1.

Fair presentation in accordance with PFRS for SMEs is presumed to

result from
a. Compliance with PFRS for SMEs, with additional disclosures where
necessary, by an entity that does not have public accountability

2. Items of dissimilar nature of function

a. Must be presented separately in financial statements if those
items are material

3. When an SME changes the end of its reporting period and presents
financial statements for period longer or shorter than one year, the
SME shall disclose
i. The reason for using a longer or shorter period
ii. The period covered by the financial statements
iii. The fact that mounts presented in the financial statements
are not entirely comparable
a. All of the above

4. A change in the presentation and classification of items in financial

statements is allowed
a. When a change in the presentation and classification will
demonstrate a more appropriate presentation and classification

5. A complete set of financial statement for SMEs

a. Is permitted but not required to present a statement of income
and retained earnings in place of statement of comprehensive
income and a statement of changes in equity
6. In accordance with PFRS for SMEs, in presenting a statement of
financial position, an entity
a. Must make the current and noncurrent presentation except when
a presentation based on liquidity provides information that is
reliable and more relevant

7. Which of the following is required to be reported as line item for an

SME but not under Full PFRS?
a. Investment in joint venture

8. An SME shall present an analysis of expenses using a classification

based on a
a. Either the nature of expenses or the function of expenses
whichever provides information that is reliable and more relevant

9. An SME whose only change to its equity in the periods for which
financial statements are presented arise from profit or loss, payment
of dividends, corrections of prior period errors and changes in
accounting policy
a. Is permitted but not required to present a statement of income
and retained earnings in place of a statement of comprehensive
income and a statement of changes in equity

10. The IASB defines SMEs as entities that

a. Do not have public accountability and publish general purpose
financial statements for external users

11. All of the following entities is publicly accountable, except

a. An entity that is not in the process of issuing shares and debt
instruments for trading in a public market
12. Which approach is taken by the IASB in developing IFRS for SMEs?
a. The standard is a simplified self-contained set of accounting
principles that are based on full IFRS

13. In the Philippines, which of the following entities is not an SME?

a. A public utility

14. Entities with total assets or total liabilities below the floor
threshold of P3,000,000 are known as
a. Micro- business entities

15. Which of the following SMEs is not exempted from the

mandatory adoption of the PFRS for SMEs?
a. An entity with concrete plans to conduct an initial public offering
within the next five years

16. If an SME that uses the PFRS for SMEs in the current year
breaches the ceiling of the size criteria at the end of the current year,
the entity is
a. Required to transition to full PFRS in the next year if the event that
caused the change is significant and continuing

17. What is considered “significant” change in the size criteria that

requires transition from the PFRS for SMEs to full PFRS?
a. 20% or more of the total assets or total liabilities
18. This is defined as the "first annual financial statements in which
an SME adopts Philippines Financial Reporting Standards for SMEs".
a. First financial statements that conform with IFRS for SMEs

19. An SME that presents first financial statements that conform

with IFRS for SMEs is known as
a. A first-time adopter
20. What is the date of transition to IFRS for SMEs?
a. The beginning of the earliest period for which an entity presents
full comparative information under IFRS for SMEs.

21. The statement of financial position at the date of transition to

IFRS for SMEs is best described as
a. Opening statement of financial position

22. In the opening statement of financial position, which cannot be

done by the first-time adopter of IFRS for SMEs?
a. Recognize assets and liabilities required by full PFRS but IFRS for
SMEs does not require such recognition.

23. IFRS for SMEs contains exemptions for the restatement of the
opening statement of financial position. What is the basis for such
exemptions?
a. Impracticability

24. The reconciliation of equity under the previous reporting

framework to the equity under IFRS for SMEs is made at
a. The date of transition to IFRS for SMEs and at the end of current
reporting period

25. The reconciliation of profit or loss under the previous reporting

framework to the profit or loss under PFRS for SMEs is made at
a. The end of current reporting period

26. Fair presentation in accordance with IFRS for SMEs is presumed

to result from
a. . Compliance with IFRS for SMEs, with additional disclosures where
necessary, by an entity that does not have public accountability
27. An entity that is not publicly accountable must make an explicit
and unreserved statement of compliance with the IFRS for SMEs
a. If the entity complies with all the requirements of IFRS for SMEs

28. Financial statements prepared by an SME must comply with the

IFRS for SMEs. Which of the following statements suitably describes
the nature of the compliance with the Standard?
a. The SME has followed IFRS for SMEs in its entirety

29. A complete set of financial statements for SMEs

a. Is similar to that provided for by full PFRS.

30. In accordance with IFRS for SMEs, an entity must present

additional line items in a statement of financial position when
a. Such presentation is relevant to an understanding of the entity's
financial position

31. In accordance with IFRS for SMEs, the financial statement that
presents the assets, liabilities and equity at a point in time.
a. Could be titled the statement of financial position, the balance
sheet or any other title that is not misleading

32. All of the following are considered line items in the statement of
financial position of an SME, except
a. Total of assets of disposal group classified as held for sale

33. Which of the following must not be included in the statement of

financial position of an SME?
a. Contingent asset
34. Which of the following is required to be shown as line item for an
SME but not under full IFRS?
a. Investment in joint venture

35. All of the following are considered line items in the statement of
financial position of an SME, except
a. Revaluation surplus related to intangible assets

36. Which of the following should be recognized in the

comprehensive income of an SME?
a. Gain and loss from translation of a foreign operation
37. Which of the following can an SME elect as an accounting policy
choice to recognize in other comprehensive income?
a. Actuarial gain and loss of defined benefit plan de Gain and loss on
hedging instrument

38. Which component of OCI of an SME is reclassified to profit or

loss?
a. Change in fair value of hedging instrument

39. Which method is required for reporting change in accounting

policy?
a. Retrospective approach

40. Which of the following is not treated as a change in accounting

policy?
a. A change from direct writeoff method of recognizing bad debt
expense to allowance method
41. Which statement about accounting changes is correct?
a. A change from expensing certain costs to capitalizing such costs
due to a change in the period benefited should be handled as a
change in accounting estimate.

42. Prior years’ statements are not restated for

a. Changes in estimates

43. Inventories are defined as

a. Assets held for sale in the ordinary course of business, in the
process of production for such sale, or in the form of materials or
supplies to be constituted in the production process or in the
rendering of services.

44. Inventories must be measured by an SME at

a. The lower of cost and estimated selling price less cost to complete
and dispose

45. Under PFRS for SMEs, if the estimated selling price less cost to
complete and sell is lower than cost of inventory, the write-down is
recognized
a. As an impairment loss

46. Consumable supplies to be consumed in the production process

are accounted for as
a. Inventory

47. A retailer of perishable produce seeks to avoid obsolescence by

arranging the produce in such a way that customers are most likely to
purchase the oldest inventory first. The cost formula that is more
appropriate for the entity is
a. FIFO
48. A property developer must classify properties that it holds for
sale in the ordinary course of business as
a. Inventory

49. An SME may use techniques for measuring cost of inventories if

the results approximate cost. Accepted techniques include all of the
following, except
a. Gross profit method

50. An entity must assign the cost of inventories by

a. Specific identification of individual costs for inventories that are
not ordinarily interchangeable.

51. All of the following are considered basic financial instruments,

except
a. Investment in convertible preference shares

52. All of the following are considered basic financial instruments,

except
a. Option and forward contracts

53. For a basic financial instrument measured at cost less

impairment, the impairment loss is
a. . The difference between the carrying amount of the asset and the
best estimate of the amount that would be received if the asset
were sold.

54. It is a financial instrument that gives the holder the right to sell
the instrument back to the issuer or is automatically redeemed or
purchased by the issuer on the occurrence of a future uncertain event.
a. Puttable instrument
55. All of the following financial assets are basic financial
instruments of an SME, except
a. A thirty percent holding in nonputtable ordinary shares of another
entity where the investee is classified as an associate of the entity.
56. All of the following financial instruments are basic financial
instruments of an SME, except
a. Financial instruments that meet the definition of an entity's own
equity

57. All of the following are considered basic financial instruments of

an SME, except
a. Investment in convertible debt

58. Which of the following statements reflects the accounting for

financial instruments under IFRS for SMEs?
a. All amortized cost instruments must be tested for impairment

59. Investment property is defined as

a. Land or a building, or part of a building, or both held to earn
rentals or for capital appreciation or both.

60. An SME operates a bed and breakfast from a building it owns.

The SME also provides the guests with other services including
housekeeping, satellite television and broadband internet access. The
daily room rental is inclusive of these services. Furthermore, upon
request, the entity conducts tours of the surrounding area for the
guests. Tour services are charged for a fee separately. The SME should
account for the building as
a. Property, plant and equipment
61. An SME must measure an investment property after initial
recognition
a. At fair value, for property whose fair value can be measured
reliably without undue cost or effort on an ongoing basis and the
cost-depreciation impairment model for all other investment
property.

62. A building is held by a subsidiary to earn rentals under an

operating lease from the parent. The Parent manufactures products in
the rented building. The fair value of the building can be measured
reliably without undue cost or effort on an ongoing basis. What is the
accounting treatment of the building?
a. Accounted for as an investment property by the subsidiary and
property, plant and equipment by the group

63. What is the presentation of investment property accounted for

using the cost model?
a. Separate line item as investment property at cost less accumulated
depreciation and impairment

64. An associate is
a. An entity over which the investor has significant influence and that
is neither a subsidiary nor an interest in a joint venture.

65. An SME shall account for investments in associate after initial

recognition using
a. Any one of the cost model, equity method and fair value model
and using the same accounting policy for all investments in
associates
66. Under the cost model, the investment in associate is
subsequently measured at
a. Cost less accumulated impairment loss
67. Under the fair value model, the investment in associate is
subsequently measured at
a. Fair value

68. Investments in associates must be tested for impairment if the

entity uses
a. The cost model or the equity method

69. An SME owns 30% of the ordinary shares that carry voting rights
at a general meeting of shareholders. In the absence of evidence to
the contrary, the SME
a. Has significant influence over the investee, provided that it does
not have control or joint control over the investee.

70. Which of the scenarios would not lead to the presumption that
an entity has significant influence?
a. Holding indirectly, through a joint venture, 20% or more of the
voting power of the investee.

71. What is the definition of property, plant and equipment?

a. Tangible assets held for use in the production or supply of goods or
services, for rental to others, or for administrative purposes and
expected to be used during more than one reporting period.

72. An SME shall measure property, plant and equipment after initial
recognition using
a. Cost model and revaluation model

73. What depreciation method is most appropriate for the significant

part of an aircraft?
a. Production method based on air miles flown for the jet engine and
straight line method for all other parts of the aircrafts
74. An entity shall measure government grant at
a. The fair value of the asset received or receivable

75. An SME must recognize a government grant that does not impose
specified future performance conditions
a. In income when the grant proceeds are receivable.

76. An SME must recognize a government grant that imposes

specified future performance conditions
a. In income only when the performance conditions are met.

77. An SME must recognize government grant received before the

income recognition criteria are satisfied
a. As a liability

78. Borrowing costs do not include

a. Dividends declared to equity holders

79. An SME must recognize all borrowing costs

a. As an expense when incurred.
80. An SME shall capitalize all of the following as cost of property,
plant and equipment, except
a. Loan raising cost

81. Which of the following is a disclosure requirement in relation to

borrowing cost under PFRS for SMEs?
a. Total finance costs recognized as expense

82. An SME must measure intangible assets after initial recognition

a. At cost less any accumulated amortization and any accumulated
impairment loss.
83. The useful life of the intangible asset of an SME is considered to
be
a. Finite

84. An SME acquired a trademark that has a remaining legal life of

five years but is renewable every ten years at little cost. The useful life
of the trademark is
a. Indefinite

85. Under PFRS for SMEs, the cost of an intangible asset at initial
recognition is measured at fair value when
a. It is acquired as part of business combination or acquired by way
of government grant.

86. What is the accounting for research and development?

a. All research and development costs are expensed
87. On January 1, 2010, an SME (a publisher) acquired a competitor's
publishing title at certain amount. On January 1, 2013, the entity
commenced publishing using the new title. On December 31, 2017,
the entity decided to sell the publishing title and took actions that
make the sale within 12 months highly probable. The publishing title
was sold on December 31, 2018. The entity should account for the
publishing title as
a. An intangible asset from January 1, 2010 to the date of disposal on
December 31, 2018.

88. Which of the following arrangements is accounted for in

accordance with PFRS for SMEs on leases?
a. Agreements that transfer the right to use assets even though
substantial services by the lessor may be called for in connection
with the operation or maintenance of such assets.
89. An SME entered, as lessee, into a five-day non-cancelable lease
of a motor vehicle that has an economic life of five years and nil
residual value. Lease payments are on a daily basis. At the end of the
lease term, the lessee returns the motor vehicle to the lessor. The
lease is accounted for
a. As an operating lease

90. Depreciation of a leased machine is

I. Recognized by the lessee where the lessor and the lessee have
classified the lease as finance lease.
Il. Recognized by the lessor where the lessor and the lessee have
classified the lease as an operating lease.
a. Either I or II
91. A lessee that paid a certain amount to a broker for arranging a
finance lease must
a. Include the fee in the cost of the leased asset

92. An SME enters as lessee into a two-year lease in respect of a

machine that has an economic life of four years with nil residual
value. Rent per year is payable yearly in advance. The lessee holds an
option to acquire the machine for a nominal amount. The option is
exercisable at the end of the lease term when the fair value of the
machine is expected to be very much higher than the nominal
amount. At the commencement of the lease term, the lessor should
I. Derecognize the machine and recognize a lease receivable.
Il. Continue to recognize the carrying amount of the machine subject
to the lease as an item of property, plant and equipment.
a. I only

93. What is the formula in computing equity?

a. Investments by owners plus retained earnings minus distributions
to owner
94. What is the measurement of equity shares issued?
a. Fair value of cash or other resources received or receivable less
direct issue costs

95. An entity shall account for the transaction cost of an equity

transaction as
a. A deduction from equity

96. An entity shall reduce equity for

a. Amount of distributions to owners.

97. When entity distributes noncash asset as dividend to the owners.

the entity shall
a. Recognize a liability equal to the fair value of the asset to be
distributed.

98. An entity shall recognize the goods or services received in a

share-based payment transaction
a. When the entity receives the goods or services.

99. If share options granted to employees under a share-based

payment transaction vest immediately
a. The employees are unconditionally entitled to the share-based
payments

100. For equity-settled share-based payment transactions, an entity

shall measure the goods or services received
a. At the fair value of the goods or services received unless the fair
value cannot be estimated reliably.
101. In measuring the fair value of shares and the related goods or
services received, an entity
a. Uses observable market price and other measures according to a
measurement hierarchy.

102. For a cash-settled share-based payment transaction for

employee services, the entity should
a. Recognize in profit or loss the estimate of the cash to be paid out
to the employees over the vesting period

103. For share-based payment transaction offering a choice of settling

the transaction in cash or by transfer of equity instrument, the entity
should account for the transaction as
a. Cash-settled share-based payment transaction unless the entity
has a past practice of settling by issuing equity instrument or the
option to settle in cash has no commercial substance.

104. Specialized activities of an SME include all, except

a. Insurance

105. The exploration expenditure incurred by an SME in exploration

and evaluation activities is classified as
a. Either tangible asset or intangible asset

106. An SME shall measure subsequently the intangible exploration

and evaluation asset using
a. Cost model

107. On the part of the private operator, the infrastructure asset shall
be recognized as
a. Either financial asset or intangible asset
108. The infrastructure asset in a service concession recognized as
financial asset shall be measured at
a. Amortized cost, fair value through profit or loss, or fair value
through other comprehensive income

109. Which is not addressed in IFRS for SMEs?

a. Earnings per share

110. Which accounting treatment is not allowed under the IFRS for
SMEs?
a. Revaluation model for intangible assets

111. Which of the following is not simplification of an accounting

practice allowed by the IFRS for SMEs?
a. SMEs do not have to derecognize a financial asset when the entity
transfers to another party substantially all of the risks and rewards
of the asset.