DE LA SALLE LIPA

College of Business, Economics, Accountancy and Management

Accountancy Department
Theory of Accounts – Reviewer
____________________________________________________________________________________________________________

COVERAGE:
PAS 34: Interim Financial Reporting
PFRS 8: Operating Segments

Direction: Read and select the best answer for the following questions.

___1. It means the preparation and presentation of financial information for a period of less than one year.
a. Segment Financial Reporting
b. Interim Financial Reporting
c. Annual Financial Reporting
d. Departmental Financial Reporting
___2. PAS 34 provides for the preparation of interim financial reports. Which of the following statements concerning interim financial reporting is
incorrect?
a. Interim financial reports may be presented monthly, quarterly or semiannually.
b. Publicly traded entities are encouraged to provide interim financial reports semi-annually and such reports are to be made available not
later than 60 days after the end of the interim period.
c. PAS 34 mandates which entities are required to publish interim financial reports, how frequently, or how soon after the end of an interim
period.
d. The most common interim financial report is the quarterly financial report.
___3. Which of the following statements concerning the two views of interim financial reporting is/are correct?
a. “Independent view” provides that each interim period is an integral part of the annual accounting period.
b. “Integral view” also known as “discrete view” provides that each interim period is a basic accounting period and the results of operations
should be determined in essentially the same way as if the interim period was an accounting period.
c. Both A and B
d. Neither A nor B
___4. Annual operating expenses are estimated and then allocated to the interim periods based on forecasted revenue or sales volume. In other
words, costs incurred which clearly benefit the entire year are allocated to the interim period benefited. These statements pertain to what view of
interim financial reporting?
a. Integral view
b. Independent view
c. Discrete view
d. Side view
___5. Annual operating expenses are recognized in the interim period in which they are incurred, irrespective of the number of interim periods
benefited. This statement pertains to what view of interim financial reporting?
a. Integral view
b. Independent view
c. Side view
d. Front view
___6. What view of interim financial reporting is essentially adopted by the PAS 34?
a. Integral view
b. Independent view
c. Mix of integral and independent view
d. No view at all
___7. PAS 34 provides that an interim financial report shall include, as a minimum, the following components, except
a. The condensed statement of financial position
b. The condensed income statement
c. The condensed statement of comprehensive income
d. The condensed statement of retained earnings
e. The condensed statement of changes in equity
f. The condensed statement of cash flows
g. Selected explanatory notes

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___8. The following statements concerning the mandates of PAS 34 on interim financial report are true, except
a. If an entity’s interim financial report is in compliance with PFRS, that fact should be disclosed.
b. PAS 34 does not allow an entity to publish a set of complete set of financial statements in its interim financial reports.
c. An entity shall not describe an interim financial report as complying with PFRS unless it complies with all of the requirements of
applicable PFRS.
d. The selected explanatory notes are designed to provide an explanation of significant events and transactions arising since the last
annual financial statements.
___9. PAS 34 states a presumption that anyone reading interim financial reports will
a. Understand all Philippine Financial Reporting Standards.
b. Have access to the records of the entity.
c. Have access to the most recent annual report of the entity.
d. Not make decisions based on the report.
___10.The following statements show the proper presentation of comparative interim financial statements, except
a. Statement of financial position as of the end of the current interim financial period and a comparative statement of financial position as of
the end of the preceding year’s interim period.
b. Income statements of the current interim period and cumulatively for the current year to date, with comparative income statements for
the comparable period (current and year to date) of the immediately preceding year.
c. Statement of comprehensive income of the current interim period and cumulatively for the current year to date, with comparative
statement of comprehensive income for the comparable period (current and year to date) of the immediately preceding year.
d. Statement of changes in equity cumulatively for the current financial year to date, with comparative statement for the comparable year to
date period of the immediately preceding year.
e. Statement of cash flows cumulatively for the current financial year to date, with comparative statement for the comparable year to date
period of the immediately preceding year.
___11. Which of the following comparative financial statements is incorrect for quarterly interim period ending September 30,2012?
a. Quarterly statement of financial position as of September 30,2012 with comparative annual statement of financial position as of
December 31,2011.
b. Quarterly income statement for the quarter ended September 30,2012 and cumulative income statement up to September 30,2012 with
comparative quarterly income statement for the quarter ended September 30,2011 and cumulative income statement up to September
30,2011.
c. Quarterly statement of comprehensive income for the quarter ended September 30,2012 and cumulative statement of comprehensive
income up to September 30,2012 with comparative quarterly statement of comprehensive income for the quarter ended September
30,2011 and cumulative statement of comprehensive income up to September 30,2011.
d. cumulative statement of cash flows up to September 30,2012 with comparative quarterly statement of cash flows for the quarter ended
September 30,2011.
e. cumulative statement of changes in equity up to September 30,2012 with comparative cumulative statement of changes in equity up to
September 30,2011.
___12. The following are the basic principles of interim financial reporting, except
a. An entity shall apply the same accounting policies in its interim financial statements as are applied in its annual financial statements.
b. Revenues from products sold or services are generally recognized for interim reports on the same basis as for the annual period.
c. Expenses associated directly with revenues are matched against revenue in those interim periods in which the related revenue is
recognized.
d. Inventories shall be measured subsequently at historical cost for interim purposes.
___13. If the business is seasonal, what does PAS 34 encourage entity to disclose in its interim financial reports?
a. Interim financial information for the latest 12 months ending on a given interim date, and comparative information for the prior 12-month
period, in addition to the interim period financial statements.
b. Interim financial information for the latest 3 months ending on a given interim date, and comparative information for the prior 3-month
period, in addition to the interim period financial statements.
c. Interim financial information for the latest 6 months ending on a given interim date, and comparative information for the prior 6-month
period, in addition to the interim period financial statements.
d. Interim financial information for the latest 1 month ending on a given interim date, and comparative information for the prior 1-month
period, in addition to the interim period financial statements.
___14. The following are the rules for treatment of some items of income and expenses for interim financial reporting, except
a. Seasonal, cyclical or occasional revenue shall not be anticipated or deferred as of an interim date of anticipation or deferral would not be
appropriate at the end of the entity’s financial year.
b. Dividend revenue, royalties and government grant shall be recognized in the interim period in which they occur.
c. The costs that are incurred unevenly during an entity’s financial year shall not be anticipated or deferred for interim financial purposes
even if it is appropriate to anticipate or defer that type of cost at the end of the financial year.
d. Irregular costs such as charitable contribution and employee training cost which are considered discretionary and planned shall not be
anticipated as of an interim date if the costs have not yet been incurred.

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___15. An entity sold an item of property, plant and equipment for a gain on February 2,2012. The gain on disposal shall be recognized
a. On the first quarter only.
b. Proportionately or equally on four quarters.
c. Equally on the remaining three quarters.
d. Equally on the first two quarters.
___16. An entity suffered a loss from calamity on November 2,2012. Such loss shall be recognized
a. On the four quarters equally.
b. On the first three quarters equally.
c. On the last or 4th quarter only.
d. On the last two quarter equally.
___17. An entity purchased a prepaid insurance for P1,200,000 on January 1,2012 which is expected to benefit the whole year. How shall the
prepaid insurance be expensed or reported in the 2012 interim quarterly reports?
a. Expense P1,200,000 on the first quarter.
b. Expense P300,000 for each quarter.
c. Expense P600,000 on the first quarter and P600,000 on the last quarter.
d. Expense P400,000 each on second, third and fourth quarter
___18. What is the core principle of PFRS 8 which is titled “Operating Segments”?
a. An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the
geographical area on its business.
b. An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the types of
products on its business.
c. An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial statements to evaluate
the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.
d. An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of economy to
the its business.
___19. PFRS 8 – Operating Segments shall apply to
a. Public entities only
b. Private entities only
c. Both A and B
d. Neither A nor B
___20. The following are the requisites of an operating segment, except
a. It is a component of an entity.
b. It engages in business activities from which it may earn revenue and incur expenses, including revenue and expenses relating to
transactions with other component of the same entity.
c. Its operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be
allocated to the segment and assess its performance.
d. Discrete information of the segment is not available.
___21. Which of the following shall be considered an operating segment?
a. The corporate headquarter
b. The entity’s postemployment benefit plans
c. Neither A nor B
d. Both A and B
___22. It is the term which identifies a function and not necessarily a manager with a specific title. This function is to allocate resources to the
segments and assess their performance.
a. chief operating officer
b. chief operating decision maker
c. chief executive officer
d. chief financial officer
___23. The following are the “quantitative thresholds” for identifying reportable segments, except
a. Its reported total revenue, including both sales to external customers and intersegment sales or transfers, is 10% or more of the
combined revenue, internal and external, of all operating segments.
b. Its total assets are 10% or more of the combined assets of all operating segments.
c. The absolute amount of its reported profit or loss is 10% or more of the greater in absolute amount of: a.) combined reported profit of all
operating segments that reported a profit and b.) combined reported loss of all operating segments that reported a loss.
d. Its total liabilities are 10% or more of the combined liabilities of all operating segments.

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___24. The 75% quantitative threshold or “overall size test” is used to ensure that all entities present a sufficient level of information regarding their
business activities in order that users of financial statements can make informed economic decisions. What is the 75% quantitative threshold?
a. Total external revenue of reportable segments must be 75% of the entity’s total external revenue.
b. Total internal revenue of reportable segments must be 75% of the entity’s total internal revenue.
c. Total revenue of reportable segments must be 75% of the entity’s total revenue.
d. Total revenue of reportable segments must be 75% of the entity’s total assets.
___25. If the financial report contains both the consolidated financial statements of a parent and the parent’s separate financial statements, segment
information is required to be presented in
a. In separate financial statement only
b. In consolidated financial statement only
c. In both separate and consolidated financial statement
d. Neither separate and consolidated financial statement
___26. PFRS 8 as amended provides that each reportable segment of an entity shall always disclose information about
a. Profit or loss only
b. Profit or loss and total assets only
c. Profit or loss, total assets and total liabilities
d. Profit or loss and total liabilities only
___27. Entity-wide disclosures are additional information that is required to be disclosed by all entities if such information is not provided as part of
the reportable segment information. The following entity-wide disclosures, except
a. Information about products and services
b. Information about geographical areas
c. Information about major customers
d. Information about competitors
___28. A major customer is defined as a single customer providing a specific threshold of revenue. What is the quantitative threshold for a single
customer to be considered as a “major customer”?
a. It provides 10% or more of an entity’s total revenue.
b. It provides 10% or more of an entity’s total internal revenue.
c. It provides 10% or more of an entity’s total external revenue.
d. It provides 20% or more of an entity’s total revenue.
___29. The following are the required disclosures for a major customer, except
a. The extent of reliance of the entity on its major customers.
b. The total amount of revenue from each major customer.
c. The identity of the segment or segments reporting the revenue from the major customer.
d. The identity of the major customer or the amount of revenue that each segment reports from that customer.
___30. May an entity report operating segments that do not meet any of the quantitative thresholds for reportable segments?
a. No because the quantitative thresholds must be complied with.
b. No because it will be violative of PFRS 8.
c. Yes even if the chief operating decision maker does not agree on such reporting.
d. Yes if management particularly chief operating decision maker believes that information about the segment would be useful to the users
of the financial statements.
___31. What is the treatment of a reportable segment in the current year period but not reportable in the prior period?
a. The segment data of prior year shall be restated or retrospectively.
b. The segment data shall not be restated or prospectively.
c. The segment data of prior period shall never be reported.
d. The segment data of both periods shall not be reported.
___32. What is the approach prescribed by PFRS 8 in identifying an operating segment?
a. Management approach
b. Risks and rewards approach
c. Matrix approach
d. Geographical segment approach
e. Product approach

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