1.

*
2.
*

3. Close family members of an individual include all, except

*Brothers and sisters of the individual

4. The minimum disclosure about related party transactions include all, except
*Nature of relationship

5. Unrelated parties include which of the ff?

*All of these are unrelated parties

6. Which of the ff. is NOT a mandated disclosure about related party transactions?
*Names of all the associates that an entity has dealt with during the year

7. Which of the ff. is NOT a required minimum disclosure about a related party transaction?
* The amount of similar transaction with unrelated parties to establish that comparable related
party transaction has been entered at arm & length

8. Related party transactions include all, except

*Sold a car to the uncle of the entity’s finance director

9. All of the following are related party transactions, except

*Took a huge bank loan

10. An entity entered into a related party transaction would be required to disclose all of the
following information except
*Nature of any future transactions planned between the parties and the terms involved

11. Which is not included in key mngt personnel compensation?

*Reimbursement of out-of-pocket expenses

12. All of the following are related parties, except

* The partner of a key manager is a major supplier of the entity

13. Which of the ff. is NOT a related party of an entity?

*An entity providing banking facilities to the entity
A: A shareholder of the entity that holds one percent stake in the entity.

14. Which of the ff. should be included in key mngt personnel compensation?
*Social security contributions and postemployment benefits

15. Why is an entity permitted to change in accounting policy?

*The change would allow the entity to present a more favorable profit picture

16. Which is NOT required as a related party disclosure?

*An entity that has….

17. Which of the following is accounted for as a change in accounting policy?

*A change in inventory valuation from FIFO to average method

18. A change in accounting policy requires that the cumulative effect of the change for prior
periods should be reported as an adjustment to
*Beginning retained earnings for the earliest period presented

19. How should the effect of a change in accounting estimate be accounted for?
*By restating…

20. When it is difficult to distinguish between a change in accounting estimate and a change in
accounting policy, the change is treated as
*Change in accounting estimate with appropriate disclosure
21. Which statement in relation to a change in accounting estimate is TRUE?
*Change in accounting estimate results from new information or new development

22. A change in the periods benefited by a deferred cost because additional information has been
obtained is
* An accounting change that should be reported in the period of change and future periods if the
change affects both.

23. When an entity changed the expected service life on an asset because additional information
has been obtained, which of the following should be reported?
* An accounting change that should be reported in the period of change and future periods if the
change affects both.

24. The effect of a change in accounting policy that is inseparable from the effect of a change in
accounting estimate should be reported
* As a component of income from continuing operations in the period of change and future
periods if the change affects both

25. Which of the following is a correction of an error that was committed from prior periods?
*Change of inventory valuation from weighted average to FIFO

26. ANS: TRUE ; TRUE

I. A prior period shall be corrected by retrospective restatement except to the extent that is
impracticable to determine either the period specific effects or the cumulative effect of an error.
II. When it is impracticable to determine the period specific effects of an error on comparative
information for one or more prior periods presented, the entity shall restate the opening balances
of assets, liabilities, equity for the earliest period for which retrospective restatement is
impracticable

27.
28.
29.
30.
31.

32. Which event after the reporting period would require adjustment?
*Change in the market price of investment

33.

34. Non-adjusting events include all, except

*Destruction of a major production plant by a fire before the end of the reporting period
*A mistake in calculation of allowance for uncollectible accounts receivable.

35. At the end of the current reporting period, an entity carried…

*Make a provision for the event…

36. An entity decided to build and operate an amusement park next year. The entity applied for a
letter of guarantee which was issued before the issuance of the financial statements of the current
year. What is the adjustment required at the current year-end?
*Do nothing

37. An entity deals extensively with foreign currency…

*Adjust the foreign exchange year-end balances to reflect all abnormal fluctuations and not
just adverse movements

38. Which event after the end of reporting period would generally require disclosure?
*Settlement of litigation when the event…

39. Which of the ff. is an adjusting event that happened after the reporting period?
*Major Calamity…
40. Which of the ff. is an adjusting event?
*The determination after the…

41. Which statement is true in relation to events after reporting period?

* Notes to the financial statements should give details of….. financial statements

42. For external reporting, it is appropriate to use estimated gross profit rate to determine the cost
of goods sold for
*Interim Reporting

43. ANS: FALSE ; TRUE

I. If an entity receives information after the reporting period about conditions that existed at the
end of the reporting period, it shall update closures that relate to those condition, in the light of
the new information
II. It is important for users to know when the financial statements do not reflect evetns after his
date

44. Due to a decline in market privy in the second quarter…

*In the second quarter

45. How is the income tax expense for the 3rd quarter interim period computed?
* The estimated tax for the first three quarters based on an annual rate less a similar estimate
for the first two quarters

46. Which statement is true about interim reporting is TRUE?

*The same accounting principles…

47. Entities should disclose all of the following in interim financial report, except
*Events after the end of reporting period

48.

49. Conceptually, interim financial statements can be described as emphasizing

*Timeliness over reliability

50.
51.
52.

53. Fred Company failed to accrue warranty cost of 100,000….

*100,000

54.
55.