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    6 views5 pages

    Scan 21 Jun 23 20 37 44

    Uploaded by

    jecille magalong

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    Name. Course and year_6/A-2 macaraee (Last name) uaseypiine (first name) | Intermediate accounting 3 Multiple choice. Choose the be: ni capital letters on| st answer, Answers should b he hol ein capi write letter "N’ before each number. No erasures. You may use your rane ete ; if ut your final written using a black or blue pen. ¢ 1 (liddte initia date: hae (mm ratin 9 ere is no | answer shoutg : answer (..1. Statement 1: statement of financial position is a formal statement showing the three e| e elements . The essential; characteristics of an a nggeats conde “Gi @ashand cash equivalents, comprising financial position, namel ly assets, liabilities and equity 7 Statement 2: users analyze the statement of financial position to evaluate such factors as liquidity solvency and the need of the entity a, Statement 1 is true b, Statement 2 is true F additional financing, | d. Both are false Statement 1: liquidity is the ability of the entity to meets currently maturing obligations. F ‘Statement 2: solvency is the availability of cash over the longer term to meets maturing obligations a. Statement 1 is true b, Statement 2 is true Statement 1: pas 1, provides that ai and noncurrent liabilities, as sepat ‘Statement 2: however, an entity shall present all assets and liabili a. Statement 1 is true b. Statement 2 is true Statement 1: for some entities, such) increasing or decreasing solvency p| le. d. Both are false | entity shall present current and noncurrent assets, and current classification in the statement of financial position. , in the over order of liquidity d. Both are false ‘as financial institutions, a presentation of assets and liabilities in rovides information that is faithfully represented and more relevant than a current and noneurrent presentation. and in shor, assets are Properties mene ‘Statement 2: in layman's language a, Statement 1 is true b. Statement 2 is true ‘Statement 1: assets are defined as events and from which future econot Statement 2: the cost of the assets a. Statement 1 is true b. Statement 2 is true b. the asset is a result of a past transactions or event. Past, paragraph 66, provides that ar ‘a the asset is cash or a cash used to settle a liability for at asset primarily for the pur ». the entity expects to realize © the entity expects to realize rami cycle. as 1, paragraph 54, provides that as 2 mit such as trading securities and other investments in quoted equity ‘@. cash and cash equivalents b. financial assets at fair value, instruments trade and other receivables; atement 1: current assets are usu C and other receival d. Both are false sources controlled by the entity as result of past transactions and jc benefits are expected to flow to the entity. Jan be measured reliably Both are true Both are false ae issets are: the asset provides future ‘economic benefits. None of the above entity shall classify as asset as current when: uuivalent unless the asset is restricted from being exchanged or least twelve months after the reporting period; the entity holds the of trading. 1e asset within twelve months after the reporting period. asset or intend to sell or consume it within the entity's normal inimum the line items under current assets are: inventories and prepaid expenses bles, inventories and prepaid expenses ly listed in the statement in financial position in the order of , lement 2: PFRS 1, provides th Separate classifications on the or tax assets as current assets” a. 1is true Be 10. PFRS 1, paragray Current as noncur ue rent assets” 11. Statement 1: the oj and their reali Statement 2: when the to be twelve months. 9F a. Statement 1 is true b. rue perating cycle of ization in cash or cash| C. 12. Statement 1: a cont JB may be realized events, the settlement of which is e: economic benefits a. Statement 1 is true eoSatenem Zins 13, Contingent asset a. Pas 37, paragraph 10, defin. and whose existence will be More uncertain future events b. Contingent assets usually ar Possibility of inflow economi 4 ph 66, simply states that “an enti ntity's norm N "when an entity presents f the statement of financ, Surrent ang al position, oncurre: tt Nt assets ag shall not clan © Both are true eae d. Both are false ity shall Classify all other SSets not ¢ ot classified a b. False tiny n éntity is the tie between the acquisition of assets lequivalents » lal operating cycle is not clearly identifiable, its duration is assuy for proces ©. Both are true d. Both are false set snd be recognized because this result to recognition of income that isset shi Statement 2: liabilities are defined al “present obligations of an entity from past transactions or present pected to result an outflow from the entity of resources embodyin. ©. Both are true d. Both are false , contingent asset as a “possible asset that arises from Past event firmed only by the occurrence and nonoccurrence of one or not wholly within the control of the entity’ ise from unplanned or other unexpected events that give rise to the benefits to the entity. An example is a claim that an entity is pursuing through legal processes when the outcome is uncertain. |. None of the above 14. The essential characteristics of liabil a. the ability is the present obii not necessary that the payed wb. the liability arises from as pa: recognized unt it is incurred) c. the settlement of the liability| D 15. €stimated liabilities a. Estimated liabilities are obligi amount is not definite. Esti technically, an estimated liak measurable c. common examples of estim; ee“ ce ‘16. Statement 1: if certain conditions rel becomes payable on demand.in this} as current even if the lender thus ag} authorized for issue, not to demand Statement 2: paragraph 75 states th ‘on or before the end of reporting per He end of reporting period. Statement 1 is true b. Statement 2 is true b. events occurring between the end of authorized for issue would qualify for nt liabilities fefinancing on long-term bi DD, 17. Pas 1, paragraph 76, provides that which respect to loans classified as current liabilties, the following ties are: jation of a particular entity. The entity liable must be identified. It is or the entity to which the obligation is owed be identified. ist transaction or event. This means that the liability is not requires an outflow of resources embodying economic benefits. ions which exist at the end of reporting period although their (ed liabilities may be classified either as current or noncurrent. lity may be consisted as a “provision” which is both probaile and ted liabilities include estimated liability for premiums, estimated imated liability under customer loyalty program ing to the borrower's financial situation are breach, the liability case, pas 1,paragraph 74, states that ‘such a liablty is classified , after the end of reporting period and befage the statements is ayment as a consequence of the breach”. the liability is classified an noncurrent if the lender has agreed lod to provide a grace period ending at least twelve months after ee con eee. reporting period and the date the financial statements are disclosure a non-adjusting event, meaning, the loans remain as 18. e. 19. C GS 20. 21 Dr Rectification of a breach of | the receipt from the lender reporting period ‘One statement is wrong b. cI cl Statement 1: probable than 50% likely. Statement 2; reasonably possible a, Statement 1 is true b. Statement 2 is true Treatment of contingent liability a. Acontingent obligation is contingent liability but shall ‘an expense and an estimat contingent liability is a either disclosed only. c. All of the above d. None of the above Statement 1: equity simply stated, & increased by profitable operations al unprofitable operations and distribut} Statement 2: shareholders’ equity assets of a corporation measured by ‘a. Statement 1is true b. Statement 2 is true Statement 4: share capital is the por of the shares issued. Subscribed sh; been subscribed but not yet fully pa Statement 2: subscriptions receivab! subscribed shai as current asset. Share premium is stated value of the shares subseri ‘a. Statement 1 is true b. Statement 2 is true Statement 1: retained earings repr dividend distributions, prior period et Retained earnings can only be cl Statement 2: a deficit is a debit bala! but as deduction from shareholders’ value of the revalued asset. a. Statement 1 is true b. Statement 2 is true Statement 1: treasury share are an not canceled. Treasury shares are the retained earnings must be apy ‘Statement 2: The term “reserves” is conceptual framework. Reserves accounting standard, the use of equ equity or non-distributable equity. ‘a. Statement 1 is true b. Statement 2 is true Treasury shares a. Treasury shares are not 288 deductions from the sha ‘The amount of reduction to ‘on the face of the statement None of the above All of the above he f af a grace period ending at least tw) =the future event is likely to occur. As a rule of thumb, probat liability is not recognized in th probable and is re capital. Note: subscript the capital contri ity for treasury shares held shall be disclosed separately either long-term loan agreement he future event is most likely to occur. | ¢. Both are true d, Both are false financial statements. However, if the present ‘mount can be measured reliably, the obligation is not 2 recognized as a provision “4 abiity shall be recorded in recognizing a provision. Thus, 2 probable or measurable but not both. A contingent liability shall be | assets minus liabilities. Equity is “net assets” or total ity is decreased by ity means by owners. Conversely, 4 id contribution jon to owners. ‘stockholders’ equity is th the excess of assets over liabilities. c. Both are true d. Both are false residual interest of owners in the net , representing the total par or stated value ion of the paid in capital al that has re capital is the portion of the authorized share capt and therefore still unissued. shall preferably be reflected as a fions receivable collectible within one ibuted by the shareholders in excess deduction fro the related year shall be classified of the par or and issued. c. Both are true d. Both are false sent the cumulative balance of periodic net income or loss, ‘ors, changes in accounting policy and other capital adjustments. jed as unappropriated retained earnings. ‘c@ in retained earnings. The deficit is not presented as an asset lequity. Revaluation surplus is the excess of sound value over fair c. Bothare true d. Both are false . tity’s own shares that have been issued and then reacquired but ually recorded at fair value. When treasury shares are acquired, Jated to the extent of the fair value of the treasury shares. ot officially defined in any accounting standard or inthe ‘a substantial part of the equity of an entity. Under international ity reserves based on whether a reserve is part of distributable ¢. Both are true d. Both are false nized as an asset. Th Dean 1e cost of treasury shares shall be reported financial position or in the notes, | | J 25, Non-distributable equity is that portion that cannot be distributed to the share , the lifetime of the entity. Generally, ee equity reserves represent thy any form dy, ther than the aggregate par or stared value of share capital and retained eaminon oot" Examples include the following: except 96 Unappropriated ‘a. Share premium reserve is the excess over the par or stared value or popularly calles D paid in capital called addit b. appropriation reserve is the|earmarking of retained earnings for a certain purpose which be required by law, contract of the result of a voluntary action of management. This reserve technically known as retainet! earings appropriated. Examples include retained earnings appropriated for treasury shares, for bond redemption, for preference share redemption, for plant expansion and for contingencies c. . Asset revaluation reserve arises from the revaluation of property, plant and equipment. ss Specifically, this reserve is called revaluation surplus d. other comprehensive income reserve holders in of equit [)_ 26. Statemegy-1: paragraph 54 simply provides a list of tems that are sufficiently different in nature and V/. ~~ function to warrant separate presentation on the face of the statement of financial position. F ' Statement 2: also, paragraph 54 pravides that additional line items, headings and subtotals shall be presented on the face of the statement of financial position when such presentation is relevant to the understanding of the entity's financial position. a. Statement 1 is true c. Both are true b. Statement 2 is true | d. Both are false C27 Statement 1: paragraph 57 of pas 1 provides that “the standard does not prescribe the order or format in which items are to be presented’’.|in the Philippines, the common practice is to present in the ‘statement of financial position currefit assets before noncurrent assets, current liabilities before noncurrent liabilities, and equity after liabilities, 7 Statement 2: other formats may be equally appropriate provided the distinction is clear. This is ira accordance with paragraph 7 of the preface to pas 1. Note that the format of the statement of financial position as illustrated in the appendix to pas 1 present noncurrent assets before current assets, equity before liabilities, and noncurrent liabilities before current liabilties. a. Statement 1 is true ¢. Both are true b. Statement 2 is true | d. Both are false B 28. Which is correct? ‘a. The format of a statement of financial position is not specified in pas 1. In practice, there are two customary forms in presenting the statement of financial position namely: b. Report form this form sets forth the three major sections in a down ward sequence of assets, liabilities and equity I c. account form — as the title suggests, the presentation follows that of an account, meaning, the assets are shows on the left Side and the liabilities and equity on the right side of the statement of financial position d. Only one statement is wrong) | A. 29. Cash receipts from: Operating = a. Sale of goods and services ¢. Interest Income and Dividends b. Royalties, rental, fee, commissions and other revenue Se 4. 30, Cash payments for: operating activites . ‘a. Purchase of goods and services c. Interest Expense and Dividends b. Selling, Administrative and Other 4, Ops. siatementigsyrons Expenses C31. Cash receipts and payments for: is and claims, annulties and other policy benefi user policy benefits by an insurance company o. Seetttes eam enlaae yspercely spotted Wit investing ane Fienci) institution ivances, loans and interest income and expense of a financial 4. None of the above 8. 2 Cash receipts from: investing activi 2 y Ig activiti a. Sale of PPE, | 7 Rip Sale of Eauy and Set a ene gee In in Joint Ventures, Advances ‘and loans to other parties & Derivative contracts . ! ey sh payments for: investing activities N

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