Which of the following best describes the cost-benefit constraint?

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Financial information 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.
The benefits of the information must be greater than the costs of providing it.
 
All of the choices are correct.
Other:

 
Which of the following information is not specifically a required disclosure of PAS 1?
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Name of the reporting entity or other means of identification, and any change in that information
from the previous year.
Level of rounding used in presenting the financial statements.
Names of major shareholders of the entity.
 
Whether the financial statements cover the individual entity or a group of entities.
Other:

 
On December 31, 2017, what amount should be reported as total current  assets?
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1,950,000
 
2,500,000
2,200,000
2,250,000

 
 Which is not an essential characteristic of an asset?
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The asset provides future cash flows to the entity.

The cost of the asset can be measured reliably.
 
The asset is controlled by the enterprise
The asset is the result of a past transaction or event
Other:

Correct answer
The asset provides future cash flows to the entity.

 
On Rizal's December 31, 2017 balance sheet, the total current assets should be
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4,260,000
3,760,000
4,510,000
5,560,000
 
Other:

Correct answer
4,510,000

 
Which statement is incorrect concerning the concept of capital?
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A physical capital concept is adopted if the main concern of the users is the operating capability
of the entity.
A financial capital concept is adopted if the users are primarily concerned with the maintenance
of nominal invested capital or purchasing power of invested capital.
A physical capital concept is adopted by most entities in preparing their financial statements.
 
The selection of the appropriate concept of capital should be based on the needs of the users of
the financial statements.
Other:

 
 It is the process of incorporating in the financial statements an item that meets the
definition of an element of financial statements.
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Allocation
Summarization
Realization
Recognition
 
Other:

 
 What is meant by comparability when discussing financial accounting information?
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A qualitative characteristic that enables users to identify and understand similarities in, and
differences among, items.
 
Information has predictive or feedback value.
Information is has the quality of prudence
Information is reasonably free from error
Other:

 
 If information is to represent faithfully the transactions and other events that it
purports to represent, it is necessary that they are accounted for and presented in
accordance with their substance and economic reality and not merely their legal form.
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Neutrality
Substance over form
Completeness
Faithful representation
 
Other:

Correct answer
Substance over form

 
 Proponents of historical cost ordinarily maintain that in comparison with all other
valuation alternatives for financial reporting, statements prepared using historical cost
are more
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Indicative of the entity's purchasing power

 
Relevant
Conservative
Verifiable
Other:

Correct answer
Verifiable

 
Which one of the following is not required to be presented as minimum information on
the face of the statement of financial position?
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Biological assets
Investment property
Contingent liability
 
Investments accounted under the equity method
Other:

 
Separate line items in an analysis of expenses by function include
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Depreciation, purchases, transport costs, employee benefits and advertising costs.

Purchases, transport costs, employee benefits, depreciation, extraordinary items.
Cost of sales, administrative costs, transport costs and distribution costs
 
Purchases, distribution costs, administrative costs, employee benefits, depreciation
Other:

 
What is the common practice in the Philippines in presenting the statement of
financial position?
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Equity before assets and liabilities, noncurrent liabilities before current liabilities and noncurrent
assets before current assets.
Current assets before noncurrent assets, current liabilities before noncurrent liabilities and equity
after liabilities.
 
Noncurrent assets before current assets, noncurrent liabilities before current liabilities and equity
after liabilities
Current assets plus noncurrent assets minus current and noncurrent liabilities equals equity.
Other:

 
 The notes to financial statements should be presented in what order?  (I.)   Summary
of significant accounting policies  (II.)  Supporting computations for items presented
on the face of the statements. (III.)Other disclosures, including contingent liabilities,
unrecognized contractual commitments and nonfinancial disclosures. (IV. )Statement
of compliance with PFRS
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II, III, IV and I

I, II, III and IV
IV, I, II and III
 
No specific order
Other:

 
Which of the following is not a theoretical basis for the allocation of expense?
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Cause and effect association

Profit maximization
 
Immediate recognition
Systematic and rational allocation
Other:
 
A liability is
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The residual interest in the assets of the enterprise after deducting all of its liabilities.
Equivalent to all financial resources of the enterprise
A resource controlled by the enterprise as a result of past events and from which future
economic benefits are expected to flow to the enterprise.
A present obligation of the enterprise arising from past events the settlement of which is
expected to result in an outflow from the enterprise of resources embodying economic benefits.
 
Other:

 
Other comprehensive income shall include all of the following, except
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Net unrealized loss on available for sale securities

Foreign currency translation gain
Revaluation surplus
Dividends paid to stockholders
 
Other:

 
Historical cost is the
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Amount of cash or cash equivalent that could currently be obtained by selling the asset in an
orderly disposal.
Amount of cash or cash equivalent that would have to be paid if the same or an equivalent asset
was acquired currently.
Discounted value of the future net cash inflows that an item is expected to generate in the normal
course of business.
Amount of cash or cash equivalent paid or the fair value of the consideration given at the time the
asset was acquired.
 
Other:

 
Technically, this arises in the course of the ordinary regular activities of an enterprise
and is referred to by a variety of different names including sales, interest, dividends,
royalties and rent.
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Profit
Revenue
Income
 
Gain
Other:

Correct answer
Revenue

 
 A long-term debt that is due to be settled within twelve months after the statement of
financial position date is classified as current when  (I. )  An agreement to refinance or
reschedule payment on a long-term basis is completed after statement of financial
position date and before the financial statements are authorized for issue. (II.)  The
entity has the discretion to refinance or roll over the obligation for at least twelve
months after the statement of financial position date under an existing loan facility.
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I only
 
Neither I nor II
Either I or II
II only
Other:

 
In the absence of an accounting standard that applies specifically to a transaction,
what is the most authoritative source in developing and applying an accounting
policy?
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The requirement and guidance in the standard or interpretation dealing with similar and related
issue.
 
The definition, recognition criteria and measurement of asset, liability, income and expense in the
conceptual framework.
Accounting literature and accepted industry practice
Most recent pronouncement of other standard-setting body.
Other:

 
The elements directly related to the measurement of performance are
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Income and expenses

 
Income, expenses and equity
Assets and liabilities
Assets, liabilities and equity
Other:

 
When an entity breaches an undertaking under a long-term loan agreement on or
before the statement of financial position date with the effect that the liability
becomes payable on demand (I. )The liability is classified as current even if the lender
has agreed after the statement of financial position date and before the issuance of
the financial statements not to demand payment as a consequence of the breach.  (II.)
The liability is classified as noncurrent if the lender agreed on or before the statement
of financial position date to provide a grace period for at least twelve months after the
statement of financial position date within which to rectify the breach.
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Neither I nor II
II only
I only
Either I or II
 
Other:

 
 What is the correct amount of current assets on December 31, 2017?
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2,700,000
2,800,000
 
2,900,000
2,600,000
Other:

 
 The Conceptual Framework includes which of the following constraints?
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Conservatism
Cost
 
All of the choices are constraints in the conceptual framework
Prudence
Other:

 
The sale and accounting departments use the office space equally.  What amount
should be classified as general and administrative expenses?
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5,900,000
7,000,000
7,800,000
5,300,000
 
 
The term revenue recognition conventionally refers to
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The earning process which gives rise to revenue realization

The process of measuring and relating revenue and expenses
The process of identifying the transactions to be recorded as revenue in an accounting period
 
The process of identifying transactions that result in an inflow of assets from customers
Other:

 
On December 31, 2017, what amount should be reported as total retained earnings?
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1,029,000
1,200,000
1,330,000
 
1,630,000

 
Which statements is incorrect concerning the presentation of the income statement?
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The choice between the functional and natural presentation depends on historical and industry
factors and the nature of the entity.
The nature of expense method means that expenses are aggregated according to their nature
and are not reallocated among various functions within the entity
The cost of sales method means that expenses are classified according to their function as cost
of sales, distribution or administrative activities.
PAS 1 requires the use of the cost of sales method than the nature of expense method.
 
Other:

 
Enhancing qualities include all of the following, except
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Verifiability
Neutrality
 
Comparability
Understandability
Other:

 
Which is incorrect concerning the recognition of a liability?
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A decision by the management of an enterprise to acquire assets in the future, in itself, gives rise
to a present obligation.
If an enterprise decides as a matter of policy to rectify faults in its products even when these
become apparent after the warranty period has expired, the amounts that are expected to be
expended in respect of goods sold are liabilities.
Obligations may be legally enforceable as a consequence of a binding contract or statutory
requirement.
An obligation normally arises only when the asset is delivered or the enterprise enters enters into
an irrevocable agreement to acquire the asset.
 
Other:

Correct answer
A decision by the management of an enterprise to acquire assets in the future, in itself, gives rise
to a present obligation.

 
Separate line items in an analysis of expenses by nature include
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Cost of sales, administrative costs, transport costs and distribution costs

Purchases, transport costs, employee benefits, depreciation, extraordinary items.
Purchases, distribution costs, administrative costs, employee benefits, depreciation
Depreciation, purchases, transport costs, employee benefits and advertising costs.
 
Other:

 
 What is meant by consistency when discussing financial accounting information?
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Information is verifiable
Information is measured similarly across the industry.
Information that is measured and reported in a similar fashion across points in time
 
Information is timely.
Other:

 
The notes to the financial statements of an entity shall (I.) Present information about
the basis of preparation of the financial statements and the specific accounting
policies used. (II.) Disclose the information required by Philippine Financial Reporting
Standards that is not presented on the face of the financial statements. (III.) Provide
additional information, which is not presented on the face of the financial statements
but is not relevant to understanding of the financial statements.
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I and II only
 
I only
I and III only
I, II and III
Other:

 
Which statement is incorrect concerning the elements directly related to the
measurement of performance?
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The definition of revenue encompasses both income and gains.

 
The definition of expenses encompasses losses as well as those expenses that arise in the
course of ordinary regular activities.
Gains represent other items that meet the definition of income and do not arise in the course of
ordinary regular activities.
Losses represent other items that meet the definition of expenses and do not arise in the course
of ordinary regular activities.
Other:

 
It is the process of determining the monetary amounts at which the elements are to be
recognized and carried in the balance sheet and income statement.
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Reporting
Measurement
 
Recognition
Interpreting
Other:

 
What is the total current assets at December 31, 2017?
2/2

14,700,000
17,000,000
 
17,200,000
14,500,000
Other:

 
The cost of goods sold is
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32,000,000
 
33,500,000
30,000,000
30,600,000

 
How much is Ozz Company’s income before tax?
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4,150,00
4,000,000
3,250,000
 
3,750,000
Other:
 
The process of “matching of costs with revenue” involves the simultaneous or
combined recognition of revenue and expenses that result directly and jointly from the
same transactions or other events.  This approach is exemplified by which of the
following?
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Expenses are recognized in the income statement on the basis of direct association between the
costs incurred and the earning of specific items of income.
 
An expense is recognized immediately when an expenditure produces no future economic
benefits or when future economic benefits do not qualify or cease to qualify for recognition as an
asset.
When economic benefits are expected to arise over several accounting periods and the
association with income can only be broadly or indirectly determined, expenses are recognized
on the basis of systematic and rational allocation.
An expense is recognized immediately when a liability is incurred without recognition of an asset
as when a liability under a product warranty arises
Other:

 
Which of the following accounting theory justifies the use of historical cost method in
the preparation of financial statements?
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Relevance
Conservatism
Comparability
 
Objectivity
Other:

Correct answer
Objectivity

 
 It is the inclusion of a degree of caution in the exercise of judgment needed in making
estimates required under conditions of uncertainty such as assets and income are not
overstated or liabilities and expenses are not understated.
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Materiality
Judgment
Neutrality
Prudence (conservatism)
 
Other:

 
What is the total current assets at December 31, 2017?
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7,300,000
7,000,000
 
7,700,000
7,400,000
Other:
 
Which is incorrect concerning assets?
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In determining the existence of an asset, the right of ownership is essential.

The future economic benefit embodied in an asset is the potential to contribute directly or
indirectly to the flow of cash and cash equivalents to the entity.
Many assets have physical form but physical form is not essential to the existence of an asset.
 
The asset of an entity results from past transaction or other past event
Other:

Correct answer
In determining the existence of an asset, the right of ownership is essential.

 
 Financial statements portray the financial effects of transactions and other events by
grouping them into broad classes according to their economic characteristics.  These
broad classes are termed as the
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Accounting constraints
Features of accounting
Elements of financial statements
 
Concepts of capital and capital maintenance
Other:

 
What is another term for equity?
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Net losses
Revenue
Liability
Net assets