AKLAN STATE UNIVERSITY

SCHOOL OF MANAGEMENT SCIENCES

Banga, Aklan

Mock Board Exam Financial Accounting and

Reporting

1. When an entity changed the expected service life of an assets because additional information has been
obtained, which of the following should be reported?
a. Cumulative effect of change in accounting policy
b. Proforma effect of retrospective application
c. Prior period error
d. Change in accounting estimate

2. The financial statement prepared under PFRS

a. Do not articulate with one another
b. Are not highly precise because many estimates and judgements must be made
c. Contain limited number of future projections, such as projected sales.
d. Reflect a single measurement basis which is historical cost

3. At the end of the current year, an entity had various checks and papers in its safe. Which item should not be
included in cash account in the current year-end statement of financial position?
a. US $ 10,000 cash
b. Past due promissory note issued in favor of the entity and its president
c. Another entity’s P150,000 check payable to the entity dated December 31 of the current year
d. The entity’s undelivered check payable to the supplier dated December 31 of the current year

4. An unadjusted trial balance

a. Is a summary taken directly from the general journal
b. Proves that no errors have been made in the accounting records
c. Usually contains the account balances that should appear in the financial statement
d. Provide information that is helpful when making adjusting entries.

5. OK Company has prepared a worksheet as basis for its cash flow statement for the year ended December 31,
2016. The worksheet includes the following information: January 1 accounts balances; prepaid rent expense,
P6,000,000; account receivable, P12,000,000; accounts payable, P10,000,000; allowance for bad debts,
P1,000,000. The December 31 accounts balances: allowance for bad debts, P 1,500,000; accounts receivable
P15,000,000; prepaid rent expense, P4,500,000; accounts payable, P12,000,000. The net income of the company
is P80,000,000. What amount of net cash provided by financing activities that company should include in its cash
flow statement?
a. 78,000,000 c. 81,000,000
b. 79,000,000 d. Answer not given

6. During 2016, Orca Corporation decided to change from the FIFO method of inventory valuation to the weighted
average method. The inventory balances under each method were as follows
FIFO Weighted Average
January 1 710,000 770,000
December 31 790,000 830,000
Ignoring income tax, in its year 2016, statement of retained earnings, what amount should Orca report as the
effect of this accounting change?
a. 100,000 c. 60,000
b. 40,000 d. 0

7. XYZ Company provided the following account balances on December 31, 2016
Accounts Payable 125,000
Accrued taxes 50,000
Cash surrender value 30,000
Ordinary shares 1,000,000
 Dividends – preference 150,000
Mortgage payable (P200,000 due in six months) 1,200,000
Note payable – 20% due January 1, 2017 1,500,000
Share premium 250,000
Preference share 450,000
Income summary – credit balance 500,000
Retained Earnings – January 1, 2016 550,000
Unearned rent income 25,000
Dividends – ordinary 100,000
XYZ Company should report stockholder’s equity on December 31, 2016 at
a. 1,450,000 c. 2,500,000
b. 1,650,000 d. 2,250,000

8. The following data pertain to White Company on December 31, 2016.

Trade accounts payable, including cost of goods received
on consignment of 150,000 1,350,000
Accrued taxes payable 125,000
Stock dividend payable 300,000
Customers; deposits 100,000
White Company as guarantor 200,000
Bank overdraft 55,000
Accrued electric and power bills 60,000
Reserve for contingencies 150,000
How much should be shown as current liabilities in the statement of financial position of White Company in
December 31, 2016?
a. 1,840,000 c. 1,650,000
b. 1,740,000 d. 1,540,000

9. Regency Company reported net income for the years 2015 and 2016 at P550,000 and P700,000 respectively. The
company’s account disclosed the need for adjustments as follows:
2015 2016
Overstatement of ending inventory 29,000 33,000
Omission of depreciation on newly acquired equipment 15,000 15,000
Understatement of commission receivable 22,000 18,000
A purchase of merchandise was not recorded until the following
Year, but not included in the year’s inventory 60,000
The adjusted net income was?
a. 700,000 c. 708,000
b. 677,000 d. 737,000

10. The December 31, 2016 statement of financial position of Hazel Company showed the following current assets:
Cash and Cash Equivalent 700,000
Accounts receivable 1,200,000
Inventories 600,000
An examination of the accounts revealed that the accounts receivable include the following:
Trade accounts 930,000
Allowance for doubtful account (20,000)
Claim against shipper for goods lot in transit 30,000
Selling price of unsold goods sent by Hazel on consignment
at 130% of cost and not included in Hazel’s ending inventory 260,000
What is the amount of current assets on December 31, 2016?
a. 2,412,000 c. 2,440,000
b. 2,240,000 d. 2,500,000

11. Company Z sold P1,000 of merchandise to Company X on terms 2/10, n/15. If Company X does not pay the
account within the 15 days and instead issues at 12% a 90-day note to Company Z, the entry to Company Z’s
books (assume that Company Z uses the gross method for recording sales) at the time it receives the note will
include a:
a. Debit to Accounts Receivable for P980
 b. Debit to Notes Receivable for P980
c. Credit to Accounts Receivable for P1,000
d. Credit to Sales for P1,000

12. Which of the following is appropriately described?

a. A lapping is the practice of opening the books of accounts beyond the close of the accounting period for
the purpose of showing a better financial position and performance.
b. Window dressing consists of misappropriation a collection from one customer and concealing this
defalcation when collection is made from another customers.
c. Kiting is the transfer of cash from one bank to another bank and is usually employed at the end of the
month. It occurs when a check is drawn against a first bank and depositing the same check in a second
bank to cover the shortage in the latter bank.
d. All statement is correct.

13. The December 31, 2015 trial balance of Shido Company includes the following accounts:
Cash on Hand 500,000
Petty cash fund 20,000
Security Bank current account 1,000,000
PNB Current account No. 1 400,000
PNB Current Account No. 2 (50,000)
BSP treasury bill – 6 days 3,000,000
BPI time deposit – 3 days 2,000,000
 The cash hand includes a customer postdated check of 100,000 NSF customer check of 50,000 and postal money
order of 40,000.
 The petty cash fund includes unreplenished petty cash voucher for 2,000 and an employee check for 3,000 dated
January 31, 2016.
 A check for 200,000 was drawn against Security Bank account, dated January 15, 2014, delivered to the payee
and recorded December 31, 2015.
 The BPI deposit is set aside for acquisition of land to be used as a factory site.
How much is the cash and cash equivalents?
a. 4,915,000 c. 4,970,000
b. 4,965,000 d. 4,975,000

14. Which statement is correct?

a. Bank charge will cause balance per ledger to be lower than that recorded by the bank, all other things
being equal.
b. Outstanding check will cause the cash balance per ledger to be greater than the balance reported by the
bank, all other things being equal.
c. The amount shown in the balance sheet must also be the balance reported in the bank statement.
d. Deposit of another entity being credited to the account of the depositor is an error that does not require
an adjusting entry on the depositor’s books.

15. Emil Company gathered the following information:

 The November 30 bank statement balance included bank service charges of P2,000
 The November 30 cash balance in the general ledger was P244,500
 Outstanding checks on November 30 were P63,000 while Undeposited receipt were P36,000
 The bank service charge as shown on the bank statement totaled P3,000
 The December 31 cash balance in the general ledger was P319,750, which recognized P482,750 for
December receipts and P405,500 for checks written during December. In transit to the bank were
receipts of P28,750. Checks of P15,000 written prior to December and check of P60,500 written in
December had not yet cleared the bank
What is the total disbursement in December?
a. 419,000 c. 408,500
b. 405,500 d. 396,000

16. If the investment in equity instrument is not held for trading.

a. The subsequent changes in fair value must be presented in profit and loss
b. The subsequent changes in fair value must be presented in other comprehensive income.
 c. An entity may make an irrevocable election to present in the other comprehensive income subsequent
changes in fair value
d. The subsequent changes in fair value is not recognized.
17. X Company had the following transactions on investment in 2016:
 X purchased 10,000 A Company shares at P20 per share on January 2, 2016. X paid transaction cost
of P5,000. The fair value at the end of the year is P15 per share. These shares are held for trading
purpose.
 X purchased 5,000 B Company shares at P25 per shares on January 16, 2016. X paid transaction cost
of P5,000. The fair value at the end of the year is P25 per shares. These shares are not held for
trading purposes but will be sold if the need arises.
 X purchased 8,000 C Company shares at P15 per share on February 1, 2016. X paid brokerage fee of
P15,000. These shares are held for long term investment. The market value of these shares is
undeterminable. X sold 2,000 shares at P25 per share on June 1, 2016. X received 20% stock
dividend on December 1, 2016.
After examining the above information, you are to determine the following:
The balance of financial assets at fair value through other comprehensive income on December 31, 2016 is
a. 125,000 c. 215,000
b. 130,000 d. None of these

18. Given the data on number 17, the total investment is the non-current assets sections of the December 31, 2016
statement of financial position is.
a. 101,250 c. 231,250
b. 226,250 d. None of these

19. If there is an indication that an investment in associate may be impaired, impairment loss shall be recognized
whenever the carrying amount exceeds the recoverable amount of the investment of the investment in
associate. Which false regarding impairment in associate?
a. The recoverable amount of investment in associate is measured as the lower between fair value less
cost to sell and value in use.
b. The fair value less cost to sell is the amount obtainable from the sale of the asset in an arm’s length
transaction between knowledgeable willing parties less disposal cost.
c. Value in use is the present value of the estimated future cash flows expected to arise from the
continuing use of an asset and from its ultimate disposal
d. Any resulting impairment loss for the investment is allocated first to any remaining goodwill.

20. Smart Company has P 3,000,000 note receivable from sale of plant bearing interest at 12% per annum. The note
is dated June 1, 2015. The note is payable in 3 annual installments of P 1,000,000 plus interest on the unpaid
balance every June 1. The initial principal and interest payment was made on June 1, 2016.
The interest income for 2016 is
a. P 300,000 c. P 210,000
b. P 290,000 d. P 140,000

21. On January 1, 2016 Major Company purchased a uranium mine for P 800,000. On that date, Major estimated
that the mine contained 1,000 tons of ore. At the end of the productive years of the mine, Major Company will
be required to spend P 4,200,000 to clean up the mine site. The appropriate discount rate is 8%, and it is
estimated that it will take approximately 14 years to mine all of the ore. Major uses the productive output
method of depreciation. During 2016, Major extracted 100 tons of ore from the mine. Compute the amount of
depreciation for 2009.
a. P 114,408 c. P 223,000
b. P 80,000 d. P 500,000

22. On June 9, 2009, Pol Corp. sold merchandise with a list price of P 5,000 to Pot on account. Pol allowed trade
discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made FOB shipping point. Pol prepaid
P 200of delivery cost for Pot as an accommodation. On June 25, 2009, Pol received from Pot a remittance in full
payment amounting to
a. 2,744 c. P 2,944
b. 2, 940 d. P 3,000
23. Victoria Company had purchased equipment for P 10,000,000 on January 1, 2007. The equipment had a 5 year
life and a residual value of 1,000,000. Victoria Company depreciated the equipment using the straight line
method. On December 31, 2009, Victoria questioned the recoverability of the carrying amount of this
equipment. On December 31, 2009 the undiscounted expected net future cash flows related to the continued
use and eventual disposal of the equipment totaled P 4,800,000. The equipment’s fair value on December 31,
2009 is P 4,000,000 while the discounted cash flows related to the equipment is P 4,200,000. After any loss on
impairment has been recognized, what is the carrying amount of the equipment.?
a. P 4,200,000 c. P 4,600,000
b. P 4,000,000 d. P 4,800,000

24. London Ltd, values its inventory by using the retail method (FIFO basis, lower of cost or market). The flowing
information is available for the year just ended:
Cost Retail
Beginning inventory 80,000 140,000
Purchases 297,000 420,000
Freight-in 4,000
Shortages 8,000
Markups (net) 10,000
Markdowns (net) 2,000
Sales 400,000
At what amount would London reports its inventory?
a. 112,000 c. 117,600
b. 113,400 d. 119,000

25. Dart Co. accounting record indicated the following information:

Beginning inventory 500,000
Purchases during the year 2,500,000
Sales during the year 3,200,000
A physical inventory taken at year-end resulted in an ending inventory of P575,000. Dart’s gross profit on sales
has remained constant at 25% in recent years. Dart suspects some inventory may have been taken by new
employee. At the statement of financial position date. What is the estimated cost of missing inventory?
a. 25,000 c. 175,000
b. 100,000 d. 225,000

26. On January 2, 2002, Power Co. acquired a building costing P6,000,000. The company estimated that the useful
life of the property is 20 years. The company policy is to depreciate all depreciable assets using the straight-line
method, without scrap. On January 2, 2007, the building was remeasured at P3,000,000 and with a remaining
revised useful life of 20 years. On January 2, 2012, the company converted the property into investment
property when the fair market value is P3,500,000.
On January 2, 2012, what amount of gain or impairment recovery should the company recognize?
a. None c. 1,125,000
b. 125,000 d. 1,250,000

27. What amount of unrealized gain or revaluation surplus should Grand recognize in its shareholders’ equity on the
date of transfer?
a. None c. 1,125,000
b. 125,000 d. 1,250,000

28. Moon Co. purchased Patent A for P600,000 and Patent B for P900,000. Moon also paid indirect costs P75,000 for
Patent A and P105,000 for Patent B. Both patents were challenged in legal actions. Moon paid P300,000 in legal
fees in successful defense for Patent A and P450,000 in legal fees in an unsuccessful defense of Patent B. What
amount should Moon capitalize for patents?
a. 675,000 c. 1,680,000
b. 975,000 d. 2,430,000

29. Solo company acquired forest assets for a lump sum amount of P20,000,000 which is equal to the lump sum
value of group of assets. At the time of purchase the company is unable to determine the fair value of the trees
separately since no active market was clearly available. The other assets in group had a determinable fair value.
The forest assets are listed below and their related fair market value less point of sell cost:
Land under trees 2,000,000
 Roads in forest 1,000,000
What amount should the biological assets be initially recorded?
a. 1,000,000 c. 17,000,000
b. 20,000,000 d. 19,000,000

30. On December 31, 2016, Sony Company reported the following information involving its biological assets
Biological Assets at cost on December 31, 2014 6,000,000
Fair value surplus on initial recognition at fair value December 31, 2015 7,000,000
Change in fair value to December 31, 2016 1,000,000
Decrease in fair value due to harvest during 2016 900,000
What amount should the biological asset be reported in the December 31, 2016 statement in Financial Position?
a. 6,100,000 c. 12,100,000
b. 7,100,000 d. 13,100,000

31. Transaction cost are capitalized for all of the following except;
a. Financial assets at fair value through profit or loss
b. Financial assets at fair value through other comprehensive income
c. Available for sale securities
d. Financial assets at amortized cost

32. Losses which are expected to arise from firm and uncancellable commitments for the future purchase of
inventory items, if material, should be
a. Recognized in the accounts by debiting loss on purchase commitments and crediting estimated liabilities
for loss on purchase commitments.
b. Disclosed in the notes
c. Ignored
d. Charged to retained earnings

33. An entity records inventory at the gross invoice price. Theoretically, which of the following should affect the cost
of inventory?
i. Warehousing cost
ii. Interest on inventory loan
a. I only
b. II only
c. Both I and II
d. Neither I nor III

34. Under the inventory method. Freight-in would be included in the calculation of the goods available for sale for
which of the following:
a. Cost c. Retail
b. Both cost and retail d. Neither cost nor retail

35. Internally generated goodwill is prohibited from recognition in the financial statement of the entity. The reason
for this treatment is that
a. Goodwill is not identifiable
b. Goodwill is measurable
c. It is not comparable to any other intangible assets
d. It is not prudent to recognize intangible assets.

36. The framework for the preparation of financial statement should

a. Lead to uniformity of financial statement among entities with the same industry
b. Eliminate alternative accounting policies and methods
c. Both A and B
d. Neither A nor B

37. Which of the following is false with regards standards and standard setting bodies?
a. The process of establishing financial accounting standard is a social process which incorporates political
actions of various interested user group as well as professional research and logic
b. The purpose of the IFRS is to promote uniform auditing standards among countries of the world
 c. The IASB was formed to developed worldwide accounting standards
d. The IFRC is the Philippine counterpart of IASB

38. Which is a financial liability?

a. Deferred revenue
b. Warranty liability
c. Obligation to deliver own shares worth a fixed amount of cash
d. A constructed obligation

39. An entity is commencing a new constructive project which is to be financed by borrowing. From what date can
the entity commence the capitalization of borrowing cost?
a. May 30 – loan interest to the project starts to be incurred
b. June 22 – technical site planning commence
c. July 15 – expenditures on the project starts to be incurred
d. July 31 – construction work commence

40. On March 1, 2015, Fine Co. borrowed P1,000,000 and signed a 2-year note bearing interest at 12% per annum
compounded annually. Interest is payable at full at maturity on February 28, 2017. What amount should be
reported as accrued interest payable on December 31, 2016?
a. 100,000 c. 232,000
b. 120,000 d. 240,000

41. Ellesmere Co. operates a retail grocery store that requires from its customers refundable deposits of P5.00 on
soft drink bottles. Information for 2016 follows:
Liability for returnable deposits 12/31/2015 P 1,500,000
Bottles of soft drink sold in 2016 1,000,000
Soft drink bottles returned in 2016 1,100,000
On December 31, 2016 statement of financial position, the non-current liabilities for deposit is
a. 0 c. 1,500,000
b. 1,000,0000 d. 1,100,000

42. The following condition must be met to recognized provision, except

a. The enterprise has a present, legal or constructive as a result of past event
b. It is possible that an outflow of resources embodying economic benefits will be required to settle the
obligation
c. The amount of the obligation is measurable reliably
d. It is a probable outflow of resources of the enterprise.

43. Governance Inc. has a bonus plan covering all employees. The total bonus is equal to 10% of Governance’s
preliminary (pre-bonus, pretax) income reduced by income tax (computed on the preliminary income less the
bonus itself). Governance’s preliminary income for 2016 is P1,000,000 and the income tax rate is 32%. How
much is the bonus for 2016?
a. 61,200 c. 70,248
b. 68,000 d. None

44. Given the data in number 43, what amount should Governance Inc recognize as a distribution of profit relate to
their bonus plan in 2016?
a. 61,200 c. 70,248
b. 68,000 d. None

45. The purpose of share split up is

a. To increase the number of outstanding shares to effect a reduction in unit market price
b. To obtain wider distribution and improved marketable of the share.
c. To decrease the number of shares outstanding thereby increasing proportionately the par value
d. Both A and B

46. Instead of the usual cash dividend an entity declared and distributed a property dividend form its overstocked
merchandise. The excess of the merchandise’s fair value over it carrying amount is
 a. Ignored
b. Reported as a gain on distribution as part of profit or loss
c. Reported as extraordinary gain
d. Reported as a gain on distribution as part of other comprehensive income

47. Where financial statements should basic and diluted EPS figures for income from continuing operation
presented?
a. In the income statement
b. In the statement of financial position
c. In the note to financial statement
d. All of the above

48. What is the effect of recording a 100% bonus issue?

a. It will decrease the current ratio, working capital and book value per share
b. It will increase earnings per share and book value per share but will leave inventory turnover unaffected
c. It will decrease earnings per share and book value per share but it will leave working capital unaffected.
d. It will decrease earnings per share and the debt to equity ratio but it will leave working capital
unaffected.

49. On July 1, 2016, Boom exchanged 20,000 shares of its P200 par value of equity shares for land. A few months
ago, the land was appraised by an independent appraiser at P5,000,000. Boom shares are currently traded at
stock exchange at P300. The earnings per share is P40. How much should be debited to land account?
a. 4,000,000 c. 6,000,000
b. 5,000,000 d. 7,000,000

50. Steel Co. had the following classes of shares outstanding as of December 31, 2016
Ordinary shares, P20 par value, 20,000 outstanding; preference shares, 6% P100 par value, cumulative and fully
participating, 1,000 shares were outstanding
The last payment of preference dividend was on December 31, 2013. On December 31, 2016, a total cash
dividend of P90,000 was declared. What amounts of dividends payable to ordinary shares?
a. 57,600 c. 67,200
b. 62,400 d. 72,000

51. Given the data on number 50, what amount of dividend payable to preference shares?
a. 32,400 c. 22,000
b. 27,600 d. 18,000

52. The shareholder’s equity of Joyful Corporation on December 31, 2016 shows the following balances
10% Preference Share, 5,000 shares, P100 par 500,000
12% Preference Share, 6,000 shares, P100 par 600,000
Ordinary share, 10,000 shares, P40 par 400,000
Share premium 320,000
Accumulated profits 480,000
The 10% preference share is cumulative and fully participating, while the 12% preference share is non-
cumulative and fully participating. The last payment of dividends was on December 31, 2014. What was is the
book value per share of ordinary share?
a. 44.00 c. 60.27
b. 59.68 d. 102.80

53. Using information in # 52, what is the book value per share of 10% preference shares?
a. 159.20 c. 160.12
b. 151.20 d. 159.98

54. Night Co. had 500,000 ordinary shares issued and outstanding at December 31, 2016. During 2017, no additional
ordinary share was issued. On January 1, 2017, Night issued 400,000 nonconvertible preference shares. During
2017, Night declared and paid P180,000 cash dividends on the ordinary shares and P150,000 on the
nonconvertible preference shares. Net income for the year December 31, 2014 was P960,000. What should be
the 2014 earnings per ordinary share of Night Co.?
a. 0.90 c. 1.62
b. 1.26 d. 1.92
 55. Conceptually, interim financial statements can be described as emphasizing
a. Timeliness over reliability c. Relevance over comparability
b. Reliability over relevance d. Comparability over neutrality

56. It is appropriate to use estimated gross profit rate to determine the cost goods sold for external reporting
purposes for
a. Interim reporting only
b. Year-end reporting
c. Both interim and year-end reporting
d. Neither interim and year-end reporting

57. On January 1, 2014, Carbon Co., a lease, signed a 10 year non-cancelable lease for a machine stipulating annual
payment of P200,000. The first payment was made on January 1, 2014. Carbon appropriately treated this
transaction as a finance lease. The ten lease payments have a present value of P1,350,000 at January 1, 2014,
based on the implicit interest of 10%. For the year ended December 31, 2014, how much should Carbon record
as interest expense?
a. 105,000 c. 125,000
b. 115,000 d. 135,000

58. On December 1, 2014, Iliad Company leased office space for 5 years at a monthly rental of P60,000. On the same
date, the company paid the lessor the following amounts:
First month rent 60,000
Last month’s rent 60,000
Security deposit 80,000
Installation of new walls and offices 360,000

How much is the total expense that Iliad should report in its December 31, 2014 profit or loss relating to the
utilization of office space?
a. 60,000 c. 120,000
b. 66,000 d. 140,000

59. National Company began 2016 with a P184,000 balance in the deferred tax liability account. At the end of 2016,
the related cumulative future taxable amount is P700,000 and it will reverse evenly over the next two years.
Pretax accounting income for 2016 is P1,050,000. Tax rate for all years is 32%. Taxable income for 2016 is
925,000. How much deferred tax expense for 2016?
a. 40,000 c. 224,000
b. 184,000 d. 259,200

60. The Feather Corp., received the following report from its actuary at the end of the year:
01/01/16 12/13/16
Unrecognized past service cost 480,000 450,000
Present value of benefit obligation 5,200,000 5,920,000
Fair value of pension plan assets 5,520,000 5,760,000
Actuarial gain 800,000 524,400
Actuarial loss on plan assets 127,200
Actuarial loss on obligation during 136,000
Benefits paid during the year 740,000
Contribution made during the year 500,000
Settlement rate 12%
What is the amount of benefit expense to be charged against income for the year 2016?
a. 16,800 c. 746,800
b. 734,400 d. 874,000

61. What is the expected rate of return on plan assets during 2016?
a. 9%
b. 10%
c. 11%
d. 12%
62. What is the balance of the Prepaid/Accrued pension account as of 2016?
a. 234,400
b. 334,400
c. 524,400
d. 633,400

63. Which of the following regarding accrual versus cash basis of accounting is correct?
a. The cash basis is appropriate for some smaller entities, especially those in service industry.
b. Application of the cash basis results in an income statement reporting revenues and expenses
c. The cash basis requires a complete sets of a double entry records
d. The cash basis is less than useful in predicting the timing and amounts of future cash flow of an entity.

64. Which of the following is a characteristic of an SME, as defined by the Philippine SEC?
a. The entity files its financial statements with a securities commission for the purpose of issuing any class
of instruments in a public market.
b. The entity publishes general purpose financial statements for external users
c. The entity has total assets between 3,000,000 and 350,000,000 or total liabilities between 3,000,000
and 250,000,000
d. The entity is not a public utility

65. Which of the following entities is “publicly accountable”?

i. An entity whose shares are traded in a public market
ii. An entity whose debt instruments but not its shares are traded in market
iii. An entity whose shares and debts instruments are traded in an “over-the-counter market”
iv. An entity that is in the process of issuing its shares and debts instruments for trading in a public
market
a. I and II
b. I, II and III
c. I, II, and IV
d. I, II, III and IV

66. The PFRS for SME is intended for use by certain type of entity. Which of the following description accurately
describe the definition of a SME used by the FRSC?
a. Entities that have total assets between 3,000,000 and 350,000,000
b. Entities that have a certain income statement total
c. Entities that have no public accountability
d. Entities that have a certain annual turnover

67. Gasoline Company revenue of 3,100,000 in its accrual basis income statement for the year ended December 31,
2016. Accounts receivable beginning and ending are 700,000 and 1,100,000 respectively. Under the cash basis of
accounting, how much revenue should the company report in 2016?
a. 2,000,000
b. 2,400,000
c. 2,700,000
d. 3,500,000

68. Which of the following methods are acceptable in presenting government grants related asset of an SME?
a. Reported as deferred income until the conditions are actually satisfied
b. Deducted from the carrying amount of the asset
c. Either A or B
d. Neither A nor B

69. An SME shall account for its financial instrument from amongst the following except
a. The provision of Section 11 of PFRS for SMEs
b. The provision of Section 12 of PFRS for SMEs
c. The recognition and measurement provision of PAS 39
d. The disclosure requirements of PFRS 7

70. Which of the following accounting treatment is not mentioned in the PFRS for SMEs?
a. Retail inventory method
b. Temporary difference approach for deferred taxation
c. Equity method for joint ventures
d. Intrinsic value for share option