PAS 37 7.
Where there is a continuous range of possible
1. Which is the definition of a provision?
a. A possible obligation arising from past event
b. A liability of uncertain timing or amount
c. A liability which cannot be easily measured
d. An obligation to transfer funds to an entity
2. A provision shall be recognized as liability when
a. An entity has present obligation as a result of a past
event.
b. It is probable that an outflow of economic benefits
will be required to settle the obligation.
c. The amount of the obligation can be measured
reliably.
d. All are required for the recognition of a provision.
3. A legal obligation is derived from all of the
following, except
a. Legislation
b. A contract
c. Other operation of law
d. An established pattern of past practice
4. It is an event that creates a legal or constructive
obligation because the entity has no other realistic
alternative but to settle the obligation.
a. Obligating event
b. Past event
c. Subsequent event
d. Current event
5. Provisions are accrued because the likelihood of an
unfavorable outcome is
a. Virtually certain
b. Greater than 50%
c. At least 75%
d. Possible
6. An outflow of resources embodying economic
benefits is regarded as probable when
a. The probability that the event will occur is greater
than the probability that the event will not occur.
b. The probability that the event will not occur is
greater than the probability that the event will
occur.
c. The probability that the event will occur is the same
as the probability that the event will not occur.
d. The probability that the event will occur is 90%
likely.
outcomes, and each point in that range is as likely
as any other, the range to be used is the
a. Minimum
b. Maximum
c. Midpoint
d. Sum of the minimum and maximum
8. When the provision involves a large population of
items, the estimate of the amount
a. Reflects the weighting of all possible outcomes by
their associated probabilities.
b. Is determined as the individual most likely outcome.
c. May be the individual most likely outcome.
d. Midpoint of the possible outcomes.
9. When the provision arises from a single obligation,
the estimate of the amount
a. Reflects the weighting of all possible outcomes by
their associated probabilities.
b. Is determined as the individual most likely outcome.
c. Is the individual most likely outcome adjusted for
the effect of other possible outcomes.
d. Midpoint of the possible outcomes.
10. Which statement is incorrect where the
expenditure required to settle a provision is
expected to be reimbursed?
a. The reimbursement shall be recognized only when
it is virtually certain.
b. The amount of the reimbursement shall not exceed
the amount of the provision.
c. In the income statement, the expense relating to
the provision may be presented net of the
reimbursement.
d. The reimbursement shall be “netted” against
estimated liability for the provision.
11. The likelihood that the future event will or will not
occur can be expressed by a range of outcome.
Which range means that the future event occurring
is very slight?
a. Probable
b. Reasonably possible
c. Certain
d. Remote
12. Which statement is incorrect concerning a
contingent liability?
a. A contingent liability is not recognized in the
financial statements.
b. A contingent liability is disclosed only.
c. If the contingent liability is remote, no disclosure is
required.
d. A contingent liability is both probable and
measurable.
13. A contingent liability
a. Has a most probable value of zero but may require
a payment if a given future event occurs.
b. Definitely exists as a liability but the amount or due
date is indeterminate.
c. Is reported of current liability.
d. Is not disclosed in the financial statements.
14. How should a contingent liability be reported in the
financial statements when it is reasonably possible?
a. As a deferred liability
b. As an accrued liability
c. As a disclosure only
d. As an account payable
15. General or unspecified contingencies should
a. Be accrued and disclosed.
b. Not be accrued and need not be disclosed.
c. Not be accrued but should be disclosed.
d. Be accrued but need not be disclosed.
16. When the occurrence of a contingent asset is
probable and measurable, the contingent asset
should be
a. Recognized in the statement of financial position
and disclosed.
b. Classified as an appropriation of retained earnings.
c. Disclosed but not recognized in the statement of
financial position.
d. Neither recognized in the statement of financial
position nor disclosed.
17. Contingent asset is usually recognized when
a. Realized
b. Occurrence is reasonably possible and the amount
can be reliably measured
c. Occurrence is probable and measurable
d. The amount can be reliably measured
18. Which is the proper treatment of contingent asset?
a. An accrued account
b. Deferred income
c. An account receivable
d. A disclosure only
19. Gain contingency that is remote and measurable
a. Must be disclosed in a note to the financial
statements.
b. May be disclosed in a note to the financial
statements.
c. Must be reported in the body of the financial
statements.
d. Should not be reported or disclosed.
20. At year-end, an entity was suing a competitor for
patent infringement. The award from the probable
favorable outcome could be reliably measured.
How should the entity report the expected award?
a. Receivable and revenue
b. Receivable and reduction of patent
c. Receivable and deferred revenue
d. Disclosure only
PAS 12
1. Accounting income is
a. The income for a period before deducting tax
expense.
b. The income for a period determined in accordance
with tax law.
c. The income for a period after deducting tax
expense.
d. The income after current tax expense determined in
accordance with tax law.
2. These are differences that will result in future
taxable amount in determining taxable income of
future periods.
a. Temporary differences
b. Taxable temporary differences
c. Deductible temporary differences
d. Permanent differences
3. These are differences that result in future
deductible amount in determining taxable income
in future periods.
a. Taxable temporary differences
b. Deductible temporary differences
c. Taxable temporary and permanent differences
d. Deductible temporary and permanent differences
4. In computing the current tax asset or current tax 11. Justification for the method of determining periodic
liability, which tax rate is used? income tax expense is based on the concept of
a. Current tax rate a. Matching of periodic expense to periodic revenue
b. Future enacted tax rate b. Objectivity in the calculation of periodic expense.
c. Average tax rate c. Recognition of deferred tax asset and liability.
d. Effective tax rate d. Consistency of tax expense measurement with
actual tax planning strategies.
5. In computing the deferred tax asset or liability,
which tax rate is used?
a. Current tax rate 12.A deferred tax liability would result from
b. Estimated future tax rate a. Interest revenue on tax-exempt deposit
c. Enacted future tax rate b. Doubtful accounts expense
d. Prior tax rate c. Excess of tax depreciation over accounting
depreciation
6. When temporary difference will result in taxable d. Subscription received in advance
amount in future years
a. A deferred tax liability is recognized in the current
year. 13.A deferred tax asset would result from
b. A deferred tax asset is recognized in the current a. Tax, penalty or surcharge.
year. b. Dividend received on share investment.
c. A deferred tax asset may be recognized in the c. Excess tax depreciation over accounting
current year if certain conditions are met. depreciation.
d. A deferred tax liability may be recognized in the d. Rent received in advance included in taxable
current year if certain conditions are met. income.

7. A deferred tax liability shall be recognized for all

a. Permanent differences 14. Which is true regarding deferred income taxes?
b. Temporary differences a. Deferred tax asset is always netted against deferred
c. Taxable temporary differences tax liability.
d. Deductible temporary differences b. Deferred taxes of one jurisdiction are offset against
another jurisdiction in the netting process.
8. It is the deferred tax consequence attributable to a c. Deferred tax asset and liability may only be
deductible temporary difference and operating loss classified as noncurrent.
carryforward. d. Deferred tax asset and liability are classified as
a. Deferred tax liability current and noncurrent based on expiration date.
b. Deferred tax asset
c. Current tax liability
d. Current tax asset 15. At the current year-end, an entity had a deferred tax
liability that exceeded a deferred tax asset. Which
9. It is the amount of income tax payable related to of the following should be reported in the current
taxable income. year-end?
a. Current tax expense a. The excess of the deferred tax liability over the
b. Total income tax expense deferred tax asset as a noncurrent liability.
c. Deferred tax expense b. The excess of the deferred tax liability over the
d. Deferred tax benefit deferred tax asset as a current liability.
c. The deferred tax liability as a noncurrent liability.
10. It is the sum of the amount of income tax payable d. The deferred tax liability as a current liability.
and deferred tax liability related to accounting
income.
a. Tax expense reported in the income statement
b. Current tax expense
c. Deferred tax expense
d. Deferred tax benefit
 PFRS 16
1. Under IFRS, a lessee is required to recognize
Right of use asset and lease liability
Right of use asset but not lease liability
Lease liability but not right of use asset
Neither right of use asset nor lease liability
2. The lessee may apply the operating lease model
under what condition?
Short-term lease
Low value lease
Both short-term lease and low value lease
Under all circumstances
3. A short-term lease is defined as
Twelve months or less
Six months or less
Twelve-month lease with a purchase option
Two-year lease with option to terminate
4. Which statement is true about low value lease?
The value of an underlying asset is based on the value
of the asset when new regardless of the age of the
asset.
The term of a low value lease may be more than twelve
months.
An underlying asset does not qualify as low value lease
if the nature of the asset is such that the asset is
typically not of low value when new.
All of these statements are true about low value lease.
5. A right of use asset is initially measured at
Cost
Fair value
Current cost
Present value of expected cash inflows
6. The cost of right of use asset comprises all, except
The present value of lease payments
Lease payment made to lessor on or before
commencement date
Initial direct cost incurred by lessee
Estimated cost of dismantling the underlying asset for
which the lessee has no present obligation
7. The right of use asset is reported as
Noncurrent as separate line stem
Property, plant and equipment
Intangible asset
Investment property
8. A lessee with a lease containing a purchase option
that is reasonably certain to be exercised should
depreciate the right of use asset over
Useful life of the asset
Lease term
Useful life of the asset or the lease term, whichever is
shorter
Useful life of the asset or the lease term, whichever is
longer
9. A lease liability is measured at
The absolute amount of lease payments
The present value of lease payments
The present value of fixed lease payments
The fair value of the underlying asset
10. The lease payments include all of the following,
except
Fixed lease payments
Variable lease payments
Leasehold improvement
Residual value guarantee of the lessee
1. Rent received in advance by the lessor in an
operating lease should be recognized as revenue
When received
At the lease inception
At the lease expiration
In the period specified by the lease
2. When should a lessor recognize in income a
nonrefundable lease bonus paid by a lessee on signing
an operating lease?
When received
At the inception of the lease
At the lease expiration
Over the lease term
3. Lease payments under an operating lease shall be
recognized as rent income by the lessor on
Straight line basis over the lease term unless another
systematic basis is representative of the time pattern
of the user's benefit.
Diminishing balance basis
Sum of units basis
Cash basis
4. Which statement characterizes an operating lease?
The lessee records depreciation and interest.
The lessee records the lease liability related to the
underlying asset.
The lessor transfers title of the underlying asset to the
lessee for the duration of the lease term.
The lessor records depreciation and rent revenue.
5. The lessor should report the underlying asset in an
operating lease as which of the following?
Off the statement of financial position
Disclosed only
Reported according to nature of the asset
Current asset
6. Which statement is correct regarding the lease
capitalization criteria?
The lease transfers ownership of the underlying asset
to the lessor.
The-lease contains a purchase option.
The lease term is equal to at least 75% of the economic
life of the underlying asset.
The lease payments are at least 90% of the fair value of
the underlying asset.
7. Which of the following conditions would require
lease capitalization?
The lease does not transfer title of the underlying asset
to the lessee.
There is purchase option that is not reasonably certain
to be exercised.
The present value of the lease payments is significantly
more than the fair value of the underlying asset.
The lease term is significantly below the useful life of
the underlying asset.
8. One criterion for a finance lease specifies that the
lease term be equal to or greater than
The estimated life of the underlying asset.
90% of the life of the underlying asset.
75% of the life of the underlying asset.
50% of the life of the underlying asset.
9. One criterion for a finance lease is that the present
value at the beginning of the lease term of the lease
payments equals or exceeds
The fair value of the underlying asset
90% of the fair value of the underlying asset
75% of the fair value of the underlying asset
50% of the fa1r value of the underlying asset
 PAS 36
1. Which statement best describes impairment loss?
The removal of an asset from the statement of financial
position.
The amount by which the carrying amount of an asset
exceeds the recoverable amount.
The systematic allocation of cost of an asset less
residual value over the useful life.
The amount by which the recoverable amount of an
asset exceeds the carrying amount.
2. What is the recoverable amount of an asset?
Fair value less cost of disposal
Value in use
Fair value less cost of disposal or value in use,
whichever is higher
Fair value less cost of disposal or value in use,
whichever is lower
3. What is fair value of an asset?
The price that would be received to sell an asset in an
orderly transaction between market participants
The price that would be paid to transfer a liability in an
orderly transaction between market participants
The discounted value of future cash flows
The undiscounted value of future cash flows
4. Which statement best describes value in use?
The present value of estimated future cash flows
expected to arise from the continuing use of an asset
and from the ultimate disposal
The amount of cash that could currently be obtained
by selling an asset in an orderly disposal
The amount which an entity expects to obtain for an
asset at the end of the useful life
Undiscounted future net cash flows
5. If the fair value less cost of disposal cannot be
determined
The asset is not impaired.
The recoverable amount is the value in use.
The net realizable value is used.
The carrying amount of the asset remains the same.
6. If an asset is to be disposed of
The recoverable amount is the fair value less cost of
disposal.
The recoverable amount is the value in use.
The asset is not impaired.
The recoverable amount is the carrying amount.
7. The estimates of future cash flows in calculating
value in use include all of the following, except
Cash inflows from the continuing use of the asset.
Cash outflows incurred to generate the cash inflows
from the continuing use of the asset.
Net cash flows from the disposal of the asset at the end
of useful life.
Income tax payment.
8. Which of the following is NOT relevant in
determining value in use?
The expected future cash flows from the asset
The carrying amount of the asset
Expectation about possible variation in the amount and
timing of future cash flows
The time value of money
9. An asset is reviewed for impairment
Every three years at the end of reporting period.
When the asset is fully depreciated.
When circumstances indicate that the carrying amount
of an asset might not be recoverable.
Every year at the end of reporting period.
10. Which of the following conditions must exist in
order for an impairment loss to be recognized?
The carrying amount is less than fair value.
The carrying amount of the asset is not recoverable.
The carrying amount is less than value in use.
The carrying amount is less than recoverable amount.
1. Impairment loss is reported
As direct deduction from retained earnings
As a component of discontinued operation.
As a component of income from continuing operations.
As a change in accounting estimate.
2. What is a cash generating unit?
The smallest business segment
Any group of assets that generate cash flows
Any group of assets reported separately to
management
The smallest group of assets that generate
independent cash flows from continuing use
3. What is the allocation of an impairment loss
recognized for a cash generating unit?
Across the assets of the unit based on carrying amount.
Across the assets of the unit based on fair value.
First, to any goodwill and the balance to the other
assets prorata based fair value.
First, to any goodwill and the balance to the other
assets prorata based on carrying amount.
4. Costs of disposal include all of the following, except
Legal cost
Stamp and similar transaction tax
Cost of removing the asset
Finance cost
5. Which of the following is NOT relevant in
determining value in use?
The expected future cash flows from the asset
The carrying amount of the asset
Expectation about possible variation in the amount and
timing of future cash flows
The time value of money
PAS 19
1. Employees are each entitled to 20 days of paid
holiday leave per year. Unused holiday leave cannot be
carried forward and does not vest. What is the holiday
leave?
A short-term employee benefit
A postemployment benefit
Other long-term employee benefit
A termination benefit
2. Employees are entitled to 10 days holiday leave per
year. Unused holiday leave may be carried forward
until the employee leaves employment at which time
the entity will pay the employee for all unused holiday
leave. What is the holiday leave?
A short-term employee benefit
A postemployment benefit
Other long-term employee benefit
A termination benefit
3. An entity made a public announcement of a
commitment to a voluntary redundancy plan. The
entity has an obligation to pay employees that choose
voluntary redundancy a lump sum equal to twice their
gross annual salary. What is the obligation to pay
employees that choose voluntary redundancy?
A short-term employee benefit
A postemployment benefit
Other long-term employee benefit
A termination benefit
4. A profit-sharing plan requires an entity to pay a
specified proportion of the cumulative profit for a five-
year period to employees who serve throughout the
five-year period. What is the profit-sharing plan?
A short-term employee benefit
A postemployment benefit
Other long-term employee benefit
A termination benefit
1. It is a benefit plan under which an entity pays a fixed
contribution into a separate fund and will have no legal
or constructive obligation to pay further contribution if
the fund becomes insufficient to pay employee
benefits.
Postemployment benefit plan
Defined contribution plan
Defined benefit plan
Employer plan
2. Which statement is true concerning the recognition
and measurement of a defined contribution plan?
The contribution shall be recognized as expense in the
period it is payable.
Any unpaid contribution at the end of the period shall
be recognized as accrued liability.
Any excess contribution shall be recognized as prepaid
expense.
All of these statements are true about a defined
contribution plan.
3. Which statement is incorrect concerning the
recognition and measurement of a defined benefit
plan?
Actuarial assumptions are required to measure the
obligation and expense.
The obligation is measured on a discounted basis.
The defined benefit plan must be fully funded.
The expense recognized for a defined benefit plan is
not necessarily the amount of contribution.
4. In a defined contribution plan, a formula is used that
Defines the benefits that the employee shall receive
Ensures that pension expense is funded
Requires an employer to contribute a certain sum each
period based on the formula
Ensures that employers are at risk to make sure funds
are available at retirement
5. In a defined benefit plan, a formula is used that
Requires that gain or loss from the contribution to the
plan be borne by the employee.
Defines the benefits that the employee shall receive at
the time of retirement.
Requires cash funding for the plan.
Defines the contribution to be made by the employer.
1. It is the increase in the present value of the defined
benefit obligation resulting from employee service in
the current period.
Current service cost
Interest expense
Past service cost
Remeasurement
2. It is the increase in the present value of the defined
benefit obligation for employee service in prior periods
resulting from a plan amendment or curtailment.
Current service cost
Net interest
Past service cost
Employee benefit cost
3. The interest on the projected benefit obligation
Reflects the incremental borrowing rate of the
employer.
Reflects the rate at which pension benefits could be
effectively settled.
Is the same as the expected return on plan assets.
May be stated implicitly or explicitly when reported.
4. A pension liability is reported when
PBO exceeds FVPA
Accumulated benefit obligation exceeds FVPA
Pension expense is greater than funding
FVPA exceeds PBO
5. A pension asset is reported when
FVPA exceeds accumulated benefit obligation
FVPA exceeds PBO
PBO exceeds FVPA
FVPA exceeds remeasurements
1. These are all forms of consideration given by an
entity in exchange for services rendered by employees.
Employee benefits
Employee compensation
Fringe benefits
Salaries and wages
2. Short-term employee benefits include all, except
Wages, salaries and social security contributions.
Short-term compensated absences.
Profit-sharing and bonuses payable in more than
twelve months after the end of the reporting period.
Nonmonetary benefits, such as medical care, housing,
car and free and subsidized goods.
3. Which of the following is NOT a characteristic of
short-term employee benefits?
No actuarial assumptions are required to measure the
benefit obligation.
There is no possibility of any actuarial gain or loss.
Short-term employee benefits by definition are
payable no later than twelve months after year-end.
Short-term employee benefit obligations are measured
on a discounted basis.
4. These are employee benefits which are payable after
completion of employment.
Short-term employee benefits
Postemployment employee benefits
Other long-term employee benefits
Termination benefits
5. Postemployment employee benefits include all of
the following, except
Long-term disability benefits
Retirement benefits, such as pensions
Postemployment life insurance
Postemployment medical care
1. The components of employee benefit expense
include all of the following, except
Current service cost
Net interest
Past service cost
Contribution to the plan
2. When an entity amends a pension plan, past service
cost should be
Treated as a prior period error.
Amortized over the service period of employees.
Recorded in other comprehensive income.
Expensed in the period the plan is amended.
3. What is the meaning of “net interest” in relation to
employee benefit expense?
Interest expense on defined benefit obligation
Interest income on the fair value of plan assets
The difference between interest expense on defined
benefit obligation and interest income on the fair value
of plan assets
Interest expense on defined benefit obligation less tax
4. The return on plan assets
Is equal to the change in the fair value of the plan assets
during the year.
Includes interest, dividends and change in the fair value
of the plan assets during the year.
Is equal to the discount rate times the fair value of the
plan assets at the beginning of the period.
Is equal to the expected rate of return times the fair
value of plan assets at the beginning of the period.
4. These are compensated absences that are carried
forward and can be used in future periods and the
employees are entitled to a cash payment for unused
entitlement on leaving the entity.
Accumulating and vesting
Accumulating and nonvesting
Nonaccumulating and vesting
Nonaccumulating and nonvesting

5. Which is not required for the recognition of a liability

5. Vested benefits for compensated absences?
Usually require minimum number of years of service. The amount of the obligation must be estimable.
Are those that the employee is entitled to receive even Payment of the obligation must be probable.
if fired.
Payment of the obligation will require the use of
Are not contingent upon additional serve under the current assets.
plan.
The compensation is vested.
Are defined by all of these.

6. The vested benefits

1. What are compensated absences?
Are employee benefits that are not conditional on
Unpaid time off future employment.
A form of healthcare Are benefits to be paid to the retired employees in the
current period.
Payroll deduction
Are benefits to be paid to the retired employees to the
Paid time off
subsequent year.
Are benefits accumulated in the hands of a trustee.
2. The service cost of a defined benefit plan comprises
all, except
7. These are employee benefits that are payable as a
Current service cost result of an entity's decision to terminate an
Past service cost employee's employment before the normal retirement
date, or an employee's decision to accept an offer of
Gain or loss on settlement benefits in exchange for termination of employment.
Net interest Termination benefits
Short-term employee benefits
3. Which of the following components of defined Other long-term employee benefits
benefit cost shall be recognized through other
comprehensive income? Postemployment employee benefits

Current service cost

Past service cost
Net interest
Remeasurements
8. The components of defined benefit cost include all
except
3. Interim financial reports shall include as a minimum
Service cost
A complete set of financial statements.
Net interest
A condensed set of financial statements and selected
Remeasurements notes.
Contribution to the plan A condensed statement of financial position and an
income statement.
A condensed statement of financial position, income
9. Which of the following should be included in plan statement and statement of cash flows.
assets?
Assets held by a long-term employee benefit fund
4. Which statement in relation to an interim report is
Qualifying insurance policy true?
Both assets held by a long-term employee benefit fund An interim financial report must consist of a complete
and qualifying insurance policy set of financial statements.
Neither assets held by a long-term employee benefit An interim financial report must consist of a condensed
fund nor qualifying insurance policy set of financial statements.
An interim financial report may consist of a condensed
10. It is an insurance policy the proceeds from which set or complete set of financial statements.
are used to pay only employee benefits. All of these statements are true.
Qualifying insurance policy
Unqualified insurance policy
5. Which statement is true regarding interim
Ordinary insurance policy reporting?

Inclusive insurance policy Interim reports are required on a quarterly basis.

Interim reports are not required.

PAS 34 Interim reports require the preparation of only an

income statement and a statement of financial
1. Interim financial reports shall be published position.
Once a year at any time during the year. All of these statements are true.
Within a month of the half year-end.
On a quarterly basis. 1. Interim financial statements are usually presented
Whenever the entity wishes. on a
Monthly basis

2. If an entity does not prepare interim financial reports Quarterly basis

The year-end financial statements are deemed not to Semiannual basis

comply with IFRS Nine-month basis
The year-end financial statements' compliance with
IFRS is not affected.
The year-end financial statements shall not be
acceptable under local jurisdiction.
Interim financial reports shall be included in the year-
end financial statements.
2. For interim reporting, an inventory loss from a
market decline in the second quarter shall be
recognized
In the fourth quarter
Proportionately over the last quarters
Proportionately in each of the four quarters
In the second quarter
3. For interim financial reporting, a gain on disposal of
property occurring in the second quarter shall be
Recognized ratably over the last three quarters
Recognized ratably over all tour quarters
Recognized in the second quarter
Disclosed in the second quarter
4. Advertising costs incurred shall be deferred to
provide an appropriate expense in each period for
Interim reporting
Year-end reporting
Interim reporting and year-end reporting
Neither interim reporting nor year-end reporting
5. Which statement about interim reporting is true?
All entities that issue an annual report must issue an
interim financial report.
A complete set of financial statements must be
presented for an interim period.
The same accounting principles used for the annual
report should be employed for interim report.
All of these statements are true.
1. Publicly traded entities are encouraged to provide
interim financial reports
At least at the end of the half year and within 60 days
of the end of the interim period.
Within a month of the half year-end.
On a quarterly basis.
Whenever the entity wishes.
2. An interim financial report shall include as a
minimum all of the following components, except
Condensed statement of financial position and
statement of comprehensive income
Condensed statement of cash flows
Condensed statement of changes in equity
Accounting policies and explanatory notes
3. There is a presumption that anyone reading interim
financial reports shall
Understand all International Financial Reporting
Standards.
Have access to the records of the entity.
Have access to the most recent annual report.
Not make decisions based on the report.
4. When the business is highly seasonal, what does the
standard suggest?
Additional note about the seasonal nature
Disclosure of financial information for the latest and
comparative 12-month period in addition to the
interim report
Additional disclosure in the accounting policy note
No additional disclosure
5. Conceptually, interim financial statements can be
described as emphasizing
Timeliness over reliability
Reliability over relevance
Relevance over comparability
Comparability over neutrality
6. How is income tax expense for the third quarter
interim period computed?
The annual rate multiplied by the third quarter income
The estimated tax for the first three quarters based on
an annual rate less a similar estimate for the first 2
quarters
The rate applicable during the third quarter multiplied
by 3
Cumulative income tax for 3 quarters
7. Entities should disclose all of the following in interim
financial report, except
basic and diluted earnings per share
change in accounting policy
events after the end of the reporting period
seasonal revenue, cost of expenses
8. Due to a decline in market price in the second
quarter, an entity incurred an inventory loss. The
market price is expected to return to previous level by
the end of the year. At the end of the year, the decline
had not reversed. When should the loss be reported in
the interim income statement?
ratably over the second, third and fourth quarters
ratably over the third and fourth quarters
in the second quarter
in the fourth quarter
9. For external reporting, it is appropriate to use
estimated gross profit rate to determine the cost of
goods sold for
interim reporting
year-end reporting
interim reporting and year-end reporting
neither interim reporting nor year-end reporting
10. Which basic financial statements are prepared as a
minimum for interim financial reporting?
statement of financial position and income statement
statement of financial position, income statement and
statement of comprehensive income
statement of financial position, statement of
comprehensive income and statement of cash flows
statement of financial position, statement of
comprehensive income, statement of cash flows and
statement of changes in equity.
PAS 33
1. Earnings per share shall be computed on the basis of
Ordinary shares outstanding at the end of the year
Ordinary shares outstanding at the beginning of year
Ordinary shares outstanding at the middle of the year
Average ordinary shares outstanding during the year
2. In computing basic earnings per share, if the
preference shares are cumulative, the amount that
should be deducted as an adjustment to the net
income(numerator) is the
Preference dividends in arrears
Preference dividends paid during the year
Annual preference dividend
Annual ordinary dividend
3. In computing basic earnings per share, the amount
of preference dividends on noncumulative preference
shares should be
Deducted from net income whether declared or not.
Deducted from net income only when declared
Added to net income only when declared
Ignored
4. In computing basic earnings per share, the annual
amount of the required preference dividends on
cumulative preference shares for the period should be
Ignored
Deducted from net income only when declared
Deducted from net income whether declared or not
Added to net income whether declared or not
5. In computing basic loss per share, the annual
preference dividend on cumulative preference shares
should be
Ignored
Deducted from the net loss whether declared or not
Added to the net loss whether declared or not
Added to the net loss only when declared
1. Where in the financial statements should basic and
diluted earnings per share be reported?
In the accompanying notes
In management discussion and analysis
In the income statement
In the statement of cash flows
2. An entity that reports a discontinued operation shall
present basic and diluted earnings per share for the
discontinued operation
Only on the face of the income statement.
Only in the notes to financial statements.
Either on the face of the income statement or in the
notes to financial statements.
Only if management chooses to do so.
3. Earnings per share should be computed on the basis
of
Preference shares
Voting ordinary shares
Voting and nonvoting ordinary shares
Voting ordinary shares and preference shares
4. Undeclared preference dividends are deducted from
net income in the EPS computation for which
preference shares?
Noncumulative
Cumulative
Neither cumulative nor noncumulative
Both cumulative and noncumulative
5. Earnings per share should always be reported for
Gross income
Income before tax
Income from continuing operations
Prior period error
6. EPS disclosure are
Required for all public and nonpublic entities
Required for public entities and encouraged for
nonpublic entities
Encouraged for public entities and required for
nonpublic entities
Encouraged for all entities
7. EPS disclosures are required for
Entities whose ordinary shares and potential ordinary
shares are publicly traded.
Entities that are in the process of issuing ordinary
shares in the public market.
All entities.
Entities whose ordinary shares and potential ordinary
shares are publicly traded and entities that are in the
process of issuing ordinary shares in public market.
8. When an entity issues both consolidated and
separate financial statements, the EPS information is
required
For both sets of financial statements
In neither set of financial statements
Only for consolidated financial statements.
Only for separate financial statements
9. An ordinary share
Is an equity instrument that is subordinate to all other
classes of equity instrument.
In a financial instrument that may entitle the holder to
ordinary shares.
Is a financial instrument that gives the holder the right
to purchase ordinary shares.
Is either a financial liability or an equity instrument.
10. Earnings per share shall be reported for all of the
following except
Income from continuing operations
Income from discontinued operations
Net income
Gross income
PFRS 2
1. Share options are what type of share-based payment
transaction?
Asset-settled share-based payment transaction
Equity-settled share-based payment transaction
Cash-settled share-based payment transaction
Liability-settled share-based payment transaction
2. The compensation in a share option plan is measured
at
Fair value of share options on date of grant
Fair value of share options on date of exercise
Intrinsic value of share options on date of grant
Intrinsic value of share options on date of exercise
3. The date on which total compensation expense is
computed in a share option plan is the
Date of grant
Date of exercise
Date when the market price coincides with the option
price
Date when the market price exceeds the option price
4. Compensation resulting from a share option plan is
Recognized in the period of exercise.
Recognized in the period of the grant.
Allocated to the periods benefited by the employee’s
required service.
Allocated over the periods of the employee's service
life to retirement.
5. In what circumstances is compensation expense
immediately recognized under a share option plan?
In all circumstances.
In circumstances when the options are exercisable
within two years.
In circumstances when the options granted for prior
service are immediately exercisable.
In no circumstances is compensation expense
immediately recognized.
1. Share appreciation rights are what type of share-
based payment transaction?
Asset settled share-based payment transaction
Liability settled share-based payment transaction
Cash settled share-based payment transaction
Equity settled share-based payment transaction
2. A cash settled share-based payment transaction
increases which of the following?
A current asset
A noncurrent asset
Equity
A liability
3. What is the measurement date for a share-based
payment to employees that is classified as a liability?
The service inception date
The grant date
The settlement date
The end of reporting period.
4. For share appreciation rights, the measurement date
for computing compensation is the
Date the rights mature
Date the share reaches a predetermined amount
Date of grant
Date of exercise
5. In accounting for share appreciation rights,
compensation expense is generally
Not recognized
Recognized on the date of grant
Allocated over the service period of employees
Recognized on the date of exercise
6. The total compensation expense in a share option
plan is measured at
FV of share option on date of grant
FV of share option on date of exercise
Intrinsic value of share options on date of grant
Intrinsic value of share options on date of exercise
7. It is the contract that gives the employees the right,
but not the obligation to subscribe to the entity’s share
at a fixed or determinable price for a specified period
of time.
Share option
Share warrant
Share appreciation right
Share split
8. It is the difference between the fair value of the
shares to which the counterparty has the right to
subscribe and the price the counterparty is required to
pay for those shares.
Fair value
Intrinsic value
Market value
Book value
9. When issuing share options to employees, which of
the following factors is most relevant in determining
the accounting treatment?
The par value of the shares issued
The market value of the shares issued
The authorized number of shares
Whether the share options are issued in lieu of salary
10. For transactions with employees, the fair value of
the share options is measured on
Exercise date
Grant date
End of reporting period
Beginning of the year of grant
11. If there is an acceleration of vesting, any payment
made to the employees on the cancelation or
settlement of the grant shall be
Accounted for as repurchase of equity interest
Recognized in retained earnings
Recognized as component of other comprehensive
income
Accounted for as repurchase of equity interest and any
excess payment over the balance of share options
outstanding shall be recognized as expense
PFRS 5
1. An entity shall classify a noncurrent asset as held for
sale when
The carrying amount of the asset is recovered through
a sale transaction.
The carrying amount of the asset is recovered through
continuing use.
The noncurrent asset is abandoned.
The noncurrent asset is idle.
2. Noncurrent asset held for sale is measured at
Carrying amount
Fair value less cost of disposal
Lower between carrying amount and fair value less
cost of disposal.
Higher of carrying amount and fair value less cost of
disposal.
3. Noncurrent asset held for sale is presented as
7. For the sale of a noncurrent asset to be highly
probable, which of the following statements is
incorrect?
Management must be committed to a plan to sell the
asset.
An active program to locate a buyer and complete the
plan must have been initiated.
The asset must be actively marketed for sale at a
reasonable price in relation to the current fair value.

Current asset The sale is expected to qualify for recognition as a

completed sale within two years from the date of
Other noncurrent asset classification of the asset as held for sale.
Noncurrent investment.
Property, plant and equipment 8. What is the treatment of any gain on a subsequent
increase in the fair value less cost of disposal of a
noncurrent asset classified as held for sale?
4. If the fair value less cost of disposal is lower than the
carrying amount of a noncurrent asset classified as held The gain shall be recognized in full
for sale, the difference is The gain shall not be recognized.
Not accounted for. The gain shall be recognized but not in excess of the
Accounted for as an impairment loss. cumulative impairment loss previously recognized.

Charged to depreciation. The gain shall be recognized but only in retained

earnings.
Debited to retained earnings.

9. How should the assets and liabilities of a disposal

5. A noncurrent asset that is to be abandoned shall not group classified as held for sale be reported in the
be classified as held for sale because statement of financial position?
The carrying amount is recovered principally through The assets and liabilities shall be offset and presented
continuing use. as a single amount.
It is difficult to value. The assets of the disposal group shall be reported
separately under current assets and the liabilities of
It is unlikely that the noncurrent asset is sold within
the disposal group shall be reported separately under
twelve months.
current liabilities.
It is unlikely that there is an active market for the
The assets and liabilities shall be presented as a single
noncurrent asset.
amount and as a deduction from equity.
There should be no separate disclosure of assets and
6. It is group of assets to be disposed of by sale or liabilities that form part of a disposal group.
otherwise, together as a group in a single transaction,
and liabilities directly associated with those assets that
will be transferred in the transaction.
Disposal group
Discontinued operation
Noncurrent asset
Cash generating unit
10. An entity classified a noncurrent asset accounted
for under the cost model as held for sale at the current
year-end. Because no offers were received at an
acceptable price, the entity decided at the end of next
year not to sell the asset but to continue to use it. The
asset shall be measured at the end of next year at what
amount?
The lower of carrying amount and recoverable amount
The higher of carrying amount and recoverable amount
The lower of carrying amount on the basis that the
asset had never been classified as held for sale and
recoverable amount
The higher of carrying amount on the basis that the
asset had never been classified as held for sale and
recoverable amount