Chapter 1 - Introduction to Financial Reporting

d. at least twelve months, but at most 24 months from the end of the reporting
period.
13.Which of the following is true regarding accrual basis accounting and cash basis
accounting? =
a. The total amount of income over an entity's life is higher under accrual basis
accounting compared to cash basis accounting.
b. The total amount of expense over an entity’s life is lower under accrual basis
accounting compared to cash basis accounting.
c. The total amount of net income over an entity’s life is equal under both the
accrual basis accounting and cash basis accounting.
d. None of the above.
14. The following are true regarding materiality, except
a. Materiality is based on professional judgment.
The assessment is based on the magnitude or nature of information, but not
~ both.
c. The amount that is material to one entity is not necessarily material to another
entity.
d. Anitem is considered material if it has the ability to influence the decision of the
users of the financial statements.

15.Statement 1: An entity shall present separately items of a dissimilar nature or

function, regardless of their amounts.
Statement 2: An item that is not separately presented on the face of financial
statements may be separately presented in the notes to the financial statements.
a. Only 1is correct c. Both 1 and 2 are correct
Cb) Only 2 is correct d. Both 1 and 2 are incorrect

16. The following are not considered as offsetting, except

a. Deducting allowance for inventory write-down from the inventory account.
b. Deducting unearned interest income from the face amount of note receivable.
c.) Deducting accumulated depreciation from the cost of PPE items.
. Deducting accrued expenses from prepaid expenses.

17. Offsetting is not allowed under which of the following?

a.) Deducting interest expense from:interest income.
. Deducting foreign exchange gains or losses.
c. Deducting unrealized losses from unrealized gains from FVTPL securities.
d. Deducting selling costs against the gain on sale of PPE items.

18. Frequency of general-purpose financial reporting shall be

a. atmost every two years
{B) at least every year
¢ atleast every month
d. atmost every three months

17

The
The Book
Book R̶Readexs-Raiders
e̶a̶d̶e̶r̶s̶ Raiders || Nevule
Nevule cS CamScanner