1. The enhancing qualitative characteristics of financial To report a measure of overall entity performance.

reporting are
Comparability, verifiability, timeliness and 19. Comprehensive income excludes changes in equity
understandability resulting from which of the following?
Dividends paid to shareholders
2. The process of reporting an item in the financial
statements is 20. The full disclosure principle is best described by
Recognition which of the following?
Disclosure of any financial facts significant enough
3. It is defined as increase in economic benefits to influence the judgment of an informed user.
during the accounting period in the form of
inflows or enhancements of assets or decreases in 21. Which of the following is not a related party of an
liabilities that result in increases in equity, other than entity?
those relating to contributions from equity An entity providing banking for facilities to the entity
participants?
Income 22. Which of the following statements is correct regarding
accounting changes that result in financial statements that
4. The underlying theme of the Conceptual Framework are in effect the statements of a different reporting entity?
is The financial statements of all prior periods
Decision usefulness presented are adjusted retrospectively.
23. Changes in accounting policy are reported
5. The fundamental qualitative characteristic of faithful On a retrospective basis
representation has the components of
Completeness, neutrality and freedom from error
24. Changes in accounting policy
Permitted if the change will result in a more
6. Which of the following statements is false regarding reliable and more relevant presentation of the
adjusting entries? financial statements
Each adjusting entry affects one revenue account
and one expense account.
25. Corrections of error are reported in
Retained earnings
7. The closing process
Posts all closing entries to the appropriate general
26. When a component of a business has been
ledger account.
discontinued, the loss on disposal should
Include operating loss of the current period.
8. One element of the objective of financial reporting is
to provide
27. Which information should be disclosed in the
Information that is useful in assessing cash flow
summary of significant accounting policies?
prospects.
Criteria for determining which investments are
treated as cash equivalents.
9. The IASB employs a “due process” system which
Enables interested parties to express their view on
28. Which is true statement regarding disclosure for
issues under consideration.
subsequent events?
Recognize a loss for a recognized subsequent
10. Financial accounting standard-setting event in the current year financial statements.
Can be described as a social process
which reflects political actions of various
29. The notes to financial statements should not be used
interested user groups as well as product of
to
research and logic.
Correct an improper presentation in the financial
statements.
11. The statement of financial position is useful for all of
the following, except
30. Which of the following may not be disclosed in the
Determining free cash flows
income statement?
Gain or loss from extraordinary items
12. When classifying assets as current and noncurrent
Assets are classified as current if they are 31. A segment of business is to be reported separately
reasonably expected to be realized in cash or when the revenue of the segment exceeds the
consumed during the normal operating cycle. percent of the
Total revenue of all the entity’s industry segments
13. Which item is not a current liability?
Stock dividend distributable 32. For interim financial reporting, the income tax
expense for the second quarter should be computed
14. Which of the following is not an acceptable major by using
asset classification? Statutory tax rate for the year.
Deferred charges
33. What is a compensating balance?
15. The occurrence that most likely would have no effect Minimum deposit required to be maintained in
on net income is connection with a borrowing arrangement
Correction of an error in the financial statements of
a prior period discovered subsequent to their
issuance. 34. A cash equivalent is a short-term, highly liquid
investment that is readily convertible into known
16. The income statement would help in which of the amount of cash and
following? Is so near maturity that it presents insignificant risk
Estimate future cash flows of change in interest rate.

17. Which of the following would appear first in a 35. Which of the following concepts relates to the
statement of retained earnings? allowance method in accounting for accounts
Prior period error receivable?
Bad debt expense is an estimate that is based on
18. What is the purpose of reporting comprehensive
historical and prospective information.
income?
 36. Which of the following is a generally
accepted method in determining the
amount of the adjustment to bad debt
expense?
A percentage of sales not adjusted for the balance
in the allowance.
37. Valuation of inventories requires the determination of
all of the following, except
The cost of goods held on consignment from other
entities.
38. Which of the following is not an
acceptable method in applying the lower
of cost and net realizable value method
to inventory?
Inventory allocation
39. When inventory declines in value below
original cost, what is the maximum amount
that the inventory can be valued at?
Net realizable value
40. A major advantage of the retail inventory method is
that it
Provides a method for inventory control and
facilitates determination of the periodic inventory.
41. Where there is a production cycle of more than one
year for a biological asset, separate disclosure is
Encouraged for physical change and price change
42. Which of the following is not an accurate statement
concerning revenue recognition?
Revenue from services rendered is recognized
when cash is received or when services have been
performed.
43. When activities involve production through
natural growth or aging of biological asset,
revenue is earned as the plant or living
animal grows.
Accretion approach
44. The criteria for recognition of revenue at
the completion of production of precious
metals include which of the following?
All of these
45. Revenue from an artistic performance is recognized
once
The event takes place
46. An entity has a 20% investment in another entity
that it accounts for using the equity method. Which
of the following disclosures should be included in
the annual financial statements?
The accounting policy for the investment
47. The basic purpose of derivative financial instruments
is to manage some kind of risk such as all of the
following except?
Uncollectible of accounts receivable
48. Which of the following is an underlying?
All of these could be underlying
49. An example of a notional amount is
Number of barrels of oil
50. Entities are required to measure financial asset
based on all of the following, except
Whether the financial asset is a debt or equity
investment
51. Under the equity method of accounting for
investments, an investor recognizes the
share of the earnings in the period in which
the
Earnings are reported by the investee in the
financial statements.
52. Which of the following is not a financial asset?
Prepaid expense
53. Which of the following is not a financial instrument?
Warranty provision
54. When the revaluation model is used for
reporting property, plant and equipment,
the gain or loss should be included in
A revaluation surplus account in other
comprehensive income
55. Under the revaluation model for accounting for
property, plant and equipment
There is no rule regarding the frequency of
revaluation
56. When an entity chooses the
revaluation model as the accounting
policy for measuring property, plant
and equipment, which of the following
statements is correct?
When an asset is revalued, the entire class
of property, plant and equipment to which
that asset belongs must be revalued.
57. For a nonmonetary exchange, the configuration of
cash flow includes which of the following?
The risk, timing and amount of cash flows of the
asset
58. Accounting recognition should be given to the gain
realized on a nonmonetary exchange of plant asset,
except when the exchange has
No commercial substance and additional cash is
paid
59. Which of the following is not a capital expenditure?
Repair that maintains an asset in opening condition
60. Fence and parking lot are reported in the statement
of financial position as.
Land improvements
61. Which of the following statements is true regarding
capitalization of interest?
The amount of interest cost capitalized during the
period should not exceed the actual interest cost incurred.
When excess borrowed funds not
immediately needed for construction are
temporarily invested, any interest
earned should be recorded as interest
revenue
62. Which of the following statements is correct?
An asset is depreciated even if the fair value
exceeds carrying amount
63. Dividends representing a return of capital to
shareholders are not uncommon among the entities
which
None of these
64. Value in use is
The discounted value of future cash flows from the
use and disposal of the asset.
65. What is required with respect to accounting for
goodwill?
Goodwill should be recorded and periodically
evaluated for impairment
66. An entity has determined that the fair
value of a cash generating unit exceeds
carrying amount. Which of the following
statements is correct concerning this test
of impairment?
Impairment is not indicated and no additional
analysis is necessary.
67. An entity should recognize goodwill at which of the
following points?
Goodwill has been created in the purchase of a
business
68. Which of the following research and
development related costs should be
capitalized and depreciated over
current and future periods?
Research and development general laboratory
building which can be put to alternative use in the
future
69. Which of the following would not be considered an R
and D activity?
Adaption of an existing capability to a particular
requirement or customer need
70. Which of the following is not considered a
characteristic of a liability?
Liquidation is reasonably expected to require use
of current assets
71. Where is debt callable by the creditor reported in the
debtor’s financial statements?
Current liability
72. Which of the following is not considered when
evaluating whether or not to record a liability for
pending litigation?
The type of litigation involved
73. Under IFRS, all of the following are true
representation of the current liabilities, except
The non-current liabilities follow the current
liabilities
74. Income bonds
Pay no interest unless the issuer is profitable
75. When the effective-interest method is used to
amortize bond premium or discount, the periodic
amortization would
Increase if the bonds were issued at either a
discount or a premium.
76. When a note payable is issued for property, goods or
services, the present value of the note is measured
by
Using an imputed interest rate to discount all future
payments on the note.
77. Minimum lease payments may include a
Any of these
78. In computing depreciation of a leased asset, the
lessee should subtract
A guarantee residual value and depreciate over the
term of the lease.
79. The lease liability account should be reported as
Current portion in current liabilities and remainder
in non-current liabilities
80. In a defined benefit plan, the process of funding
refers to
Making the periodic contributions to a
funding agency to ensure that funds are
available to meet claims of retirees.
81. Which measure requires the use of future salaries in
the computation of pension obligation?
Defined benefit obligations
82. Plan assets include
Contributions made by the employer and
contributions made by the employee when
a contributory plan is involved.
83. What are compensated balances?
Paid time off
84. Entities use intraperiod tax allocation for all of the
following, except
Changes in accounting estimate
85. Taxable income
Differs from accounting income due to
differences un interperiod allocation and
permanent differences between the two
methods of income determination
86. Which feature makes a preference share more like
debt than an equity instrument?
Redeemable
87. The features frequently associated with preference
shares include all the following, except
Callable at the option of the shareholder
88. Which dividends do not reduce equity?
Share dividends
89. When bonds are issued with detachable warrants,
what amount is recorded as share premium?
The excess of the proceeds over the fair value of
the bonds
90. The distribution of share rights to existing ordinary
shareholder s would increase share premium at
Date of exercise of right
91. Which of the following option
valuation techniques should not be
used as a measure of their value of
share options in the first instance?
Intrinsic value
92. When there are two dilutive convertible
securities, the one that should be used first
to recalculate earnings per share is the
security with the
Smaller earnings per share adjustment
93. The earnings per share computation is not required
for
Income from operations
94. The statement of cash flows helps users evaluate
financial flexibility which is described as
The ability to respond and adapt to financial
adversity and unexpected needs and opportunities.
95. Which of the following is considered part of cash and
cash equivalents?
Blank overdraft
96. An SME can recognize which of the
following either as component of
profit or loss or component of other
comprehensive income?
Actuarial gain or loss

97. Which of the following is true in relation to an SME?

All these statements are true.

98. General income accounts of the government include

all of the following, except
Fines and penalties

99. What is the paramount objective of financial reporting

by the local and national government?
Accountability

100. Which of the following would result in an increase in

unrestricted net assets for the currents year?
A private non-profit hospital earned interest on
investments that were board-designated.