair value of liability should be
remeasured at the end of each reporting period. 2) The fair value of the liability should be
remeasured at the date of settlement Statement (1) Statement (2)
a. False False
b. False True
c. True False
d. True True
850.In accordance with PFRS 2 Share-based payment, how, if at all, should an entity recognize
the change in the fair value of liability in respect of a cash-settled share-based payment
transaction?
a. Should not recognize in the financial statement but disclose in the notes there to
b. Should recognize in the statement of changes in equity
C. Should recognize in other comprehensive income
d. Should recognize in profit or loss
851. How would a stock split-effect each of the following? Asset Total stockholders' equity
Additional paid in capital
a. Increase Increase Increase
b. No effect No effect No effect
c. No effect No effect Increase
d. Decrease Decrease Decrease
852. The following relate to revaluation of plant assets and quasi-reorganization. Which
statement is false?
a. The difference between historical cost net book value and sound value is credited to
Revaluation Surplus
b. Under Philippine GAAP, quasi-reorganization, can be effected through revaluation of assets
C. After a quasi-reorganization, the balance of Retained Earnings will increase
d. Any remaining balance of revaluation surplus (or appraisal capital) in the ledge after wiping
out a deficit may be used to wipe out losses that may be incurred in the future
853. How should an equity issuing convertible debt allocate the proceeds?
a To the liability account only
b. Between the liability component and equity component on the basis of fair value
C.To the liability component equal to fair value of a similar liability without conversion feature
and the residual amount to the equity component
d. fo the equity component, an amount equal to its fair value and residual amount to the
liability component
854, Sagana Corp. declared and paid a liquidating dividend of P100,000. This distribution
resulted in a decrease in Sagana's Paid-in Capital Retained Earnings Paid-in capital Retained
Earnings
a. Yes No Yes
b. No
c. Yes Yes
d. No Yes
855. Allied Corporation declared a 10% stock dividend. The declaration
a. Would decrease both retained earnings and total stockholder's equity
b.Would decrease retained earnings but would have no effect on total stockholders' equity
c. Would have no effect on retained earnings but would decrease total stockholders equity
d. Would have no effect on retained earnings and total stockholders' equity
856. How would the declaration and subsequent issuance of a 30% stock dividend by the issuer
affect each of the following when the market value of the share exceeds the par value of the
stock? Retained Earnings Stockholders' Equity No effect No effect Common Stock Additional
paid-in capital
a. No effect No effect No effect
b. No effect Increase Decrease
c. Increase No effect Decrease Decrease
d. Increase No effect Decrease No effect
857. Which of the following should be amortized over the periods of the estimated benefit?
a. Patent registration cost for a successtully developed product for commercial sale.
b. Goodwill arising from the purchase of an existing business
c. Cost of incurred in organizing a corporation
d. Legal cost in successful defense ofa patent infringement suit.
858. What is the measurement basis of an asset that is acquired in nonmonetary exchange With
no commercial substance Carrying amount of asset given up Carrying amount of asset received
Fair value of asset received With commercial substance
a. Fair value of asset given up
b. Carrying amount of asset given up
c. Carrying amount of asset received
d. Fair value of asset given up Fair value of asset given upP
859. As generally used in accounting, what is depreciation?
a. It is a process of asset valuation for balance sheet purposes
B. It applies only to long-lived intangible assets
C. It is to indicate a decline in market value of long-lived asset
d. It is an accounting process which systematicaly allocates long-ived asset tosts accounting
periods st to
860. According to PAS 16, Property, plant and equipment includes all of the following except
a. Property used in production or supphly of goods and services
b. Property used for extraction of mineral, oil or natural gas
c. Biological assets related to agricultural activity and mineral rights
d. Property for rental purposes and administrative purposes
861. Which ONE of the following statements best describes 'residual value
a. The estimated net amount current obtained of the asset were at the end of its useful life
b. The present value of estimated future cash flows expected to arise from the continuing use
of the asset and from ultimate disposal
c. The amount at which the asset could be exchanged between knowledgeable, willing parties
in an arm's length transaction
d. The amount of cash or cash equivalents that could currently be obtained by selling the asset
in an orderly disposal
862. An investor uses the equity method of accounting for an investment in the common stock
of another company when the investment
a. Is composed of common stock and it is the investor's intent to vote the common stock
b. Ensure a source of supply such as raw material
c. Enable the investor to exercise significant influence over the investee
d. Is obtained by an exchange of stock for stock
863. According to PAS 28, which of the following will not fall under the situation or "existence
of significant influence by an investor in the financial and operating poiey decision of the
investee but not control of these decisions
a. Participation in policy making process
b. Material intercompany transaction
C, Power to govern the financial and operating policy decisions of an entep as to obtain benefits
from its activities
d. Technological dependency
864. The segment return on assets
a. Reflects the profitability of a segment.
b. Is difficult to calculate because companies with traded stock are not required to report
segment information.
C. Is calculated as segment average assets divided by segment operating income
d. Is calculated as segment sales divided by segment average assets.
865. Inventory estimates will be required for the following except
a. When interim financial statement are prepared
b.When inventory is destroyed by typhoon or lahar flow
c. As proof of reasonable accuracy of the physical inventory
d. In the determination of the ending inventory to be shown on the balance sheet at year end
866. Which of the following cannot be shown as part of cash in the current assets section of the
balance sheet?
a. Compensating balance not legally restricted Regular Payroll account Cash deposit with utility
company
b. Check paid by depositor in payment of past due account
c. Proceed received discounted at the prevailing interest rate for similar notes
867. LMN Company issued a note solely in exchange for cash.
Assuming that the items below differ in amount the present value of note at issuance is equal
to the
a. Proceeds received
b. Face amount
C. Proceeds received, discounted at the prevailing interest rate for similar notes
d. Face amount discount at the prevailing interest rate for similar notes
868. Adjustments of financial statements are required for those events after balance sheet date
which . Have a material effect on a user's evaluation of the information presented in the
financial statements
D. Occurred prior to issuance of financial statements
C. Are unusual and material
d. Provide additional information for determining the amounts relating to Conditions existing at
balance sheet date o9
869. Non-adjusting events after balance sheet date should be disclosed it
a. Non-disclosure would affect the amounts presented in the financial statements
b. Non disclosure would affect the ability of users of the financial statements to make proper
valuations and decisions
C. They relate to conditions existing at the balance sheet date
d. They are unusual and material
870. What is the purpose of information presented as notes to financial statements?
a. To provide disclosures required by generally accepted accounting principles
b. To correct improper presentation in the financial statements
c. To provide recognition of amounts not included in the totals of financial statements
d. To present managements responses to auditor comments
871. Disclosure in financial statements is not required for which of the following?
a. Use of property by lease between a present company and its subsidiary
b. Receipt of service by subsidiary from a principal without charge or without record of receipt
of service
C. Possibility of strike
d. Guarantees for indebtedness of others if the possibility of loss is remote
872. As a significant component of the notes to financial statements, the "accounting policies
section" should describe
a. Only the measurement basis used in preparing the financial statements
b. Only the specific accounting policies followed by the enterprise
c. Both the measurement bases and the accounting policies followed
d. The nature of the enterprise's operations and its principal activities
873. Part of the notes to financial statements are events after the reporting period which
pertain to those events, both favorable and unfavorable that occur
a. After balance sheet date
b. After issuance of the statements
C. Between the balance sheet date and date when the financial statement are authorized for
issue
d. After the balance sheet date but prior to issuance of financial statements
874. Which of the following statements about financial statements I incorrect?
a. They show the results of the stewardship of management of the resources entrusted to it by
the capital providers
b. They are the primary responsibility of both management and the external auditor after audit
c. They are prepared at least annualy and are directed to the common information needs of a
wide range of statement users
d. They provide information about the linancial position, pertormance and cash flows of an
enterprise that is useTui to a wide range of users in making economic decisions
875. Cj Company initially records prepayments in balance sheet accounts and make reversing
entries when appropriate. Which of the following year end adjusting entries should be
reversed?
a. The entry to record bad debs expenses for the period
b. The entry to record service fees earned by year end but not billed
c.The entry to record the portion of service fees received in advance that is earned by year end
d. The entry to record supplies used during the period
876. Which of the following statements is incorrect?
a. All of the accounts of a specific business enterprise are referred to as a ledger
b. Every adjusting entry affects both a balance sheet and an income statement
c. Transactions often overlap accounting period
d. The fact that an expense is recognized on the income statement indicates that an equivalent
outlay of cash has been made in the same period.
877. Which of the following statements about the bases of recognition of income and expense
is true?
a. Under cash basis accounting, only cash and property and equipment accounts recognized as
assets
D. In modified cash basis of accounting prepaid expenses and unearned income are recognized.
C. Accrual basis and modified cash basis of accounting for income and expenses will yield the
same amount of gross profits for the paid
d. Under accrual basis of accounting acrual and deferrals are recognized in adjusting entries
which are subsequently reversed in the immediately accounting period
878. Which of the following is not a principal purpose of trial balance?
a. it proves that debits and credits of equal amounts are in the ledger
b. It is the basis for any adjustments to the account balance
c. t supplies a listing of open accounts and their balance
d. it proves that debits and credits were properly entered in the ledger accounts
379.On January 1, 2015, Rolly Company purchased an equipment for P8, 000,000 The
equipment is depreciated using straight line method based on a useful life of 8 years with no
residual value. On January 1, 2018, after 3 years, the equipment was revalueu a a replacemnent
cost of 12,000,000 with no change in residual value. On June 30, 2018, the equipment was sold
for 10,000,000. What is the effect of the June 30, 2018 transaction to the retained earnings?
a. 5,750,000 increase
b. 5,000,000 increase
C. 2, 500,000 increase
d. 3,250,000 increase

880. Which of the following statements is most correct?

a. A firm acquiring another firm in a horizontal merger will not have its required rate of return
affected because the two firms will have similar betas.
b. Financial theory says that the choice of how to pay for a merger is really irrelevant because,
although it may affect the firm's capital structure, it will not affect the firm's overall required
rate of return. In most mergers, the benefits of synergy and the price premium the acquirer
pays over market price are summed and then divided equally between the shareholders of the
acquiring and target firms.
d. The primary rationale for any operating merger is synergy, but it is also possible that mergers
can include aspects of both operating and financial mergers.
881. Which of the following is unlikely to be used in fair value measurement of a biological
assets?
a. quoted price in a market
b. external independent valuation
c. the most recent market transaction price
d. the present value of the expected net cash flows from the assets
882. The entity has issued a range of share options to employees. In accordance with PFRS 2,
what type of share-based payment transaction does this represent?
a. Asset-settled share-based payment transaction
b. Equity-settled share-based payment transaction
c. Cash-settled share-based payment transaction
d. Liability-settled share-based payment transaction
883.Heavy use of off-balance sheet lease financing will tend to a
A. Make a company appear more risky than it actually is because its stated debt ratio will
appear higher,
B. make a company appear less risky than it actually is because its stated debt rate will appear
lower.
C. Affeta company's cash flows but not its degree of risk.
d. Have no efect on either cash flows or risk because the cash flows are alreauy reflected in the
income statement
884.Which of the following statements is most correct?
a. From the issuing corporation s perspective, preferred stock is more risky than bonds.
b. From the investor's perspective, preferred stock is less risky than bonds
C. If a preferred issue is cumulative this means that the issuing company is permitted to pay
dividends on its common stock even if it failed to pay the dividend on its preferred stock.
d. Most nonconvertible preferred stock is owned by corporations.
885. A 10-year convertible bond has a face value of P1,000 and pays an annual coupon of P5O.
The bond's conversion price is P40. The issuing company's stock currently trade P30 a share.
The company can issue straight (non-convertible) debt with an 8 percent yield. Which of the
following statements is most correct?
a. The bond's conversion value is currently P750.
b. The bond's straight-debt value is P750.
C. The bond's straight-debt value is P1,000.
d. The convertible bond should sell for less than P750. at
886. When an entity chooses the revaluation model as its accounting policy for measuring
property, plant and equipment, which of the following statements is correct?
a Revaluation of property, plant and equipment must be made at least every three years.
b. When an asset is revalued, the entire class of property, plant and equipment to which that
asset belongs must be revalued.
C. Increases in an asset's carrying value as a result of the first revaluation must be recognized as
a component of profit or loss.
d. When an asset is revalued, individual assets within a class of property, plant and equipment
to which that asset belongs can be revalued.
887. The lease analysis should compare the cost of leasing to the
a. Cost of owning using debt,
b. Cost of owning using equity
c. After-tax cost of debt to measure the effect of leasing on the cost of equity.
d. d.Cost of owning using the weighted average cost of capital for the firm.
888. Which of the following statements is most correct?
a. Financial leases are fully amortized,
b. Financial leases can be canceled.
C Financial leases provide for maintenance services
d. Operating leases can never be canceled.
889.A construction company signed a contract to build a theater over a period of 2 years, and
with this contract also signed a maintenance contract for 5 years. Both the cOntacts are
negotiated as a single package and are closely interelated to each other The two contracts
should be
a. Segmented and considered 2 separate contracts
b. Combined and treated as a single contract.
CTreated differently, the building contract under the completed contract method and
maintenance contract under the percentage of completion method.
d. Recognized under the completed contracted method.
890. Under NGAS, the standard residual value of depreciable assets is equal to
a. zero
b. 10% of cost
C. P1,000
d. P5, 000
891. XYZ Company has a probable loss that can only be reasonable estimated within a range of
outcome. No single amount within a range is a better estimate than any other amount. The loss
accrual should be
a. Zeroo
b. The maximum of the range
C. The midpoint of the range
d. The minimum of the range
892. The riskiness of the cash flows to the lessee, with the possible exception of residual value,
is about the same as the riskiness of the lessee's
a. Equity cash flows.
b. Capital budgeting project cash flows.
C. Debt cash flows.
d. Pension fund cash flows.
893. An investor who writes call options against stock held in his or her portfolio is said to be
Seling
a. In-the-money options.
b. Put options.
C. Naked options.
d. Covered options
894. In computing diluted earnings per share, the method of recognizing the use of the
proceeds that would be obtained upon the exercise of options and warrants is the
a. Treasury stock method
C. Common share conversion method
b. Diluted method
d. Potential common share method
895. Which is correct concerning actuarial gains and losses? Actuarial gains and losses comprise
of experience adjustments and the effects of changes in actuarial assumptions. Actuarial gains
and losses are recognized as an increase or decrease of benefit expense in full Actuarial gains
and losses may result from increases or decreases in either the present value of defined benefit
obligation or the fair value of any related plan assets. I. 1. I1.
a. 1 and Il only.
b. 1 and Il only.
C. II and Ill only.
d. 1, 1 and 11.
896. Which expenditures would never qualify as an exploration and evaluation asset?
a. Expenditures for acquisition of right to explore.
b. Expenditures for exploratory drilling.
C. Expenditures related to the development of mineral resources.
d. Expenditures for activities in relation to evaluating the technical feasibility and commercial
viability of extracting a mineral resources
897. When an entity breaches an undertaking under a long term loan agreement on or before
the balance sheet date with the effect that the liability becomes payable on dm and, the liability
is: Statement : Current, even if the lender agreed after the reporting period and before the
authorization of financial statements for issue not to demand payment. Statement li: Non-
current if the lender agreed by the end of the reporting period to provide a grace period for at
least 12 months after the balance sheet date within which the entity can rectify the breach.
a. True, True
b. True, False
C. False, True
d. False, False
898. Which of the following is not used in accounting for investment in associates and interest
in jointly controlled entities of SMEs?
a. cost model
b. equity method
C. fair value model
d. revaluation model
899, On January 1, 2018, Toto Construction Company changed to the percentage ot completion
for financial reporting but not for tax reporting. On December 31, 2017, the entity compiled
data showing that income under the cost recovery method aggregated P700,000. if the
percentage of completion had been used, the accumulated income through December 31, 2017
would have been P880,000. The income tax rate is 409% for all years. What should be reported
as a result of this accounting change?
a. An increase in the ending retained earnings of P180,000 in 2017.
b. A cumulative effect adjustment of P108,000 in the 2018 income statement
C. An increase in construction in progress for P180,000 in 2017 statement of financial position.
d. A decrease in beginning retained earnings for P108,000 in 2018
900. Which of the following statements is most correct?
a. An option's value is determined by its exercise value, which is the market priceof the stock
less its striking price. Thus, an option can't sell for more than its exercise value.
b. As stock price rises, the premium portion of an option on a stock increases because the
difference between the price of the stock and the fixed striking price increases
C.Issuing options provides companies with a low cost method of raising capital.
d. The market value of an option depends in part on the option's time to maturity and on the
variability of the underlying stock's price.
901. A commercial bank estimates that its net income suffers whenever interest rates increase.
The bank is looking to use derivatives to reduce its interest rate risk. Which of the following
strategies best protects the bank against rising interest rates?
a. Buying inverse floaters.
b. Entering into an interest rate swap where the bank receives a fixed payment stream, and in
return agrees to make payments that float with market interest rates.
c. Purchase principal only (PO) strips that decline in value whenever interest rates rise
d. Enter into a short hedge in which the bank agrees to sell interest rate futures.
902. Which of the following statements is most correct?
a. One advantage of forward contracts is that they are default free.
B. Futures contracts generally trade on an organized exchange and are market daily,
C. G00ds are never delivered under forward contracts but are almost d delivered under futures
contracts.
d. Statements a and c are correct
903. Warnes Motors stock 1S trading at P20 a share. Call options that expire in months with an
exercise price of P20 have a price of P1.50. Which of the following w ocCur if the stock price
increases 10 percent to P22 a share?
a. The price of the call option will increase by P2.
b. The price of the call option will increase by more than P2. The price of the call option will
increase by less than P2, and the percentage
C. increase in price will be less than 10 percent. The price of the call option will increase by less
than P2, but the percentage increase in price will be more than 10 percent.
d. The price of the call option will increase by less than P2 but the percentage increase I price
will be more than 10 percent.
904. An entity shall disclose in the summary of significant accounting policies:
a. the measurement basis (or bases) used in preparing financial statements
b. all the measurement bases specified in the PFRS for SMEs irrespective of whether they were
used by the entity in preparing its financial statements
c. the measurement basis (or bases) used in preparing the financial statements and the
accounting policies used that are relevant to an understanding of the financial statements
d. all of the measurement bases and the accounting policy choices available to the entity (i.e.
specified in the PFRS for SMEs) irrespective of whether they were used by the entity in
preparing its financial statements
905. E.G. Co. exchanged similar nonmonetary assets with Example Co. and no cash was
exchanged. The carrying amount of the asset surrendered by E.G. exceeded both the fair value
of the asset received and Example's carrying amount of that asset. E.G. should: (assume
exchange has commercial substance)
a. Recognize the difference between the carrying amount of the asset it surrendered and the
fair value of the asset it surrendered as a loss.
b. Recognize the difference between the carrying amount of the asset it surrendered and the
fair value of the asset it received as a gain.
C. Recognize the difference between the carrying amount of the asset it surrendered and the
carrying amount of the asset it received as a loss.
d. Recognize no gain or loss.
906. Which of the following statements is most correct?
a. 1f the underlying asset does not pay a dividend; it does not make sense to exercise a call
option prior to its expiration date
b. Call options generally sell at a price less than their exercise value
C. If a stock becomes riskier (more volatile), call options on the stock are likely to decline in
value,
d. Statements b and care correct,
907. Which of the following statements regarding factors that affect call option prices is
correct?
a. The longer the call option has to run the smaller its value and the smaller its premium.
b. An option on an extremely volatile stock is worth less than one on a one on a very stable
stock.
c. The price of a call option increases as the risk-free rate increases.
d. Statements a, b, and c are correct. for a
908.Which of the following should be expensed as incurred by the franchisee fe franchise with
an estimated useful life of twenty years? Amount paid to the franchisor for the franchise
b. Payment to a company, other than the franchisor, for that company's franchise
C. Legal fees to the franchisee's lawyers to obtain the franchise
d. Periodic payments to the franchisor based on the franchisee's revenue a
909. Which is not a characteristic of the "full cost" method of accounting in the oil and gas
industry?
a. All cost incurred in acquiring, exploring, and developing within a defined cost center are
capitalized and amortized.
b. Cos are capitalized even if a specific project in a cost center was a failure.
C. Cost of unsuccessful acquisition and exploration activities are charged to expense.
d. Exploration and evaluation asset is classified either as tangible asset or an intangible asset
according to the nature of the asset.
910. A riskless hedge can best be defined as
a. A situation in which aggregate risk can be reduced by derivatives transactions between two
parties.
b. A hedge in which an investor buys a stock and simultaneously sells a call option on that stock
and ends up with a riskless position.
C. Standardized contracts that are traded on exchanges and are "marked to Market daily, but
where physical delivery of the underlying asset is virtually never taken.
d. wo parties agree to exchange obligations to make specified payment streams
911. Which of the following statements concerning commercial paper IS income
a. Commercial paper is generally written for terms less than 270 days.
B. Commercial paper generally carries an interest rate below the prime rate
C. Commercial paper is sold to money market mutual funds, as well as to on financial
institutions and nonfinancial corporations.
d. Commercial paper can be issued by virtually any firm so long as it is willing to pay the going
interest rate
912. Firms generally choose to finance temporary assets with short-term debt because
a. Matching the maturities of assets and liabilities reduces risk
b. Short-term interest rates have traditionally been more stable than long-term interest rates.
c. A firm that borrows heavily long-term is more apt to be unable to repay the debt than a firm
that borrows heavily short-term.
d. Sales remain constant over the year, and financing requirements also remain
913. Which of the following statements is most correct?
a. One advantage of stock repurchases is that they are generally taxed more favorably than
dividend payments.
b. One advantage of dividend reinvestment plans is that they enable investors to avoid paying
taxes on the dividends they receive.
C. Stock repurchases make sense if a company is interested in increasing its equity ratio.
d. Stock repurchases make sense if a company believes that its stock is overvalued and that it
has a lot of profitable projects to fund over the next year.
914. The factors considered in determining the useful life of an asset include all of the
following, except
a. Expected usage of an asset
b. Expected physical wear and tear
C. Technical or commercial obsolescence
d. Residual value

915. Which of the following actions will enable a company to raise additional equity capital
(that is, which of the following will raise the total book value of equity)?
a. The establishment of a new-stock dividend reinvestment plan.
b. The establishment of an open-market purchase dividend reinvestment plan.
C. A stock repurchase.
d. Statements a and d are correct.

916. A scheme developed to encourage participating companies reduce emission of

Greenhouse gases to specified levels.
a. Cap and Trade Scheme
b. Carbon Emission Scheme
C. Environmental Accounting
d. Greenhouse Effect Accounting

917. Which of the following is not a valid condition that will exempt an entity from preparing
consolidated financial statemets.
a. The ultimate parent entity produces consolidated financial statements available for public use that
comply with PFRS.
b. The parent entitys debt or equity capital is not traded on the stock exchange.
c. the parent entity is in the process of filing its financial statement with a securities commission.
d. the parent entity is a wholly owned subsidiary if another entity.
918. The cost of an item of property, plant, and equipment that is acquired through the issuance of
capital stock or bonds payable is measured at
a. The fair value of the property received
b. The fair value of the capital stock or bonds payable issued
c.Par value of capital stock or face value of bonds payable issued
d. Cost of the asset to its owner
919. Which of the following statements is correct?
a. An asset that is sold for less than book value at the end of a project's life will generate a loss for the
firm and will cause an actual cash outflow attributable to the project
b. Only incremental cash flows are relevant in project analysis and the proper incremental cash flows
are the reported accounting profits because they form the true basis for investor and managerial
decisions.
C. It is unrealistic to expect that increases in net operating working capital required at the start of an
expansion project are simply recovered at the project's completion. Thus, these cash flows are included
only at the start of a project
d. Equipment sold for more than its book value at the end of a project's life will increase income and,
despite increasing taxes, will generate a greater cash flow than if the same asset is sold at book value.
920. What factor must be present to use the units of production method of depreciation?
a. Obsolescence is expected
b. Total units to be produced can be estimated
C Production is constant over the life of the asset
d. Repair costs increase with use
921. Spontaneously generated funds are best defined as:
a. The amount of assets required per peso of sales.
B A forecasting approach in which the forecasted percentage of sales for each item is held constant
C. Funds that a firm must raise externally through borrowing or by selling new common or preferred
stock.
d. Funds that are obtained automatically from routine business transactions.
922. It is defined as property held for use in the production or supply of goods or services or for
administrative purposes; or sale in the ordinary course of business.

Business property
b. Investment property.
C. Owner-occupied property
d. Rental property
923 Which of the following statements is most correct?
One of the key steps in the development of pro forma financial statements is to identify those assets and
liabilities that increase spontaneously with net income.
The first, and most critical, step in constructing a set of pro forma financial statements is establishing the
sales forecast
. cPro forma financial statements as discussed in the text are used primarily to assess a firm's historical
performance.
d. The capital intensity ratio reflects how rapidly a firm turns over its assets and is the reciprocal of the fixed
assets turnover ratio.
924. How should an entity recognize the change in the fair value of the liability in respect of a cash-
settled share-based payment transaction?
a. Should not recognize in the financial statements but disclose in the notes
b. Should recognize in the statement of changes in equity
C. Should recognize in other comprehensive income
d. Should recognize in profit or loss
925. Which of the following methods is used in PFRS to account for defined benefit pension plans?
a. accumulated benefits method
b. benefit-years-of-service method
c. projected-unit-credit method
d. vested years of service method
926. The overall principles of statement presentation include all of the following, except
A. Financial statements should be prepared on a going concern basis unless management either intends
to liquidate the enterprise or to cease trading has no realistic alternative but to do so
b. Each material item should be presented separately in the financial statement and immaterial amounts
should be aggregated with amounts of a similar or function
C. An enterprise should prepare its financial statements, including for cash flow information, under the
accrual basis accounting
D. Inappropriate accounting policies are not rectified either by disclosure of the accounting policies used
or by notes or explanatory material
926. Which of the following components of other comprehensive income should not be recycled to
profit or loss?
i. Changes in revaluation surplus.
Ii Changes in the fair value of "AFS" financial assets.
Iii Actuarial gains and losses on defined benefit plans.
Iv Gains and losses arising from translating the financial statements of foreign operations.
a. I and II only. b. I and iii only. C I,ll and Ill only. d. ii, il, lll and IV only.
927. An entity purchase a building and the seller accepts payments partly in equity shares and partly in
debentures of the entity. This transaction should be treated in the cash flow statement as follows:
a. This does not belong in a cash flow statement and should be disclosed only in the notes to the
financial statements.
b. The purchase of the building should be investing cash outflow and the issuance of shares and the
debentures financing cash outflows.
ignore the transaction totally since it is a non-cash transaction. No mention is required in either the cash flow
statement or in the notes to the financial statements
The purchase of the building should be investing cash outflow and the issuance of debentures financing cash
outflows while the issuance of shares investing cash outflow.
928. Provisions shall be recognized for all of the following except:
a, rectification costs relating to defective products already sold.
b. cleaning up costs of contaminated land when an oil entity has a published policy that it will undertake
to clean up all contamination that it causes.
C. future refurbishment costs due to introduction of a new computer system.
D. restructuring costs after a binding sale agreement has been signed
929. In 2014, after an entity's 2013 financial statements were approved for issue, the entity discovered
an error in the calculation of depreciation expense. The error occurred during 2012. The entity presents
comparative figures among several years. The effect of the correction in the entitys financial statements
will be recognized.
a. in the entitys profit or loss for the year ended December 31, 2013
b. in the entitys profit or loss for the year ended December 31, 2014.
c. Outside of total comprehensive income, in the statement of changes in equity as an adjustment to
retained earnings at January 1, 2013.
d. Outside of total comprehensive income, in the statement of changes in equity as an adjustment to
retained earnings at January 1, 2014.
930. Which statement is iincorrect concerning the treatment of residual value of the leased asset in the
sales type lease?
a. The unearned finance income will be identical whether the residual value is guaranteed or
unguaranteed.
b. The gross profit will be the same whether the residual value is guaranteed or unguaranteed.
c. The sales price includes the present value of the unguaranteed residual value.
D. The present value of the unguaranteed residual value is deducted to determine the cost of sales.
931. To be highly effective, the actual results of the hedge must be within a range of
a. 80% - 100%
b. 80% - 125%
C 100% - 125%
d. 100% - 150%
932. How is the compensation expense measured for equity settled share-based payments?
a. Use the normal hourly rate of the employees.
b. Measure the fair value of share options using an option pricing model.
c. Measure the difference between the market price and the fair value of the share options.
d. Measure the intrinsic value of share options as the difference between market price and exercise
price at measurement date.
933. Under IFRIC 17, an entity shall measure a noncurrent asset classified as held for distribution to
owners at
a. carrying amount
b. fair value less cost to distribute
c. lower between choices (A) and (B)
d. higher between choices (A) and (B)
934. in arriving at the gross profit during the first year using the percentage completion method of
accounting for a long term construction contract, the estimated total gross profit from the contract is
multiplied by
a. The percentage of the cost incurred during the year to the total contract price
b. The percentage of the cost incurred during the year to the total estimated cost
c.The percentage of the cost incurred during the year to the total cost incurred to date.
d. The percentage of the cost incurred during the year to the unbilled portion of the total contract price.
935. The milestone method of revenue recognition provides that if substantive milestone is achieved,
what amount of revenue is recognized?
a. Revenue is recognized up to the amount of cash collected
b. A prorate revenue based upon the percentage delivered to date
c. Contingent revenue is recognized in its entirety.
d. A percentage of total revenue based on the separate units delivered.
936. On the disposal of a foreign operation, the cumulative amount of the exchange differences
deferred in the separate component of equity relating to that foreign operation shall be recognized
a. as additional paid in capital.
b. as an adjustment to the beginning balance of retained earnings.
C. in profit or loss when the gain or loss on disposal is recognized.
d. separately as income or loss from discontinuing operations.
937. Units of currency held and assets and liabilities to be received or paid in a fixed or determinable
number of units of currency are
a. Financial assets and liabilities
b. Monetary items
c. Nonmonetary items
d. Functional currency
938. A parent need not present consolidated financial statements in certain instances. Which of the
following is not one of those instances?
a. The parent is itself a wholly-owned subsidiary, or is a partially-owned subsidiary of another entity and
its owners, including those not otherwise entitled to vote, have been informed about, and do not object
to the parent not presenting consolidated financial statements.
b. the presents debt or equity instruments are traded in a public market.
c The parent did not file, nor is it in the process of filing, its financial statements securities commission or
other regulatory organization for the purpose any class of instruments in a public market
D. the ultimate or any intermediate parent produces consolidated financial statements available for
public use that comply with Philippine Financial Reporting Standard
939. The existence of significant influence is not evidenced by
a. Participation in the on in the policy making process, including participation in decisions about
dividends or other distributions.
B. Presetation in the board of directors or equivalent governing body of the investee.
C. Power to cast the majority of votes at meetings of the board of directors or equivalent governing
body.
d. Provision of essential technical information.
940. Which of the following events after the balance sheet would generally result in to 940. Which one
an adjustment rather than disclosure?
a. Announcing a plan to discontinue an operation, disposing of assets or setting liabilities attributable to
a discontinued operation or entering into binding agreements to sell such assets or settle such liabilities.
b. The destruction of a major production plant by fire after the balance sheet date.
C. Abnormally large changes after the balance sheet date in asset prices or foreign exchange rates.
d. Determination after the balance sheet date of the cost of assets purchased, or the proceeds from
assets sold, before the balance sheet date.
941. Which of the following is one of the conditions that must exist for an entity to recognize revenue on
separate units under a multiple deliverable arrangement?
a. The delivered item has value on a standard alone basis and can be sold separately.
b. The delivered item is not returnable.
C. Collection has occurred for all of the separate units.
d.The separate units must be delivered within 90 days of the end of the accounting period.
942. Which of the following would be considered a Level 2 for fair value measurement?
a. Quoted market price on a stock exchange for an identical asset
b. historical performance and return on the investment.
c. Quoted market price available from a business broker for a similar asset.
d. all of these would be considered level 2 input for fair value measurement
943. When an investment in joint venture is held by a venture capital onani mutual trust fund, unit trust
and Insurance.linked fund
a. The entity must apply the equity method of accounting
b. The entity must apply the fair value method of accounting.
c.The entity may elect to measure the investment in joint venture at the fair through profit or loss.
d. The entity may elect to measure the investment in joint venture at fair value through other
comprehensive income.
944. If the payment of employees' compensation for future absences is probable the amount can be
reasonably estimated and the obligation relates to rights that accumulate, the compensation should be
a. accrued it attributable to employees' services not rendered.
b. accrued if attributable to employees' services already rendered.
c. accrued if attributable to employees' services whether rendered or not.
d. recognized only when paid.
945. Which of the following is not considered a research and development activity?
a. Laboratory research aimed at discovery of new knowledge.
b. Design, construction and operation of pilot plant.
C. Engineering follow-through in an early phase of commercial production.
d. Conceptual formulation and design of possible product or process.
946. When a debt security is transferred from IBODI (held to maturity) to available for sale, any
unrealized gain or loss at the date of transfer shall be
a. included in retained earnings.
b. reported as a component of stockholders' equity.
c. included in earnings.
d. reported as a component of stockholders' equity and subsequently amortized through interest
income over the remaining life of the debt security using the effective interest method of amortization.
947. How would you describe a fixed cost?
a. It may change in total where such change is unrelated to changes in production
b. It may change in total where such change is related to changes in production.
c. It is constant per unit change in production.
d. It may change in total where such change depends on production within the relevant range.
948 The valuation of inventories on a prime cost basis.
a. would achieve the same result as direct costing
b. would exclude all overhead from reported inventory cost
c. is always achieved when standard costing is adopted
d. is always achieved when the fifo flow assumption is adopted.
949 Deferred tax assets appearing in the balance sheet shall be reduced by a valuation allowance if its is
a. Probable that some portion will be realized.
b. Reasonably possible that some portion will not be realized.
C More likely than not that some portion will not be realized.
d. Likely that some portion will not be realized.
950. Which of the following is not a category of financial assets defined in PAS 39?
a. Available-for-sale financial assets
b. Financial assets at fair value through profit or loss
C. Loans and receivables
d. Held-for-sale investments
951. All of the following statements regarding derivatives are correct, except
a. The derivatives should be recognized as assets and liabilities.
b. The derivatives should be reported at fair values.
C. Gains and losses resulting from speculation should be deferred.
d. Gains and losses resulting from fair value hedge are reported immediately.
952. Under PFRS 9, "Financial instruments", what is the principle for recognition of a financial asset?
a. A financial asset is recognized when it is probable the future economic benefits will flow to the entity
and the cost of the instruments can be measured reliability
b. A financial asset is recognized when the entity obtains control of the instrument.
C. A financial asset is recognized when the entity obtain the risk and rewards of ownerships of the
financial asset and has the ability to dispose the financial asset.
d. A financial asset is recognized when the entity becomes a party to contractual provisions of the
instrument.
953. Depreciation of an asset begins when it is available use for location and condition necessary for it to
be capable of operating in intended by management. Depreciation of an asset ceases when
a. the asset becomes idle.
b. the asset is retired from active use and held for disposal.
c. the asset is derecognized.
d. the asset incurs major repairs and maintenance during the year.
954. The depreciable amount of an asset is the
a. the amount of cash and cash equivalent paid or the fair value of the other consideration given to
acquire an asset at the time of its acquisition construction.
b. is the cost of an asset, or other amount substituted for cost, less its residual value.
c is the amount at which an asset is recognized after deducting any accumulated depreciation and
accumulated impairment losses.
d. amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's
length transaction.
955. Which statement is incorrect concerning the situations that would lead to a lease being classified as
a finance lease?
a. The lease transfers ownership of the asset to the lessee by the end of the lease term.
b. The lessee has the option to purchase the asset at a price that is sufficiently lower than the fair value
at the date of the inception of the lease.
C.The lease term is for the major part of the economic life of the asset even if the title is not transferred.
d. At the inception of the lease, the present value of the minimum lease payments amounts to at least
substantially all of the fair value of the leased asset.
956. Which of the following is a characteristic of a change in accounting estimate?
a. It usually need not be disclosed.
b. It does not affect the financial statements of prior periods.
c. It should be reported through the restatement of financial statements.
d. It will affect all periods following the period of change.
957. Under PRFS 6, "Exploration and evaluation of mineral resources", an entity is required to consider
which of the following in developing accounting policy for the recognition of exploration and evaluation
asset?
a. The requirements and guidance in PFRS dealing with similar and related issues.
b. the definitions, recognition criteria, and measurement concepts for assets, liablities, income and
expenses in the Conceptual Framework.
C. Recent pronouncement of standards-setting bodies.
d. Whether the accounting policy results in information that is relevant and reliable.
958 which of the following has been outflowed in relation to insurance contracts?
Shadow accounting
Catastrophe provisions
A test for the adequacy of recognized insurance liabilities.
An impairment test for reinsurance assets.
959. The following statements relate to cash. Which statement is false?
A. Cash equivalents are short-term highly liquid investments that are readily to cash and so near their
maturity that they represent insignificant risk of changes in value because of changes in interest rates.
B. Redeemable preferred share may qualify as a cash equivalent if purchased three months before the
specified redemption date.
C. Legally restricted compensating balances are excluded from cash but are presented as current assets
if the related loan is less than one year
D. A six-month BSP treasury bill with remaining maturity of three months on balance sheet date may be
classified as cash equivalent provided this is disclosed.
60 Which of the following would not contribute to negative goodwill?
Errors in measuring the fair value of the acquiree's net identifiable assets
b. A bargain purchase.
A requirement to measure net assets acquired at a value other than fair value.
d. Making acquisitions at the top of a "bull" market for shares.
961. The deferred tax consequence attributable to a deduction temporary difference and operating loss
carry-forward is known as a deferred
a. Tax expense
b. Tax asset
C. Tax benefitd
D. Tax liability
sh discounts permitted on purchased raw materials should be
added to other income, whether taken or not
added to other income, only if taken
deducted from inventory, whether taken or not
deducted from inventory, only if taken
963. It is a contractual agreement whereby two or more parties undertake an economic activity which is
subject to joint control,
a. Jointly controlled operation
b. Joint venture
c. Partnership
d. Joint undertaking
964. Which of the following falls within the definition of "related parties" as defined by PAS 24?
a. government department and agencies
. b. a supplier with whom eth reporting entity has a one-year contract for the supply of raw materials.
c. providers of finance in the course of their normal dealings with an enterprise by virtue only of those
dealings.
d. the wife of a key management personnel who has the authority to plan, direct and control the
activities of the reporting enterprise.
965. Under PAS 24, all of the following are not necessarily considered related parties of the reporting
entity, except
a. post-employment benefit plans.
b. providers of finance.
C. public utilities.
d. trade unions.
966. Which of the following situations will require disclosures as a related party?
a. In consolidated financial statements in respect to intra-group transactions.
b. In parent separate financial statements when they are made available to published with the
consolidated financial statements.
C. In the financial statements of state-controlled enterprise of transactions with other state-controlled
enterprises.
d. In related party relationships where control exists, irrespective of whether there have been
transactions between related parties.
967. Part of the notes to financial statements are events after the reporting period which pertain to
those events both favorable and unfavorable that occur.
a. After balance sheet date.
b. After issuance of the statements
. C. After the balance sheet date prior to issuance of financial statements.
d. Between the balance sheet date and the date when the financial statements are authorized for issue.
968. Adjustment of financial statements are required for those events after balance sheet date which
a. Are unusual and material.
B. Occurred prior to issuance of the financial statements,
C. Have a material effect or a user's evaluation of the information presentation in the financial
statements
D. Provide additional information for determining amounts relating to conditions existing in the balance
sheet date.
969. Type 1 event that provide evidence of conditons existing at the balance sheet data are given the
following treatment.
a. adjusting in the cash flow statements
b. recognition in the financial statements
c. disclosures in the notes to the financial statements.
D. ratification by shareholders at an annual meeting.
970. Which is usually considered as a type 1 events (i.e., adjustin event) under PAS 10?
a. a decline fair value of investment
b. Abnormally large change in asset prices or foreign exchange rate.
c. Receipts of information indicating that an asset was impaired at the end of reporting period.
d. Enactment of tax laws that significantly affect current and deferred tax assets and liability.
971. Under PAS 10, which of the following is classified as an adjusting event rather than non-adjusting
event?
A. The entity announced the discontinuance of its assembly operation
b. The entity entered into an agreement to purchase the freehold of its currently
leased office building.
c. Destruction of major production plant by fire.
d. A mistake was discovered in the calculation of the allowance for uncollectible trade receivables
resulting to an understatement of the trade receivables.
972. Type ll events that are indicative of conditions that arose after the balance sheet date are given the
following treatment
a. Recognition in the balance sheet.
b. Recognition in the income statement.
c Recognition in the cash flow statement.
d. Note disclosure in the financial statements.
973. Which measures requires the use oof future salaries in the computation of pension obligation?
a Accumulated benefit obligation
b. Defined benefit obligation
c. Restructured benefit obligation
d. Vested benefit obligation
974. The interest on the defined benefit obligation component of pension expense
A. s the same as the expected return on plan assets
b. May be stated implicitly or explicitly when reported.
c Reflects the incremental borrowing rate of the employer
d. Reflects the rate at which pension benefits could be effectively settled
975. Which of the following is taken into account when determining the discount rate?
a. Investment or actuarial risk
b. Specific risk associated with the entity's business
c. Risk that future experiences may differ from actuarial assumptions
d. Market yields at the end of reporting period on high quality corporate bonds.
976. The computation of pension expense includes all the following except
a. Past service cost
b. Interest income on plan assets
C Interest on projected benefit obligation
d. Current service cost component measured using current salary levels
977. Under PAS33 the weighted average number of shares outstanding for all periods shall be adjusted
for
a. Any prior period error
b. Any issue of shares for cash
c. Any convertible instruments settled in cash
d. Any change in the number of ordinary shares without change in resources
978. In computing weighted average shares outstanding when a stock dividend or share split occurs the
additional shares are
a. Weighted by the number of days outstanding
b. Weighted by the number of months outstanding
c. Considered outstanding at the beginning of the year
d. Considered outstanding at the beginning of the earliest year reported
979. An ordinary nonvoting share which is entitled to a fixed dividend should
a. Not be included in EPS calculation
b. Be included in the calculation of diluted EPS
c. Be included in EPS calculation after adjustment of the fixed dividend
d. Be included in EPS calculation without adjustment of the fixed dividend
980. When computing diluted EPS convertible bonds are
a. Ignored
b. Assumed converted if anti-diluted
C. Assumed converted if dilutive
d. Assumed converted whether dilutive or ant dilutive
981. When there are two dilutive convertible securities the one that should be used first to recalculate
earnings per share is the security with the
a Greater earnings adjustment
b. Smaller eamings adjustment
C Greater earnings per share adjustment
D. Smaller earnings per share adjustment.
982. Under PAS33 contingent ordinary shares are treated as outstanding and included in the
computation if the condition is satisfied for
a. Both basis and diluted EPS from date of agreement
b. Both basis and diluted EPS from the beginning of the year,
c. Both basic and diluted EPS from the date of the condition is satisfied
d. Basic EPS from the date the condition is satisfied and for diluted EPS from beginning of year date of
agreement if later.
983. Which of the following impairment losses should never be reversed?
a. Loss on goodwill
b. Loss on business segment
C. Loss on inventory
d. Loss on property plant and equipment
984. All of the following are true with regard to impairment testing of long-lived assets; except
a. If impairment indicators are present the entity must conduct an impairment test.
b. If the recoverable amount is lower than the carrying amount an impairment loss is reported
c. The impairment test compares the carrying amount with the lower of fair value less cost of disposal
and value in use,
d. If either the fair value less cost of disposal or the value in use is higher than the carrying amount, no
impairment loss is recorded
985. Under PAS36 which of the following statements is incorrect with impairment?
A. If impairment Indicators are present, the entity must conduct an impairment test.
B. If the recoverable amount is lower than carrying amount, an impairment is recognized
C. If recoverable amount is higher than carrying amount, no impairment loss is recognized
d. The impairment test compares the carrying amount with the lower of fair value less cost of disposal
and value in use.
986. Which of the following statements in relation to recovery of impairment for an intangible asset is
not true?
a. No recovery of impairment is allow for goodwill.
b. The recovery of impairment is reported as other income.
C. The amount of recovery is limited to the carrying amount of the asset that would have been reported
had no impairment occurred.
d. After a recovery of impairment has been recognized, the carrying amount of the asset reported
would be higher between fair value less cost of disposal and value in use.
987. An entity has determined that the fair value of a cash generating unit exceeds carrying amount.
which of the following statements is correct concerning this test of impairment?
a. Goodwill should be written down as impaired.
b. Goodwill should be retested at the entity level.
c. Impairment is not indicated and no additional analysis is necessary.
d. The assets and liabilities should be valued to determine if there has been an impairment of goodwill.
988. Which of the following is not a financial instrument?
a. Convertible bond.
b. Foreign currency contract.
c. Loan receivable.
d. Warranty provision.
989. Which of the following research and development related costs should be capitalized and
depreciated over current and future periods?
a. Inventory used for a specific research period.
b. Administrative salaries allocated to research and development.
c. Research findings purchased to aid a particular research project current in process.
d. Research and development general laboratory building which can be put to alternative use in future.
990. Which of the following costs should not be capitalized?
a. Costs incurred to file for patent.
b. costs of testing prototype before economic feasibility have been demonstrated
c. Engineering costs incurred to advance the project to the full production stage
d. Acquisition cost of equipment to be used on current and future research projects.
991Start-up cost including legal fees incurred to organize a new entity should be.
a. Expensed incurred.
b. Capitalized and never amortized.
C. Capitalized and amortized over 5 years.
d. Capitalized and amortized over 40 years.
992. Operating losses incurred during the start-up years of a new business should be
a. Written off directly against retain earnings
b. Capitalized as a deferred charge and amortized over five years.
C Accounted for and reported like the operating losses of any other business.
d. Capitalized as an intangible asset and amortized over a period not to exceed 20 years.
993. Under PAS20 a government grant should be recognized when
a. The entity has complied with all the conditions attaching to the grant.
b. The entity has complied with all the conditions attaching to the grant and the grant will be received
c. Three is reasonable assurance that the entity will comply with the conditions attaching to the
government grant.
d. There is reasonable assurance that the entity will comply with the conditions attaching to the grant
and the grant will be received.
994. Which of the following is true regarding the income approach for government grant?
a. Depreciation is higher if the grant is an adjustment of the asset
B. Depreciation is higher and net income lower if the grant is an adjustment to the asset.
C. Depreciation is higher and if the grant is a deferred revenue and net income is not affected
D. Depreciation is higher and net income is lower if the grant is recorded as deferred revenue
995 Under PFRS 3 which of the following would not contribute to negative goodwill?
A bargain purchases
b. Making acquisition at the top of a "bull" market for shares
c. Errors in measuring the fair value of the acquiree's net identifiable assets
d. A requirement to measures net assets acquired at a value other than fair value
996. In a business combination what is the accounting treatment if an acquirer's interest in the fair value
of the net assets acquired exceeds the consideration transferred?
a. Recognized the excess immediately in profit or loss
b. Recognize the excess immediately in other comprehensive income
c. Reassess the recognition and measurement of the net assets acquired and the consideration
transferred and then recognize the excess immediately in profit or loss.
d. Reassess the recognition and measurement of the net assets acquired and the consideration
transferred and then recognize the excess immediately in other comprehensive income.
997. Which costs should be included in the consideration transferred in a combination?
a Fees paid to accountants.
b. Cost of maintaining an acquisition department
c. Both cost of maintaining an acquisition department and fees paid to accountants
d. Neither cost of maintaining an acquisition department nor feeds paid to accountants
998. During the current year, an entity acquired another entity in a transaction properly accounted for
as a business acquisition. At the time of the acquisition, some of the information for valuing assets was
incomplete. How should the acquirer account for the incomplete information in preparing the financial
statements immediately after the acquisition?
a. Record the uncertain item at the carrying amount of the acquire
b. Do not record the uncertain items until complete information is available
c. Record a contra account to the investment account for the amount involved
d. Record the uncertain item at a provisional amount measured at the date of acquisition
999. When does the measurement period end for a business combination in which there incomplete
accounting information on the date of acquisition?
A. Thirty days from the date of acquisition
b. On the final date when all contingencies are resolved
C. At the end of the reporting period in the year of acquisition
D. When the acquirer receives the information or one year from the acquisition date whichever occurs
earlier
1000. The private concession operator shall recognize the infrastructure asset as
a. Financial asset
b. Intangible asset
c. Either intangible asset or financial asset
d. Neither an intangible asset or financial asset