Statement of Changes in Equity

Twenty items. Two points each. Choose the best answer.

1. What is/are true about Equity?

a. Residual interest
b. Net assets
c. Sub-classified in the statement of financial position
d. All of the above
2. An entity shall present a statement of changes in equity including which of the
following?
a. Total comprehensive income for the period, showing separately the total
amounts attributable to owners of the parent and to non-controlling interest.
b. For each component of equity, the effects of retrospective application or
retrospective restatement recognized in accordance with PAS 8
c. For each component of equity, a reconciliation between the carrying amount at
the beginning and the end of the period, separately disclosing changes resulting
from: profit or loss; other comprehensive income; and transactions with owners
in their capacity as owners, showing separately contributions by and distributions
to owners and changes in ownership interests in subsidiaries that do not result in
a loss of control.
d. All of the above
3. Items directly affecting Retained Earnings include all of the following EXCEPT
a. Non-current asset held for sale.
b. Prior period errors and Effect of change in accounting policy.
c. Dividends declared.
d. Appropriation of retained earnings.
4. There is distinction between return on capital and return of capital.
a. Yes.
b. None.
c. It depends.
d. Sometimes.
5. There are two approaches in determining income. What are these?
a. Capital Maintenance Approach and Transaction Approach
b. Return on Capital Approach and Return of Capital Approach
c. Financial Capital Approach and Physical Capital Approach
d. All of the above
6. Choose the correct statement
a. The elements in the owners equity section of a statement of financial position
are classified primarily by source.
b. Appropriated retained earnings are those earnings that have been set aside for
the payment of dividends.
c. All tangible operational assets are depreciable; therefore, they are usually
reported net of depreciation.
 d. Statement of Financial Position items are grouped according to date of their
acquisition.
7. The elements of the equity section of the statement of financial position should be
classified primarily by:
a. Source
b. Maturity date
c. Class of capital stock
d. Liquidity
8. Retained earnings is a subcategory of
a. Contributed capital
b. Capital stock
c. Liabilities
d. Equity
9. Which of the following reports is not a component of the financial statements according
to PAS 1?
a. Statement of Financial Positions.
b. Statement of Changes in Equity.
c. Directors Report.
d. Notes to Financial Statements.
10. Which of the following should be presented in the statement of changes in equity?
a. Investment by owners.
b. Distributions to owners.
c. Change in ownership interest in subsidiary that does not result in a loss of
control.
d. All of the above.
11. Which of the following does not appear in the statement of retained earnings?
a. Net loss
b. Prior period error
c. Preference share dividend
d. Other comprehensive income
12. Which of the following would appear first in the statement of retained earnings?
a. Net income
b. Prior period error
c. Cash dividend
d. Share dividend
13. Which of the following would not appear in the statement of retained earnings?
a. Net loss
b. Prior period adjustment
c. Discontinued operation
d. Dividend declared
14. Correction of errors in the prior period are included in
a. Retained earnings
b. Other comprehensive income
c. Net income
 d. Share premium
15. An entity made a very large arithmetical error in the calculation of depreciation. The
correction of the error when discovered in the next year should be treated as
a. An increase in depreciation expense for the year when the error is discovered.
b. A component of income for the year when the error is discovered but separately
reported.
c. Other expense for the year when the error was made.
d. A prior period adjustment.
16. The financial capital concept requires that net assets shall be measured at
a. Current cost
b. Historical cost
c. Historical cost adjusted for changes in purchasing power.
d. Current cost adjusted for changes in purchasing power.
17. Which of the following statements regarding the term profit is true?
i. Profit is any amount over and above that required to maintain the capital
at the beginning of the period.
ii. Profit is the residual amount that remains after expenses have been
deducted from income.
b. I Only.
c. II Only.
d. Both I and II.
e. Neither I nor II.
18. Under financial capital maintenance concept, a profit is earned
a. If the monetary amount of the net assets at the end exceeds the monetary
amount of the net assets at the beginning, after excluding any distributions to
and contributions from owners.
b. If the monetary amount of net assets at the beginning exceeds the monetary
amount of the net assets at the end, after excluding distributions to and
contributions from owners.
c. If the monetary amount of net assets at the end exceeds the monetary amount
of net assets at the beginning.
d. If the monetary amount of net assets at the beginning exceeds the monetary
amount of net assets at the end.
19. A financial instrument that gives the holder the right to put the financial instruments
back to the issuer for cash or other financial asset.
a. Trading security.
b. Available for sale security.
c. Puttable Financial Instrument.
d. Debt Financial Instrument.
20. For puttable financial instruments classified as equity instruments, an entity shall
disclose:
a. Summary quantitative data about the amount classified as equity.
b. Its objectives, policies and processes for managing its obligation to repurchase or
redeem the instruments when required to do so by the instrument holders,
including any changes from the previous period.
c. The expected cash outflow on redemption or repurchase of that class of financial
instruments.
d. All of the above.

Ora et Labora