Central Philippine Adventist College

School of Business and Accountancy

Conceptual Framework and Accounting Standards

Long-Exam: PAS 1

1. Which statement is incorrect regarding PAS 1 Presentation of Financial Statements?

a. It prescribes the basis for presentation of general- purpose financial statements to ensure comparability both with the entity’s
financial statements of previous periods and with the financial statements of other entities.
b. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum
requirements for their content.
c. It uses terminology that is suitable for profit- oriented entities, including public sector business entities.
d. It sets out the recognition, measurement and disclosure requirements for specific transactions and other events.

2. Financial statements
a. Are a structured representation of the financial position and financial performance of an entity.
b. Provide information that assists users in predicting the entity’s future cash flows and, in particular, their timing and certainty.
c. Show the results of the management’s stewardship of the resources entrusted to it.
d. All of the above.

3. Financial statements provide information about an entity’s

I. Assets
II. Liabilities
III. Equity
IV. Income and expenses, including gains and losses
V. Contributions by and distributions to owners in their capacity as owners
VI. Cash flows

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

b. I, II, III, IV and V only
c. I, II, III, IV and VI only
d. I, II, III and IV only

4. Which statement is correct regarding presentation of financial statements?

a. A complete set of financial statements includes statement of retained earnings.
b. An entity cannot use titles for the statements other than those used in PAS 1.
c. Reports and statements presented outside financial statements are within the scope of PFRSs.
d. An entity shall present with equal prominence all of the financial statements in a complete set of financial statements.

5. Statement of financial position as at the beginning of the earliest comparative period is not required when an entity
a. Applies an accounting policy retrospectively.
b. Makes a retrospective restatement of items in its financial statements.
c. Reclassifies items in its financial statements.
d. Changes in accounting estimate.

6. In accordance with PAS 1, the general features of financial statements do not include:
I. Fair presentation and compliance with PFRSs
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
c. II and V
d. V

7. Which statement is incorrect regarding presentation of financial statements?

a. In virtually all circumstances, an entity achieves a fair presentation by compliance with applicable PFRSs.
b. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity
or to cease trading, or has no realistic alternative but to do so.
c. An entity shall prepare its financial statements, without exception, using the accrual basis of accounting.
d. An entity shall present separately each material class of similar items and items of a dissimilar nature or function unless they
are immaterial.
8. Which statement is incorrect regarding presentation of financial statements?
a. An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by a PFRS.
b. An entity shall present a complete set of financial statements (including comparative information) at least annually.
c. An entity shall present, as a minimum, two statements of financial position, three statements of profit or loss and other
comprehensive income, three separate statements of profit or loss (if presented), three statements of cash flows and three
statements of changes in equity, and related notes.
d. An entity shall retain the presentation and classification of items in the financial statements from one period to the next unless
another presentation or classification would be more appropriate or a PFRS requires a change in presentation.

9. An entity shall clearly identify each financial statement and the notes. In addition, an entity shall display the following information
prominently, and repeat it when necessary, for the information presented to be understandable:
I. The name of the reporting entity or other means of identification, and any change in that information from the end of the
preceding reporting period
II. Whether the financial statements are of an individual entity or a group of entities
III. The date of the end of the reporting period or the period covered by the set of financial statements or notes
IV. The presentation currency, as defined in PAS 21
V. The level of rounding used in presenting amounts in the financial statements
a. I, II, III, IV and V
b. I, II, III and IV only
c. I, III and IV only
d. I, II and III only

10. The statement of financial position shall include line item that presents
a. Bearer plants
b. Patents
c. Finished goods inventory
d. Investment property

11. The statement of financial position shall include line item for the following assets, except
a. Trade and other receivables
b. Investments in associates
c. Assets classified as held for sale
d. Right-of-use assets

12. The statement of financial position shall include line item for the following liabilities, except
a. Trade and other payables
b. Provisions
c. Liabilities included in disposal groups classified as held for sale
d. Lease liabilities

13. An asset shall be classified as current asset when it satisfies any of the following criteria, except
a. It is expected to be realized or held for sale or consumption in the normal course of the entity’s normal operating cycle.
b. It is held primarily for the purpose of being traded.
c. It is expected to be realized within twelve months after the end of the reporting period.
d. It is cash or cash equivalent that is restricted from being exchanged or used to settle a liability for at least twelve months after
the end of the reporting period.

14. A liability shall be classified as a current liability when it satisfies any of the following criteria, except
a. It is expected to be settled in the entity’s normal operating cycle.
b. It is primarily held for the purpose of being traded.
c. It is due to be settled within twelve months after the end of the reporting period.
d. The entity has an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting
period.

15. An entity breaches a provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the
liability becomes payable on demand. The entity classifies the liability as non-current
a. If the breach is rectified after the reporting period and before the authorization of the financial statements for issue.
b. If the lender agreed, after the reporting period and before the authorization of the financial statements for issue, not to demand
payment as a consequence of the breach.
c. If the lender agreed by the end of the reporting period to provide a period of grace ending at least twelve months after the
reporting period, within which the entity can rectify the breach and during which the lender cannot demand immediate
repayment.
d. In none of these.
16. Which statement is incorrect regarding presentation of statement of profit or loss and other comprehensive income?
a. An entity may use the title ‘statement of comprehensive income’ instead of ‘statement of profit or loss and other
comprehensive income’.
b. An entity may present the profit or loss section in a separate statement of profit or loss.
c. If presented separately, the statement of profit or loss shall immediately precede the statement presenting comprehensive
income, which shall begin with profit or loss.
d. An entity may present a single statement of profit or loss and other comprehensive income, with profit or loss and other
comprehensive income presented in one section.

17. The statement of profit or loss and other comprehensive income shall present
a. Profit or loss
b. Total other comprehensive income
c. Comprehensive income for the period, being the total of profit or loss and other comprehensive income
d. All of the above

18. The statement of profit or loss and other comprehensive income shall present allocation of profit or loss and other comprehensive
income for the period attributable to
a. Owners of the parent
b. Non-controlling interests
c. Both a and b
d. Neither a nor b

19. An entity presents an analysis of expenses using a classification based on:

a. The nature of expenses.
b. The function of expenses.
c. Either the nature of expenses or the function of expenses within the entity, whichever provides information that is reliable
and more relevant.
d. Either the nature of expenses or the function of expenses within the entity, whichever the entity would prefer to present.

20. An entity classifying expenses by function shall disclose additional information on the nature of expenses. The minimum disclosure
does not include
a. Depreciation c. Employee benefits
b. Amortization d. Advertising

21. 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. Revenue, presenting separately interest revenue calculated using the effective interest method
c. A single amount for the total of discontinued operations
d. Impairment losses (including reversals of impairment losses or impairment gains) determined in accordance with PAS 36.

22. In accordance with PAS 1, the profit or loss section or the statement of profit or loss shall include line item for gains and losses
from derecognition of
a. Financial assets measured at fair value through profit or loss.
b. Financial assets measured at fair value through other comprehensive income.
c. Financial assets measured at amortized cost.
d. All of these.

23. In accordance with PAS 1, which of the following gains or losses from reclassification of financial assets need not be presented
separately in the profit or loss section or the statement of profit or loss?
a. Reclassification of financial assets out of the amortized cost measurement category to FVTPL.
b. Reclassification of financial assets out of the FVTOCI measurement category to FVTPL.
c. Reclassification of financial assets out of the FVTPL measurement category.
d. None of these.

24. In accordance with PAS 1, which of the following expenses need not be presented separately in the profit or loss section or the
statement of profit or loss?
a. Finance costs
b. Share of loss of associates
c. Tax expense
d. Depreciation expense

25. The components of other comprehensive income include:

a. Changes in revaluation surplus
b. Remeasurements of defined benefit plans
c. Gains and losses arising from translating the financial statements of a foreign operation
d. All of these
Part II
Instruction: For financial accounting and reporting purposes, determine whether the item below is an asset or not. If it is an asset,
determine whether it is current or non-current, and determine whether the item is a financial asset or non-financial asset. Chose from
the given choices below:
A. The item is a current asset and a financial asset
B. The item is a non-current asset and a financial asset
C. The item is a current asset and a non-financial asset
D. The item is a non-current asset and a non-financial asset
E. The item is not an asset

26. A team of skilled staff = E

27. Accounts receivable = A
28. Bearer plants = D
29. Certificates of deposits = A
30. Contingent asset = E
31. Finished goods = C
32. Machinery and equipment = D
33. Patents = D
34. Prepaid insurance = C
35. Raw materials = C

Part III
Instruction: For financial accounting and reporting purposes, determine whether the item below is a liability or not. If it is a liability,
determine whether it is current or non-current, and determine whether the item is a financial liability or a non-financial liability. Chose
from the given choices below:

A. The item is a current liability and a financial liability

B. The item is a non-current liability and a financial liability
C. The item is a current liability and a non-financial liability
D. The item is a non-current liability and a non-financial liability
E. The item is not an liability
36. Accounts payable = A
37. Bank overdraft = A
38. Bonds payable = B
39. Cash Dividends payable = A
40. Contingent liability = E
41. Deferred revenue = C
42. Deferred tax liability = D
43. Provision for warranties = C
44. Rent received in advance = C
45. Share dividends payable = E

Part IV:
Instruction: For Financial Accounting purposes, determine whether each of the following items is included in other comprehensive
income (OCI) or included in profit or loss statement. If it is included in OCI, determine if the item can be reclassified subsequently to
profit or loss or not. If the items are included in profit or loss statement, determine if the item is required to be presented separately in
the statement of profit or loss (line item) or not. Choose from the choices below:
A. Included in OCI, can be reclassified subsequently
B. Included in OCI, cannot be reclassified subsequently
C. Included in profit or loss as a line item
D. Included in profit or loss but is not required to be present
46. Sales revenue = Answer - C
47. Gains and losses from investments in debt instruments measured at fair value through OCI = Answer - A
48. Change in fair value that is attributable to credit risk for financial liabilities designated as at fair value through profit or loss =
Answer - B
49. Impairment losses on loans receivable = Answer - C
50. Gains and losses on hedging instruments that hedge investments in equity instruments designated at fair value through OCI =
Answer - A
51. Gains and losses from investments in equity instruments designated at fair value through OCI = Answer - B
52. Finance costs = Answer - C
53. Gain or loss on reclassification of a financial asset from the amortized cost measurement category to fair value through profit or
loss = Answer - C
54. Interest revenue calculated using the effective interest method = Answer - C
55. Advertising expense = Answer - D