1. Which of the following is incorrect regarding fair presentation of financial statement?

Ans: Management cannot depart from PFRS requirement even if compliance

2. All of the following are correct, except:

Ans: Incomplete records another term for double entry system

3. In a single statement of comprehensive income, profit is equal to the total comprehensive

Ans: Only if an entity has no other comprehensive income

4. Which of the following describes a change in reporting entity?

Ans: Changing the companies included in combined financial statements.

5. The occurrence that most likely would have no effect on net income is the

Ans: Correction of an error in the financial statements of a prior period discovered subsequent
to their issuance

6. Compared to the accrual basis of accounting, the cash basis overstates income by the net
decrease during the accounting period of:

Ans: Accrued Expenses but not accounts receivable

7. Which of the following is accounted for as a change in accounting principle

Ans: A change in inventory valuation from average cost to FIFO

8. A statement of financial position as at the beginning of earliest comparative period should

be prepared by an entity in any following circumstances except

Ans: When an entity changes any of its accounting estimates used in accounting

9. An entity that purchases goods from suppliers for resale to customers should recognize
which inventory

Ans: Merchandising inventory

10. When converting from cash basis to accrual basis of accounting, which of the following
adjustments should be made to cash paid for operating expenses to determine accrual basis
operating expenses?

Ans: Subtract ending prepaid expense

11. Other comprehensive income, except

Ans: Gains or losses..
12. Which of the following definitions is correct?
Statement 1: general purpose financial
Statement 2 : individual financial
Ans: I Only
13. Which of the following is an entity specific aspect
Ans. Materiality
14.Which method of income measurement
Ans. Transaction Approach
15. Which of the following terms...cannot be used to describe.. comprehensive income?
Ans. Extraordinary item
16. Which statements is correct.. statement of financial position?
Ans: I only
17.Accounting changes are often.. violation in the acctg concept of
Ans. Consistency
18. It is defined as an increase in economic benefits
Ans. Income
19. The process of reporting an item in the FS is
Ans. Recognition
20.which statements are intended.. needs of users who are not in a position
Ans. General purpose FS

21. Which of the following is not treated as a change in accounting principle?

Ans: A change from LIFO to FIFO for inventory valuation

22. An entity presents an analysis of expenses using a classification based on:

Ans: Either the nature of expenses or the function of expenses within the entity,
whichever provides information that is reliable and more relevant.

23. The account deferred grant revenue is classified as

Ans: A noncurrent liability

24. Which of the following disclosures is required for a change from sum-of-the-years-
digits to straight line?

Ans: Recomputation of current and future years' depreciation

25. A characteristic of the notes to the financial statements is that:

Ans: They describe accounting policies

26. Offsetting of assets and liabilities is

Ans: Not allowed unless permitted by PFRS

27. PAS 1 refers to it as all changes in equity other than introduction and return of
capital to owners.

Ans: Other comprehensive income

28. Which of the following is not a generally practiced method of presenting the income
statement?

Ans: Including prior period adjustments in determining net income

29. Which of the basic financial statements is not prepared using the accrual basis of
accounting?

Ans: Statement of Cash Flows

30. Which of the following is included in comprehensive income

Ans: Unrealized gains on available for sale of securities

31. In preparing a statement of comprehensive income in two statements, the second

statement shall start with what line item?

= Profit or loss
32. Which one of the following transactions should be classified as a financing activity
on the statement of cash flows?

= Purchase of the company’s own stock

33. Which one of the following is not required to be presented as a minimum information
on the face of the statement of financial position, according to PAS 1?

= Contingent Liability

34. A company changes from straight-line to an accelerated method of calculating

depreciation, which will be similar to the method used for tax purposes. The entry to
record this change should include a

= Credit to accumulated depreciation

35. The major financial statements include all of the following, except

= Statement of changes in financial position

36. An entity shall present a complete set of financial statements (including the
comparative information) at least

= Annually

37. An example of a correction of an error in previously issued financial statements is a

change

= From the cash basis of accounting to the accrual basis of accounting

38. Which of the following statements is true regarding the single-entry accounting
system?

= It is also called incomplete records because only minimal accounting records are kept
without the benefit of a complete accounting system

39. The fundamental qualitative characteristic of faithful representation has the

components of

= Completeness, neutrality and freedom from error

40. XYZ Inc. decided to extend its reporting period from a year (12-month period) to a
15-month period. Which of the following is not required under PAS 1 in case of change
in reporting period?

= XYZ should disclose that comparative amounts used on the financial statements are
not entirely comparable.
41. Presenting consolidated financial statements this year when statements of
individual companies were presented last year is

- an accounting change that should be reported by restating the financial statements

of all prior periods presented

42. Which of the following would be classified as a Financing Activity on the

statement of cash flows?

- Dividends paid to shareholders of the company on the company’s common stock

43. Which of the following is not considered a characteristic of a liability?

-Liquidation is reasonably expected to require use of existing resources classified as

current assets

44. Which of the following is not required to be presented in the statement of

changes in equity?

-The amounts of dividends recognized as distributions to owners during the period,

and related amount per share

45. Which of the following is (are) the proper time period(s) to record the effects of a
change in accounting estimate?

-current period and prospectively

46. PAS 1 requires the allocation of profit or loss for the period between or among:

I. Profit or loss attributable to owners of the parent

II. Profit or loss attributable to subsidiaries of the parent

III. Profit or loss attributable to non-controlling interests

-1 and 3

47. An increase in inventory account of a company from 10,000 at the beginning of

the year to 15,000 at the end of the year would be shown on the company’s
statement of cash flows prepared under the indirect method as

- A deduction from net income of 5,000 in order to arrive at net cash provided by
operating activities
48 When converting from cash basis to accrual basis of accounting, w/c of the
following adjustments should be made to cash collections from customers to
determine accrual basis service revenue?

-Add ending accounts receivables

49. The REFINANCING (rolling over) of a currently maturing long term-debt

completed on or before the balance sheet date requires that such debt be classified
as

- Non-current liability, if the financing is at the discretion of the entity owing the debt.

50 When an entity BREACHES an undertaking under a long term agreement with

the effect that the liability becomes payable in demand, the liability is classified a

Ans: Current, even if the lender has agreed not to demand

51. Which of the following is true?

Answer-all of the above

52. Which is not an objective of the notes to the financial statements as envisaged
under PAS 1

Answer-Notes allow external auditors in assessing whether amounts in the fs are

fairly presented in a form of opinion
53. The REFINANCING (rolling over) of a currently maturing long-term debt completed
on or before the balance sheet date requires that such debt be classified as a

Answer-non current liability

54. Which of the following is an essential characteristics of an asset?

Answer-An asset provides future benefits

55. What's the purpose of information presented in notes to fs

Answer-To provide disclosure required by generally accepted accounting principles

56. When a company decides to switch from the double-declining balance methodto the
straight line method this change should be handled as a…

Answer-change in accounting estimate.

57. The sf position is useful for all the following, except

Answer-determining free cash flow

58. The estimated life of a building that has been depreciated 30 years of an originally
estimated life of 50 years has been revised to a remaining life of 10 years. Based on
this information, the accountant should

Answer-depreciate the remaining book value over the remaining life of the asset.

59. Which of the following is not an application of going concern?

Answer-Amortizing research...

60? These advances should be reported as---

Answer-Receivables

61. Which of the following is not a retrospective-type accounting change?

- Sum-of-the-years’-digits

62. Which type of accounting change should always be accounted for in current and future
periods?

- Change in accounting estimates

63. When an enterprise chooses not to present properly classified SFPosition

- Assets and liabilities should be presented according to liquidity

64. Which of the following items will not appear in the statement of changes in equity?
- Change in depreciation method

65. If a material amount of inventory has been ordered through a formal purchase

- This fact must be disclosed

66. Under PAS 1, which of the following does not refer to a current asset?

- Expected to be realized after 12 months after B/S date (pero wrong ni sya)

67. Which of the following are the acceptable methods for reporting comprehensive income

I. One statement of comprehensive income

II. Two statements; an income statement and a statement of CI

III. In the statement of owner’s equity

- 1 and 2 only

68. Which item is not a current liability?

- Stock dividends distributable

69. Items of dissimilar nature or function

- must be presented separately in FS if those items are material

70. PAS 1 precludes an entity to present or classify this account as current in the SFPosition

- Prepayments (pero wrong ni sya)

71. Which is incorrect regarding an income statement?

Answer: When a separate income statement is prepared, it is not

considered a part of a complete set of financial statements

72. The valuation of a promise to receive cash in the future at present value is
valid because of the accounting concept of

Answer: Going concern

73. Current tax assets and current tax liabilities can only be offset in the
statement of financial position

Answer: If the entity has the legal right and the intention to settle on
a net basis

74. The net worth method, otherwise known as the capital maintenance
approach, is a concept in which
 Answer: Profit = an amount that an enterprise could distribute to its
owners and be as well off at the end of the period as it was
at the beginning of the period

75. All of the following is required to be disclosed by the entity in the notes to the
financial statements. Which is the exception?

Answer: If it is a limited life entity, information regarding the length of

its life

76. Under the indirect method of determining net cash operating activities, which
of the following would be recorded as a deduction from net income?

Answer: A decrease in accounts payable

77. Which of the following is correct concerning PAS 1 Presentation of Financial

Statements?

Answer: It prescribes the basis for presentation of general and

special purpose financial statements

78. What is the objective of financial statements according to PAS 1?

Answer: To provide information about the financial position,

performance, and cash flows of an entity that is useful to a
wide range of users in making economic decisions

79. The income statement information would help in which of the following tasks?

Answer: Estimate future cash flows

80. The presence of “cost of sales” account in the income statement signifies that
an entity classifies expenses according to

Answer: Function

81. Which of the following statements is true when accounts receivable are factored without
recourse?

Ans: The factor assumes the risk of collectibility and absorbs any credit losses in collecting the
receivables

82. Which of the following is not an acceptable presentation of the statement of financial
position?
Ans: Deferred tax liabilities presented as part of current liabilities

83. The statement of financial position information is useful for all of the following, except

Ans: To analyze cash inflows and outflows for the period

84. A company changes from percentage-of-completion to completed-contract, which is the

method used for tax purposes. The entry to record this change should include a

Ans: debit to Retained Earnings in the amount of the difference on prior years, net of tax.

85. An entity must disclose comparative information for

Ans: The previous comparable period for all amounts reported

Corrected ans: The previous comparable period for all amounts reported, and for all narrative
and descriptive information when it is relevant to an understanding of the current period's
financial statement

86. Which of the following reports is within the scope of PAS 1?

Ans: A statement of financial condition prepared by a banking institution

Corrected ans:

87. The statement of financial position

Ans: Omits many items that are of financial value

88. Under PAS 1, which of the following does not describe a current liability?

Ans: The entity has an unconditional right to defer settlement of the liability for at least twelve
months after the balance sheet date

89. They are structured representation of the financial position and financial performance of an
entity.

Ans: Financial Statements

90. Counterbalancing errors do not include

Ans: errors that correct themselves in three years.

91. If, at the end of a period, a company erroneously excluded some goods from its ending
inventory.-no effect on the company's net income, working capital, and retained earnings.

92.Which of the following statements is correct?-A change from expensing certain costs to
capitalizing these costs due to a change in the period benefited, should be handled as a change
in accounting estimate.
93. under PAS 1, assets in the statement of financial position are broadly classified into.-Current
and non-current

94. These provide narrative description or dissagreetion of items disclosed on the face of the
FS..-Notes to Financial Statements

95.It involves the description of the items in words and by a monetary amount and the inclussion
of that amount in the FS.-Recognition