Summary of Quizzes in Conceptual Framework and Accounting Standard

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Summary of Quizzes in Conceptual Framework and

Accounting Standard
Accountancy (ICCT Colleges Foundation)
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CHAPTER 1 PRE-TEST – CBACT01

Accounting provides which type of information?
a. Quantitative
b. Financial information
c. Qualitative
d. All of these
It refers to the process of incorporating the effects of an accountable event in the
statement of financial position or the statement of profit or loss and other
comprehensive income through a journal entry.
a. Realization
b. Derecognition
c. Posting
d. Recognition
The primary objective of financial reporting is to provide.
a. Information about economic resources, claims to these resources, and changes
in them.
b. Information useful for investment and credit decisions.
c. Information useful in predicting future cash flows.
d. All of these
All of the following are events considered as exchange or reciprocal transfer, except.
a. Purchase of investment in equity securities.
b. Sale of equipment for non-interest bearing note.
c. Subscription of the entity’s own equity instrument (i.e., contributions by
owners)
d. Exchange of a note payable of an account payable
e. Borrowing of money from a bank
What is the basic purpose of accounting?
a. To provide quantitative financial information about economic activities.
b. To provide all information that users need in making economic decisions.
c. To provide qualitative financial information about economic activities intended to
be useful in making economic decisions.
d. To provide quantitative financial information about economic activities
intended to be useful in making economic decisions.
These are events involving an entity and another external party.
a. Life events
b. Internal events
c. Transactions

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d. External events
All of the following are events considered nonreciprocal transfers, except
a. Declaration of cash dividends
b. Declaration of stock dividends
c. Payment of accounts payable
d. Imposition of fines
e. Theft
General purpose financial statements are:
a. Those statements that cater to the common and specific needs of a wide range
of external users.
b. Those statements that cater to the common needs of a wide range of external
users and internal users.
c. Those statements that cater to the common needs of a limited range of external
users.
d. Those statements that cater to the common needs of a wide range of
external users.
External users are those:
a. Who do have the authority to demand financial reports tailored to their specific
needs.
b. Who do not have the authority to demand financial reports tailored to their
common needs.
c. Who do not have the authority to demand financial reports tailored to their
specific needs.
d. Who belong to countries other than the domicile country of the reporting entity
It is the accounting process of assigning numbers, commonly in monetary terms, to the
economic transactions and events.
a. Analyzing
b. Measuring
c. Classifying
d. Interpreting

A change in the pattern of consumption of economic benefits from an asset is most like
a
a. Change in accounting policy
b. Change in accounting estimate
c. Error.

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d. Any of these
Entity A had the following balances at December 31, 20x1:
Cash in checking account 35,000
Cash in 90-day money market account 75,000
Treasury bill, purchased 12/1/x0, maturing 5/31/x2 150,000
How much cash and cash equivalents is reported in Entity A’s December 31, 20x1
statement of financial position?
a. 110,000
b. 235,000
c. 310,000
d. 460,000
How should the following changes be treated, according to PAS 8?
I. A change is to be made in the method of calculating the provision for
uncollectible receivables.
II. Investment properties are now measured at fair value, having previously been
Change (1) Change (2)
a. Change of accounting policy
change of accounting policy
b. Change of accounting policy
change of accounting estimate
c. Change of accounting estimate
d. Change of accounting estimate
Change of accounting estimate
Entity A acquires equipment by issuing shares of stocks. How should Entity A report the
transaction in the statement of cash flow?
a. Operating activities
b. Investing activities
c. Financing activities
d. Not reported
According to PAS 8, these are the specific principles, bases, conventions, rules and
practices applied by an entity in preparing and presenting financial statements.
a. Accounting policies
b. Accounting estimates
c. Accounting standards

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d. Accounting assumptions
Which of the following statements best describes a statement of cash flows?
a. The statement of cash flows is also called the statement of activities.
b. The statement of cash flows shows information on an entity’s assets, liabilities
and equity.
c. The statement of cash flows shows information on an entity’s income and
expenses during the period.
d. The statement of cash flows shows historical changes of cash and cash
equivalents during the period.
Entity A, a financial institution, received cash dividends from its investments in
marketable securities during the year. How will the dividends be presented in Entity A’s
statement of cash flows?
a. As investing activity
b. As operating activity
c. As financing activity
d. A or B
PAS 8 permits a change in accounting policy only if the change
a. Is required by PFRS
b. Results in reliable and more relevant information
c. A or B
d. PAS 8 does not permit a change in accounting policy
These arise from misapplication of accounting policies, mathematical mistakes,
oversights or misinterpretations of facts, or fraud.
a. Error
c. Change in accounting policy
d. Impracticable application
Which of the following is presented under the investing activities section of a statement
of cashflows?
a. Collection of accounts receivable
b. Cash purchases of inventories
c. Purchase of equipment through cash
d. Issuance of share capital through cash

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Which of the following instances does not preclude an entity from recognizing
depreciation during a certain period?
a. The asset is fully depreciated.
b. The asset is being depreciated using the units of production method and there is
no production during the period.
c. The asset is classified as held for sale under PFRS 5.
d. The asset becomes idle or is taken out of active use.
Which of the following is not one of the essential characteristics of PPE?
a. Tangible asset
b. Used in business
c. Primarily held for sale
d. Long-term in nature
These are differences that have future tax consequences.
a. Permanent differences
b. Temporary differences
c. Taxable difference
d. Deductible differences
If plotted on a graph (X-axis: time; Y-axis: ₱), the depreciation charges under the
straight-line method would show,
a. a Straight-line.
b. An upward line sloping to the right.
c. A downward line sloping to the left.
d. A curvilinear line sloping here and there.
During the period, deferred tax assets increase by ₱400 while deferred tax liabilities
increased by ₱500. The net change of ₱100 is a
a. Deferred tax expense
b. Deferred tax income
c. Deferred tac liability
d. Deferred tax asset
This type of difference will give rise to deferred tax liability.
a. Taxable temporary difference
b. Permanent difference
c. Deductible temporary difference
d. Deferred difference
PAS 16 requires an entity to review the depreciation method and estimates of useful life
and residual value at the end of each yead-end. A change in any of these is accounted
for using.

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a. A specific transitional provision of a PFRS

b. Retrospective application
c. Prospective application
d. Any of these
At the end of the period, Entity A has taxable temporary difference of ₱100,000. Entity
A’s income tax rate is 30%. Entity A’s statement of financial position would report which
of the following?
a. 30,000 deferred tax asset
b. 30,000 deferred tax liability
c. 30,000 deferred tax expense
d. 30,000 income tax expense
According to PAS 16, the selection of an appropriate depreciation method rests upon
the entitys
a. Management
b. Accountant
c. Regulator
d. All of these
Deferred tax assets and deferred tax liabilities do not alter the tax to be paid in the
current period. However, they cause tax payments to either increase or decrease when
they reverse in a future period. The reversal of which of the following will cause an
increase in tax payment?
a. Deferred tax liability
b. Deferred tax asset
c. Deferred tax expense
d. Deferred tax benefit
CHAPTER 4 - PRETEST
Read and understand each question carefully. This test consists of 10 items of Multiple
Choice.
1. Which of the following is considered a government grant under PAS 20?

a. Award of major government contracts
b. Cancellation of an existing loan from the government
c. Free technical advice
d. Public improvements

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2. Which of the following is not considered a government grant under PAS 20?
a. Financial aid
b. Benefit of subsidized loans
c. Tax breaks
d. Forgivable loans
3. The main concept used in recognizing income from government grants is

a. capital approach
b. historical cost
c. matching
d. materiality
4. In 20x1, Entity A proposes an environmental clean-up project for a river. The

government supports this project and gives Entity A a ₱1M monetary grant
conditioned that the money will only be spent on the proposed project. The proposed
project is expected to take about 2 years to complete. Entity A starts the clean-up
project in 20x2. How should Entity A recognize income from the government grant?
a. in full when Entity A receives the grant
b. over 2 years starting in 20x1
c. over the period of the project as expenses are incurred
d. the grant is not recognized as income
5. According to PAS 20, a government grant that becomes repayable is accounted for
a. retrospectively.
b. prospectively.
c. a or b
d. not accounted for
6. ABC Philippines Co. is required to file audited financial statements with the Philippine
Securities and Exchange Commission (SEC) and the Bureau of Internal Revenue
(BIR). What is the presentation currency for the financial statements to be filed with
the said government agencies?
a. Philippine peso
b. U.S. dollar
c. a or b
d. none of these
7. These are those which do not give rise to a right to receive (or an obligation to deliver)
a fixed or determinable amount of money.
a. Monetary items
b. Non-monetary items
c. Financial items
d. Non-financial items

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8. On December 1, 20x1, you imported a machine from a foreign supplier for $100,000,
due for settlement on January 6, 20x2. Your functional currency is the Philippine peso.
When preparing the December 31, 20x1 statement of financial position, which of the
following will you translate to the closing rate?
a. machine
b. accounts payable
c. a and b
d. none of these
9. Use the information in Problem #4 above. The relevant exchange rates are as follows:
Dec. 1, 20x1 Dec. 31, 20x1 Jan. 6, 20x2
₱50:$1 ₱52:$1 ₱47:$1
How much foreign exchange gain (loss) will you recognize on December 31, 20x1?
a. 200,000 c. 100,000
b. (200,000) d. (100,000)
10. Which of the following costs may not be eligible for capitalization as borrowing costs
under PAS 23?
a. Interest on bonds issued to finance the construction of a qualifying asset.
b. Amortization of discounts or premiums relating to borrowings that qualify for
capitalization.
c. Imputed cost of equity.
d. Exchange differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to interest costs pertaining to a qualifying asset

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CHAPTER 1 POST TEST – CBACT01

The coronet company has a cost card in relation to an item of goods manufactured as
follows:
Materials – 70
Storage cost of finished goods – 18
Delivery to customers (freight out) – 4
Non-recoverable purchase taxes – 6
According to PAS 2, at what figure should the item be valued in inventory?
a. 88
b. 76
c. 98
d. 94
PAS 1 requires an assessment of the entity’s ability to continue as a going concern
each time financial statements are prepared. Who is responsible in making this
assessment?
a. Accountant
b. Auditor
c. Management
d. Government regulatory body
Which of the following costs of conversion cannot be included in cost of inventory?
a. Cost of direct labor.
b. Factory rent and utilities.
c. Salaries of sales staff (sales department shares the building with factory
supervisor).
d. Factory overheads based on normal capacity.
Which of the following costs are included in the cost of inventories?
a. Transport costs of raw materials.
b. Abnormal material usage
c. Storage costs relating to finished goods.
d. Administrative and general overhead.
Which of the following is considered a qualitative factor in making materiality
judgements?
a. The context of an item in relation to the current economic state of the
environment where the entity operates.
b. 10% of profit or loss, in absolute terms

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c. 5% of total revenues
d. 1% of total assets
Who is responsible for the preparation and the fair presentation of an entity’s financial
statements in accordance with the PFRSs?
a. Any accountant
b. Certified public accountant
c. Auditor
d. Management
The cost of inventory should not include
I. Purchase price
II. Import duties and other taxes.
III. Abnormal amounts of wasted materials.
IV. Administrative overhead.
V. Fixed and variable production overhead.
VI. Selling costs.
a. II, III, IV, V
b. III, IV, VI
c. I, II
d. II, III, IV, V, VI
The two primary qualities that make accounting information useful for decision making
are
a. Comparability and consistency
b. Materiality and timeliness
c. Relevance and reliability
d. Faithful representation and relevance
Which of the following financial statements would be dated as at a certain date?
a. Statement of financial position
b. Statement of profit or loss and other comprehensive income
c. Statement of cash flows
d. All of these
This type of presentation of statement of financial position does not show distinctions
between current and noncurrent items.
a. Classified presentation
b. Unclassified presentation
c. Non-discriminating presentation
d. Awesome presentation
A soundly developed conceptual framework of concepts and objectives should.

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a. Increase financial statement users’ understanding of and confidence in financial

reporting.
b. Enhance comparability among companies’ financial statements.
c. Allow new and emerging practical problems to be more quickly soluble.
d. All of these.
These are the end product of the financial reporting process and the means by which
information gathered and processed is periodically communicated to users.
a. Financial reporting
b. Financial statements
c. Financial products
d. Accounting statements
How should trade discounts be dealt with when valuing inventories at the lower of cost
and net realizable value (NRV) according to PAS 2?
a. Added to cost
b. Ignored
c. Deducted in arriving at NRV
d. Deducted from cost
Inventories are measured at
a. Lower of cost and fair value.
b. Lower of cost and net realizable value.
c. Lower of cost and nominal value.
d. Lower of cost and net selling price.
e. Choices b and d.
This comprises all “non-owner changes in equity.” It excludes owners changes in equity,
such as subscription, issuance, and reacquisition of share capital and declaration of
dividends.
a. Other comprehensive income
b. Changes in equity
c. Total comprehensive income
d. Profit or loss
Which of the following is added to the cost of inventories?
a. Storage costs of part-finished goods
b. Trade discounts
c. Refundable purchase taxes
d. Administrative costs
Which of the following is not one of the general features of financial statements under
PAS 1?

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a. Fair presentation and compliance with PFRSs

b. Going concern
c. Cash basis
d. Materiality and aggregation
Late information lacks this qualitative characteristic.
a. Tardiness
b. Verifiable
c. Timeliness
d. Comparability
In making an economic decision, an investor needs information on the amounts of an
entity’s economic resources and claims to those resources and claims to those
resources. That investor would most likely refer to which of the following financial
statements?
a. Statement of financial position
b. Statement of comprehensive income
c. Statement of cash flows
d. Statement of changes in equity
The overall objective of financial reporting is to provide information.
a. About an entity’s assets, liabilities, and owners’ equity
b. About and entity’s financial performance during a period.
c. That is useful in making economic decisions.
d. That allows owners to assess management’s performance.

1. Entity A, a financial institution, received cash dividends form its investments in
marketable securities during the year. How will the dividends be presented in
Entity A’s statement of cash flows?
a. As investing activity
b. As financing activity
c. As operating activity
d. A or B
2. How should the following changes be treated, according to PAS 8?
III. A change is to be made in the method of calculating the provision for
uncollectible receivables.
IV. Investment properties are now measured at fair value, having previously been
Change (1) Change (2)
a. Change of accounting policy

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b. Change of accounting policy

change of accounting estimate
c. Change of accounting estimate
d. Change of accounting estimate
Change of accounting estimate
3. Examples of non-adjusting events except one:
a. Changes in fair values, foreign exchange rates, interest rates or market prices
after the reporting period.
b. Casualty losses
c. Litigation arising solely from events occurring after the reporting period
d. The receipt of information after the reporting period indicating that an
asset was impaired at the end of reporting period
4. Examples of cash flows from financing activities except one
a. Cash receipts from issuing share s of other equity instruments and cash
payments to redeem them.
b. Cash receipts and cash payments on derivative assets and liabilities
(other than those that are held for trading or classified as financing
activities)
c. Cash receipts from issuing notes, loans, bonds and mortgage payable and
other short term or long-term borrowings, and their payments
d. Cash payments by a lessee for the reduction of the outstanding liability
relating to a lease
5. Examples of cash flows from Operating activities except one:
a. Cash receipts from the sale of goods, rendering of services, or other forms of
income
b. Cash receipts and cash payments in the acquisition and sale of equity
or debt instruments of other entities
c. Cash receipts and payments from contracts held for dealing or trading
purpose
d. Cash payments for purchases of goods and services
6. A change in the pattern of consumption of economic benefits from an asset is
most like a
a. Change in accounting policy
c. Error.
d. Any of these
7. Entity A acquires equipment by issuing shares of stocks. How should Entity A
report the transaction in the statement of cash flow?
a. Operating activities
b. Investing activities
c. Financing activities
d. Not reported

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8. Which of the following is most likely to be a non-adjusting event?

a. A major customer liquidates its business after the end of the reporting period.
b. The entity announces a major restructuring after the end of the reporting
period.
c. The settlement after the reporting period of a court case that confirms
that the entity has a present obligation at the end of reporting period.
d. The determination after the reporting period of the cost of asset purchased, or
the proceeds from asset solid, before the end of reporting period
9. These arise from misapplication of accounting policies, mathematical mistakes,
a. Error
10. These arise from misapplication of accounting policies, mathematical mistakes,
a. Error
11. The Sarin Company’s financial statements for the year ended 30 April 20x8 were
approved by its finance director on 7 July 20x8 and a public announcement of its
profit for the year was made on 10 July 20x8. The board of directors authorized
the financial statements for issue on 15 July 20x8 and they were approved by the
shareholders on 20 July 20x8. Under PAS 10, after what date should
consideration no longer be given as to whether the financial statements to 30
April 20x8 need to reflect adjusting and non-adjusting events?
a. 7 July 20x8
b. 10 July 20x8
c. 15 July 20x8
d. 20 July 20x8
12. Entity A had the following balances at December 31, 20x1:
Cash in checking account 35,000
Cash in 90-day money market account 75,000
How much cash and cash equivalents is reported in Entity A’s December 31,
20x1 statement of financial position?
a. 110,000
b. 235,000

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c. 310,000
d. 460,000
13. One of Entity A’s delivery trucks had an accident on February 14, 20x2. The truck
is totally wrecked and is uninsured. Entity A’s December 31, 20x1 current period
financial statements were authorized or issue on March 31, 20x2. Entity A asked
you if it can write-off the carrying amount of the destroyed truck from its
December 331, 20x1 statement of financial position. What will you tell Entity A?
a. Yes, go ahead. Write-off the truck because the events is an adjusting event.
b. No. don’t write-off the truck because the events is a non-adjusting event.
c. No. Don’t write-off the truck because the event is a non-adjusting event.
You should, however, disclose the event if you deem it to be material.
14. According to PAS 10, these are those events, favorable and unfavorable, that
occur between the end of the reporting period and the date when the financial
statements are authorized for issue.
a. Events after the reporting period
b. Non-adjusting events
c. Adjusting events
d. All of these
15. Which of the following is an example of a non-adjusting event?
a. Sale of inventory for less than its carrying value shortly after the reporting
period.
b. Amounts received in respect of an insurance claim being negotiated at the
period end.
c. Destruction of a machine by fire after the reporting period.
d. Bankruptcy of a major customer with a balance owing at the period end.
16. PAS 8 permits a change in accounting policy only if the change.
a. Is required by a PFRS
b. Results in reliable and more relevant information
c. A or B
d. PAS 8 does not permit a change in accounting policy
17. Which of the following statements best describes a statement of cash flows?
a. The statement of cash flows is also called the statement of activities.
b. The statement of cash flows shows information on an entity’s assets, liabilities
and equity.
c. The statement of cash flows shows information on an entity’s income and
expenses during the period.
d. The statement of cash flows shows historical changes of cash and cash
equivalents during the period.
18. Which of the following is presented under the investing activities section of a
statement of cashflows?
a. Collection of accounts receivable
b. Cash purchases of inventories
c. Purchase of equipment through cash

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d. Issuance of share capital through cash

19. According to PAS 8, these are the specific principles, bases, conventions, rules
and practices applied by an entity in preparing and presenting financial
statements.
a. Accounting policies
b. Accounting estimates
c. Accounting standards
d. Accounting assumptions
CHAPTER 3 - POST TEST
Read and understand each question carefully. This test consists of 10 items Multiple
Choice.
1. Imagine you are an employer (an awesome one). When should you recognize short-
term employee benefits?
a. Every 1st day of the month
b. Every 15th and 30th of the month.
c. When the employees have rendered service in exchange for the employee
benefits.
d. Never!
2. You are the business owner of Entity A. You have 10 employees, each earning
₱20,000 per month. You pay salaries on a bi-monthly basis. During the month of April
20x1, none of your employees were absent, late or have rendered overtime service.
When will you recognize the salaries expense (and at what amount) for the first payday
in the month of April 20x1?
Timing of recognition Amount recognized
a. April 1 20,000
b. April 15 20,000
c. April 1 100,000
d. April 15 100,000
3. Entity A has 20 employees who are each entitled to one day paid vacation leave for
each month of service rendered. Unused vacation leaves cannot be carried forward
and are forfeited when employees leave the entity. All the employees have rendered
service throughout the current year and have taken a total of 150 days of vacation
leaves. The average daily rate of the employees in the current period is ₱1,000.
However, a 5% increase in the rate is expected to take into effect in the following year.

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Based on Entity A’s past experience, the average annual employee turnover rate is
20%. How much will Entity A accrue at the end of the current year for unused
entitlements?
a. 0 c. 90,000
b. 150,000 d. 94,500
4. Under a profit-sharing plan, Entity A agrees to pay its employees 5% of its annual
profit. The bonus shall be divided among the employees currently employed as at
year-end. Relevant information follows:
Profit for the year ₱8,000,000

Employees at the beginning of the year 8
Average employees during the year 7
Employees at the end of the year 6
If the employee benefits remain unpaid, how much liability shall Entity A accrue at the
end of the year?
a. 400,000 c. 200,000
b. 300,000 d. 0
5. You are employed as an accountant. Your company’s retirement plan states that,
upon retirement, an employee (not less than 60 years but not more than 65 years of
age) is entitled to a lump sum payment equal to the employee’s final monthly salary
level multiplied by the number of years in service (not less than 10 years). At the end
of month following the month of retirement and every month thereafter, the retired
employee is entitled to a monthly pension equal to one-eighth (1/8) of the final monthly
salary level. The monthly pensions cease upon death of the retired employee.
However, if the employee has immediate dependent(s) with age of less than 18 years,
the dependent(s) will be entitled to the monthly pensions, which will cease when the
dependent(s) reaches 18 years of age. What type of post-employment benefit plan
does your company have?
a. Defined contribution plan
b. Defined benefits plan
c. Defined pension plan
d. Cannot be determined; insufficient information!
Use the following information for the next six questions:

Information on Entity A’s defined benefit plan is as follows:
PV of DBO – Jan. 1, 20x1 1,800,000

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FVPA – Jan.1, 20x1 1,440,000

PV of DBO – Dec. 31, 20x1 2,160,000
FVPA, end. – Dec. 31, 20x1 1,572,000
Current service cost 390,000
Actuarial loss 120,000
Return on plan assets 132,000
Discount rate 5%
6. How much is the net defined benefit liability (asset) in Entity A’s December 31, 20x0
a. 588,000 liability
b. 588,000 asset
c. 360,000 liability
d. 360,000 asset
b. 588,000 asset
d. 360,000 asset
8. How much is the total defined benefit cost for 20x1?

a. 588,000
b. 468,000
c. 348,000
d. 228,000
9. How much is the component of the total defined benefit cost to be recognized in profit
or loss?
a. 390,000
b. 408,000
c. 348,000
d. 18,000
10. How much is the component of the total defined benefit cost to be recognized in other
comprehensive income?
a. 180,000
b. (60,000)

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c. 60,000
d. (180,000)
Use the following information for the next six questions:

Information on Entity A’s defined benefit plan is as follows:
PV of DBO – Jan. 1, 20x1 1,800,000
FVPA – Jan.1, 20x1 1,440,000
PV of DBO – Dec. 31, 20x1 2,160,000
FVPA, end. – Dec. 31, 20x1 1,572,000
Current service cost 390,000
Actuarial loss 120,000
Return on plan assets 132,000
Discount rate 5%
b. 588,000 asset
d. 360,000 asset
b. 588,000 asset
d. 360,000 asset
13. How much is the total defined benefit cost for 20x1?
a. 588,000
b. 468,000
c. 348,000
d. 228,000
14. How much is the component of the total defined benefit cost to be recognized in profit
or loss?
a. 390,000

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b. 408,000
c. 348,000
d. 18,000
15. How much is the component of the total defined benefit cost to be recognized in other
comprehensive income?
a. 180,000
b. (60,000)
c. 60,000
d. (180,000)

On December 1, 20x1, you imported a machine from a foreign supplier for S100,000,
due for settlement on January 6, 20x2. Your functional currency is the Philippine peso.
When preparing the December 31, 20x1 statement of financial position, which of the
following will you translate to the closing rate?
a. Machine
b. Accounts payable
c. A and B
d. None of these
On January 1, 20x1, Entity A obtained a 10%, P5,000,000 loan, specifically to finance
the construction of a building. The proceeds of the loan were temporarily invested and
earned interest income of P180,000. The construction costs of P7,000,000. How much
is the cost of the building on initial recognition?
a. 7,320,000
b. 7,000,000
c. 7,500,000
Examples of government grants except one:
a. Receipt of financial aid in case of loss from a calamity.
b. Forgiveness of an existing loan from the government.
c. Benefit of a government loan with below-market rate of interest.
d. Answer not given.
The main concept used in recognizing income from government grants is.
a. Capital approach
b. Historical cost

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c. Matching
d. Materiality
Which of the following may not be considered a “qualifying asset” under PAS 23?
a. A power generation plant that normally takes two years to construct.
b. An expensive private jet that can be purchased from a local vendor.
c. A toll bridge that that usually take more than a year to build.
d. A ship that normally takes one to two years to complete.
Are units of currency held and assets and liabilities to be received or paid in a fixed or
determinable number of units of currency.
a. Monetary items
b. Non-monetary items
c. Foreign currency monetary items
d. None of the above
These are those which do not give rise to a right to receive (or an obligation to deliver) a
fixed or determinable amount of money.
a. Monetary items
b. On-monetary items
c. Financial items
d. Non-financial items
The capitalization of borrowing costs as part of the cost of a qualifying asset
commences on the date when all of the following conditions are met except one:
a. The entity incurs expenditures for the asset.
b. Interest expense on financial liabilities or lease liabilities computed using
the effective interest method.
c. The entity incurs borrowing costs
d. It undertakes activities that are necessary to prepare the asset for its intended
use or sale
An asset that necessarily takes a substantial period of time to get ready for its intended
use or sale.
a. Qualifying asset
b. Fixed asset
c. Non current asset
d. Tangible asset
Functional currency is
a. When preparing financial statements, a reporting entity must identify its functional
currency

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b. The primary economic environment in which an entity operates is normally the

one in which it primarily generates and expends cash.
c. A only
d. Both a and b
Which of the following costs may not be eligible for capitalization as borrowing costs
under PAS 23?
a. Interest on bonds issued to finance the construction of a qualifying asset.
b. Amortization of discounts or premiums relating to borrowings that qualify for
capitalization.
c. Imputed cost of equity.
d. Exchange differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to interest costs pertaining to a qualifying asset.
An asset is being constructed for an enterprise’s own use. The asset has been financed
with a specific new borrowing. The interest cost incurred during the construction period
as a result of expenditures for the asset is,
a. A part of the historical cost of acquiring the asset to be written off over the
estimated useful life of the asset.
b. Interest expense in the construction period.
c. Recorded as a deferred charge and amortized over the term of the borrowing.
d. A part of the historical cost of acquiring the asset to be written off over the term of
the borrowing used to finance the construction.
Which of the following is considered a government grant under PAS 20?
a. Award of major government contracts.
b. Cancellation of an existing loan from the government.
c. Free technical advice
d. Public improvements
Which of the following is not considered a government grant under PAS 20?
a. Financial aid
b. Benefit of subsidized loans
c. Tax breaks
d. Forgivable loans
ABC Philippines Co. is required to file audited financial statements with the Philippine
Securities and Exchange Commission (SEC) and the Bureau of Internal Revenue (BIR).
What is the presentation currency for the financial statements to be filed with the said
government agencies?
a. U.S. dollar
b. Philippine peso
c. A or B

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d. None of these
Capitalization of borrowing costs
a. Shall be suspended during the temporary periods of delay.
b. May be suspended only during extended periods of delays in which active
development is delayed.
c. Should never be suspended once capitalization commences.
d. Shall be suspended only during extended periods of delays in which active
development is delayed.
The following are not government grants except one:
a. Free technical or marketing advice
b. Government procurement policy that is responsible for a portion of the entity’s
sales.
c. Public improvements that benefit the entire community
d. Receipt of cash, land, or other non-cash assets from the government
subject to compliance with certain conditions.
Is an entity that is subsidiary, associate, joint venture or branch of a reporting entity, the
activities of which are based or conducted in a country or currency other than those of
the reporting entity.
a. Monetary items
b. Foreign operation
c. Foreign currency
d. Answer not given
According to PAS 20, a government grant becomes repayable is accounted for
a. Prospectively
b. Retrospectively
c. A or B
d. Not accounted for

Interest in the associate includes the following except one
a. Investment in associate measured under equity method
b. Investment in preference shares of the associate
c. Unsecured long-term receivables or loans
d. Secured long-term receivables or loans
The following are the financial Statements of a Defined Contribution Plan except one
a. A trial balance and statement of financial positions.

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b. A statement of net assets available for benefits

c. A statement of changes in net assets available for benefits
d. Accompanying notes to the financial statement
Disclosure of related party transaction except one
a. Key management personnel compensation broken down into the following
categories SPOTS and loans to key management personnel.
b. Related party transactions – nature of transaction and outstanding balances.
c. Parent-subsidiary relationship regardless of whether there have been
transactions between them.
d. The actuarial present value of promised retirement benefits, distinguishing
between vested benefits and non-vested benefits.
The amount of benefits to be received by employees enrolled in a defined benefit plan
is.
a. Dependent on the level of contributions to a fund.
b. Dependent on the level of investment performance of a fund.
c. A and B
d. Neither a and b
Which of the following statements is correct?
a. PAS 19 encourages, but does not require, involving a qualified actuary in
measuring defined benefit obligations.
b. PAS 26 applies only to defined benefit plans but not to defined contribution plans.
c. Information on ‘excess’ or ‘deficit’ is required to be disclosed in the financial
statements of a defined contribution plan.
d. In practice, actuarial valuations are frequently prepared every year.
PAS 24 requires the disclosure of key management personnel compensation. Which of
the following is not included in this disclosure?
a. Short-term employee benefits
b. Termination benefits
c. Shared-based payment
d. Reimbursements of officers’ out-of-pocket expenses
The following are examples of related parties except one
a. Investor and investee relationship where control, joint control or significant
influence exists.
b. Close family member
c. Post-employment benefit plan
d. Comptroller

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These are those presented in addition to consolidated financial statements or the

financial statements of an entity with an investment in associate or joint venture that is
accounted for using equity method in accordance with PAS 28.
a. Individual financial statements.
b. Separate financial statement
c. Consolidate financial statements
d. Equity financial statements
A related party transaction is
a. Parent-subsidiary relationship regardless of whether there have been
transactions between them.
b. Transfer of resources, services or obligations between a reporting entity
and a related party, regardless of whether a price is charged.
c. Applied by an employer in (among others) determining the cost of providing
retirement benefits.
d. Applied by, for example, a trustee, when preparing the financial statements of a
retirement benefit plan.
Which of the following is not required to be disclosed under PAS 24?
a. A Parent-subsidiary relationship when there were transactions between them
during the period.
b. A parent-subsidiary relationship when there were no transactions between them
during the period.
c. Loans to officers.
d. The name of the parent of the entity’s associate.
CHAPTER 5 – POST TEST

1. Which of the following best describes the term ‘significant influence’ as used under
PAS 28?
a. The holding of 20% interest in an investee.
b. The ability to control an investee’s relevant activities through holding of significant
portion of the investee’s voting rights.
c. The power to participate in the financial and operating policy decisions of an
entity.
d. The contractually agreed sharing of profits and losses in an investee.
2. Entity A owns 25% of the voting rights in Entity B. However, Entity A has no
representation on the board of directors of Entity B. Which of the following statements
is correct?
a. Entity A cannot be presumed to have significant influence over Entity B because
Entity A does not have board representation.

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b. Entity A is presumed to have signification influence over Entity B because it holds

25% or more of the voting rights in Entity B.
c. Entity A is presumed to have signification influence over Entity B because it
holds 20% or more of the voting rights in Entity B.
d. Representation on an investee’s board of directors is never considered when
determining the existence of significant influence.
3. On January 1, 20x1, Entity A acquires 25% interest in Entity B for ₱800,000. Entity B
reports profit of ₱1,000,000 and declares dividends of ₱100,000 in 20x1. How much
is the carrying amount of the investment in associate on December 31, 20x1?
a. 800,000
b. 1,250,000
c. 1,000,000
d. 1,025,000
4. The Hanwell Company acquired a 30% equity interest in The Northfield Company for
CU400,000 on 1 January 20X6. In the year to 31 December 20X6 Northfield earned
profits of CU80,000 and paid no dividend. In the year to 31 December 20X7 Northfield
incurred losses of CU32,000 and paid a dividend of CU10,000. In Hanwell's
consolidated statement of financial position at 31 December 20X7, what should be the
carrying amount of its interest in Northfield, according to IAS 28 Investments in
associates?
a. CU438,000
b. CU411,400
c. CU414,400
d. CU400,000
5. These are those presented in addition to consolidated financial statements or the

financial statements of an entity with an investment in associate or joint venture that
is accounted for using equity method in accordance with PAS 28.
a. Individual financial statements
b. Separate financial statements
c. Consolidate financial statements
d. Equity financial statements
6. Entity A acquired an investment in associate for ₱1M many years ago. At the end of
the current reporting period, the investment has a fair value of ₱2.9M. If the equity
method is used, the investment would have a current carrying amount of ₱2.6M. In
Entity A’s separate financial statements, the investment should be valued at
a. 1,000,000.
b. 2,600,000.
c. 2,900,000.
d. any of these, as a matter of an accounting policy choice

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7. The amount of benefits to be received by employees enrolled in a defined benefit plan

is
a. dependent on the level of contributions to a fund.
b. dependent on the level of investment performance of a fund.
c. a and b
d. neither a nor b
8. Which of the following statements is correct?

a. PAS 19 encourages, but does not require, involving a qualified actuary in
measuring defined benefit obligations.
b. PAS 26 applies only to defined benefit plans but not to defined contribution plans.
c. Information on ‘excess’ or ‘deficit’ is required to be disclosed in the financial
statements of a defined contribution plan.
d. In practice, actuarial valuations are frequently prepared every year.
9. PAS 24 requires the disclosure of key management personnel compensation. Which

of the following is not included in this disclosure?
a. short-term employee benefits
b. termination benefits
c. share-based payment
d. reimbursements of officers’ out-of-pocket expenses
10. Which of the following is not required to be disclosed under PAS 24?
a. A parent-subsidiary relationship when there were transactions between them
during the period.
b. A parent-subsidiary relationship when there were no transactions between them
during the period.
c. Loans to officers
d. The name of the parent of the entity’s associate
11. Equity method

a. Investments in associates or joint ventures are accounted for using the equity
method. Under this method, the investment is initially recognized at cost and
subsequently adjusted for the investor’s share in the charges in the equity of the
investee.
b. separate financial statements are those presented in addition to consolidate
financial statements or in addition to financial statements in which investments in
associates or joint ventures are accounted for using the equity method.
c. A Only
d. Both a and b
12. Is the contractually agreed sharing of control over an economic activity.

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a. Significant influence
b. join control
c. key management control
d. answer not given
13. Financial statements of a defined contribution plan.

a. A statement of net assets available for benefits
b. a statement of charges in net assets available for benefits
c. accompanying notes to the financial statements
d. all of these
14. Is the power to participate in the financial operating policy decisions of an entity, but
is not control over those policies.
a. Key management control
b. significant influence
c. joint control
d. inventory control
15. The following are examples of related parties except one.

a. Key management personnel
b. close family member
c. lender and investor
d. post-employment benefit plan
16. Interest in the associate includes the following except one

a. Secured long-term receivables or loans
b. Investment in associate measured under equity method
c. Investment in preference shares of the associate
d. Unsecured long-term receivables or loans
17. Interest in the sushi does not include the following:

a. trade receivables and payables
b. secured long-term receivables or loans
c. A only
d. both a and b

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CHAPTER 6 - PRETEST
1. PAS 29 is generally not applied by entities unless their functional currency is that of a
hyperinflationary economy. This is because of which of the following basic accounting
concepts?
a. Going concern
b. Price level concept
c. Stable monetary assumption
d. Materiality
2. Which of the following is within the scope of PAS 32?

a. Assets held for sale in the ordinary course of business
b. Contracts relating to employee benefits
c. Financial instruments that are within the scope of PFRS 9
d. Investments in associates and joint ventures
3. Which of the following is not a financial asset?

a. Cash
b. Receivable
c. Inventory
d. Investment in associate
4. These are bonds that can be exchanged for shares of stocks of the issuer.
a. Exchangeable bonds
b. Callable bonds
c. Convertible bonds
d. Rock bonds
5. Which of the following is not a financial instrument?

a. Accounts receivable
b. Investment in shares of stocks
c. Accounts payable
d. All of these are financial instruments
6. Which of the following is correct regarding the provisions of PAS 34?

a. PAS 34 requires publicly listed entities to prepare at least a semi-annual financial
report to be issued not later than 60 days after the end of the interim period.
b. PAS 34 requires both publicly and non-publicly listed entities to prepare at least a
semi-annual financial report to be issued not later than 60 days after the end of the
interim period.
c. PAS 34 encourages publicly listed entities to prepare at least a semi-annual
financial report to be issued not later than 60 days after the end of the interim
period.

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d. PAS 34 encourages publicly listed entities to prepare at least three quarterly

financial reports to be issued not later than 45 days after the end of each interim
period.
7. According to PAS 34, measurements in the interim period are made on

a. a discrete basis.
b. a year-to-date basis.
c. an item-by-item basis.
d. a or b, as matter of accounting policy choice
8. ________________ is “any contract that gives rise to a financial asset of one entity
and a financial liability or equity instrument of another entity. financial instrument
9. ________________ is a computation made for ordinary shares. It is a form of
profitability ratio which represents how much was earned by each ordinary share
during the period. earnings per share
10. ________________is the amount of profit for the period per share, reflecting the
maximum dilutions that would have resulted from conversions, exercises, and
other contingent issuances that individually would have decreased earnings per
share and in the aggregate would have had a dilutive effect. diluted earnings
per share

1. Entity A had 100,000, ₱10 par, 10% cumulative preference shares outstanding all
throughout 20x1. Entity A reported profit after tax of ₱1,200,000 for the year
ended December 31, 20x1. The movements in the number of ordinary shares are as
follows:
1/1/20x1 Ordinary shares outstanding 120,000

3/1/20x1 Shares issued for cash 42,000
9/30/20x1 Subscribed shares 20,000
11/1/20x1 Reacquisition of treasury shares (12,000)
Outstanding shares at the end of period 170,000
What is the basic earnings per share?

a. 5.92
b. 6.96
c. 7.09

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d. 6.13
2. Entity A is computing for its basic earnings per share and has gathered the following
information:
Loss for the year (800,000)
Preferred dividends 50,000
Outstanding ordinary shares 100,000
There have been no changes in the number of outstanding ordinary shares during
the period. What is the basic earnings (loss) per share?
a. -7.50
b. 7.50
c. -8.50
d. 8.50
3. Entity A had 200,000 ordinary shares outstanding all throughout 20x1. In 20x2, share
issuances occurred:
• On April 1, 20,000 shares were issued for cash.
• On September 30, a 10% bonus issue (share dividend) was declared.
• On November 1, a 2-for-1 share split was issued.
Entity A had the following profits: ₱1,200,000 in 20x2 and ₱900,000 in 20x1. What
are the earnings per share to be disclosed in Entity A’s 20x2 comparative financial
statements?
20x2 20x1
a. 2.22 2.02
b. 2.54 2.05
c. 2.65 2.09
d. 2.78 2.12
4. Entity A has 200,000 ordinary shares outstanding on January 1, 20x1. Entity A offers
rights issue to its existing shareholders that enable them to acquire 1 ordinary share
at a subscription price of ₱120 for every 5 rights held. The rights are exercised on May
1, 20x1. The market price of one ordinary share immediately before exercise is ₱180.
Entity A reported profit after tax of ₱2,700,000 in 20x1. What is the basic earnings per
share in 20x1?
a. 12.58

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b. 12.67
c. 11.71
d. 11.67
5. Entity A had the following instruments outstanding all throughout 20x1:
12% convertible bonds payable issued at face amount, each

₱1,000 bond is convertible into 30 ordinary shares ₱2,000,000
Ordinary shares, ₱10 par, 100,000 shares issued and
outstanding 1,000,000
Profit for the year is ₱1,200,000. Entity A’s income tax rate is 30%.
What is the diluted earnings per share in 20x1?

a. 8.55
b. 8.15
c. 8.05
d. 8.98
6. Which of the following is correct regarding the provisions of PAS 34?

a. PAS 34 requires publicly listed entities to prepare at least a semi-annual financial
report to be issued not later than 60 days after the end of the interim period.
b. PAS 34 requires both publicly and non-publicly listed entities to prepare at least a
semi-annual financial report to be issued not later than 60 days after the end of the
interim period.
c. PAS 34 encourages publicly listed entities to prepare at least a semi-annual
financial report to be issued not later than 60 days after the end of the interim
period.
d. PAS 34 encourages publicly listed entities to prepare at least three quarterly
financial reports to be issued not later than 45 days after the end of each interim
period.
7. According to PAS 34, measurements in the interim period are made on

a. a discrete basis.
b. a year-to-date basis.
c. an item-by-item basis.
d. a or b, as matter of accounting policy choice

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8. Which of the following is within the scope of PAS 32?

a. Assets held for sale in the ordinary course of business
b. Contracts relating to employee benefits
c. Financial instruments that are within the scope of PFRS 9
d. Investments in associates and joint ventures
9. Which of the following is not a financial asset?

a. Cash
b. Receivable
c. Inventory
d. Investment in associate
10. These are bonds that can be exchanged for shares of stocks of the issuer.
a. Exchangeable bonds
b. Callable bonds
c. Convertible bonds
d. Rock bonds
11. Examples of nonmonetary liabilities except one

a. financial liabilities measured at fair value
b. unearned items not payable in cash such as advances from customers, unearned
rent, deferred revenues, and the like
c. warranty obligations to be settled by future delivery of services (e.g., free repair
service) or replacement with other non-monetary items (e.g., free replacement of
parts or replacement of the good purchased)
d. physical assets such as inventories, property, plant, and equipment, and
investment properties and their related accumulated depreciation
12. Indicators of hyperinflation
a. the general population prefers to keep its wealth in non-monetary assets or in a
relatively stable foreign currency. Amounts of local currency held are immediately
invested to maintain purchasing power.
b. The general population regards monetary amounts not in terms of the local
currency but in terms of a relatively stable foreign currency. Prices may be quoted
in that currency.
c. A only
d. Both a and b
13. The following are examples of monetary assets except one.
a. Loans and receivables and their related allowances.
b. Accrued expenses payable in fixed and determinable amounts of money.
c. Financial assets at amortized cost (debt instrument)
d. Cash surrender value
14. Examples of nonmonetary assets except one
a. physical assets such as inventories, property, plant, and equipment, and
investment properties and their related accumulated depreciation.

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b. financial assets measured at fair value

c. unearned items not payable in cash such as advances from customers,
unearned rent, deferred revenues, and the like intangible assets
d. Advance is an prepayments not collectible in cash such as advances to suppliers,
prepaid insurance, prepaid rent, and the like
15. Examples of monetary liabilities except one
a. finance lease receivables
b. financial liabilities at amortized cost (debt instruments), e.g. accounts, notes,
bonds, and finance lease payables
c. refundable deposits, e.g., security deposits unless is to be returned to tenants at
the end of the lease term and deposits for returnable containers
d. Dividends payable
CHAPTER 7 PRE-TEST – CBACTG

1. According to PAS 36, an asset is impaired if
a. its carrying amount exceeds its recoverable amount.
b. its recoverable amount exceeds its carrying amount.
c. its carrying amount is less than its value in use.
d. its fair value less disposal costs exceeds its recoverable amount.
2. According to PAS 36, when measuring an asset’s value in use, the discount rate to be
used in discounting the estimated cash flows should be the
a. pre-tax rate that reflects current assessments of the time value of money and
risks.
b. post-tax rate that reflects current assessments of the time value of money and
risks.
c. pre-tax rate that reflects current assessments of market-based risks for similar
replacement assets.
d. post-tax rate that reflects current assessments of market-based risks for similar
replacement assets.
3. According to PAS 36, if an asset’s fair value less disposal costs cannot be determined,
its recoverable amount would be its
a. carrying amount.
b. replacement cost.
c. value in use.
d. current cost.
4. According to PAS 36, if it is not possible to determine the recoverable amount of an

individual asset,
a. that asset is not impaired.
b. the carrying amount of that asset should be written-off in its entirety, unless a
rough-estimation can be made.

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c. the recoverable amount of that asset should be determined in relation to the

cash-generating unit to which it belongs.
d. that asset is useless; it should be given away to the garbage collection guy.
5. The reversal of an impairment loss results to

a. a gain and an adjustment to the depreciation charges in subsequent periods.
b. a gain, but no adjustment to the depreciation charges in subsequent periods.
c. a loss and an adjustment to the depreciation charges in subsequent periods.
d. a loss, but no adjustment to the depreciation charges in subsequent periods.
6. According to PAS 37, a present obligation that is possible and can be measured
reliably is
a. recognized.
b. recognized and disclosed.
c. disclosed only.
d. ignored.
7. According to PAS 37, provisions are (choose the incorrect statement)

a. presented in the statement of financial position separately from other types of
liabilities.
c. necessarily estimated because their settlement amount is not certain.
d. disclosed only, unless their expected occurrence is remote
8. The essential elements of an intangible asset do not include

a. identifiability.
b. probable outflow of resources embodying economic benefits.
c. control.
d. future economic benefits.
9. According to PAS 38, which of the following may be recognized as cost of intangible
asset?
a. Research costs incurred in self-generating an intangible asset
b. Costs of an internally generated customer lists
c. Purchase cost of an externally acquired publishing title
d. Abnormal amount of wasted labor in self-generating an intangible asset
10. On January 1, 20x1, Entity A registers a patent for a total registration and legal costs
of ₱600,000. Entity A estimates that the patent has a remaining useful life of 25 years.
How much is the amortization expense for 20x1?
a. 30,000
b. 24,000
c. 16,000
d. 0

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1. Which of the following qualifies for classification as an investment property?
a. Property that is currently being developed for future use as investment
property
b. Investment property that is currently being developed for future use as owner-
occupied property
c. Property that is leased out to another entity under a finance lease
d. Building being rented from another entity and leased out under various operating
sub-leases
2. The distinguishing characteristic that identifies an investment property from the other
assets of an entity is
a. changes in fair value of the asset is recognized in profit or loss.
b. the property does not derive cash flows separate from the other assets of the entity.
c. it generates separately identifiable cash flows from the other assets of the
entity.
d. it earns rental as part of the ordinary operations of the entity.
3. Under this model, an investment property is measured at cost less accumulated

depreciation and accumulated impairment losses.
a. Impairment loss model
b. Cost model
c. Fair value model
d. Gorgeous model
Use the following information for the next two questions:

Entity A acquires an investment property for ₱1,000,000 cash. Additional costs incurred
are as follows:
• Repairs and remodelling before occupancy, ₱50,000.
• Legal costs of transferring title to the property, ₱20,000.
• Repairs after occupancy, ₱15,000.
The investment property is estimated to have a remaining useful life of 10 years and
a residual value equal to 5% of initial cost.
4. Entity A uses the straight line method of depreciation. How much is the carrying
amount of the investment property under the cost model after one year?
a. 914,850
b. 923,100
c. 968,350

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d. 872,100
5. Entity A uses the straight line method of depreciation. The investment property has a
fair value of ₱980,000 at the end of Year 1. How much is the carrying amount of the
investment property under the fair value model after one year?
a. 980,000
b. 973,200
c. 986,350
d. 837,900
6. The essential elements of an intangible asset do not include

e. identifiability.
f. probable outflow of resources embodying economic benefits.
g. control.
h. future economic benefits.
7. According to PAS 38, which of the following may be recognized as cost of intangible
asset?
a. Research costs incurred in self-generating an intangible asset
b. Costs of an internally generated customer lists
c. Purchase cost of an externally acquired publishing title
d. Abnormal amount of wasted labor in self-generating an intangible asset
8. On January 1, 20x1, Entity A registers a patent for a total registration and legal costs
of ₱600,000. Entity A estimates that the patent has a remaining useful life of 25 years.
How much is the amortization expense for 20x1?
c. 30,000
d. 24,000
c. 16,000
d. 0
9. According to PAS 37, a present obligation that is possible and can be measured
reliably is
a. recognized.
c. disclosed only.
d. ignored.
10. According to PAS 37, provisions are (choose the incorrect statement)
a. presented in the statement of financial position separately from other types of
liabilities.

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c. necessarily estimated because their settlement amount is not certain.
d. disclosed only, unless their expected occurrence is remote.
11. According to PAS 36, an asset is impaired if

e. its recoverable amount exceeds its carrying amount.
f. its carrying amount is less than its value in use.
g. its fair value less disposal costs exceeds its recoverable amount.
h. its carrying amount exceeds its recoverable amount.
12. According to PAS 36, when measuring an asset’s value in use, the discount rate to be
used in discounting the estimated cash flows should be the
e. post-tax rate that reflects current assessments of the time value of money and
risks.
f. pre-tax rate that reflects current assessments of the time value of money and
risks.
g. pre-tax rate that reflects current assessments of market-based risks for similar
replacement assets.
h. post-tax rate that reflects current assessments of market-based risks for similar
replacement assets.
13. According to PAS 36, if an asset’s fair value less disposal costs cannot be determined,
its recoverable amount would be its
e. value in use.
f. carrying amount.
g. replacement cost.
h. current cost.
14. According to PAS 36, if it is not possible to determine the recoverable amount of an
individual asset,
e. that asset is not impaired.
f. the carrying amount of that asset should be written-off in its entirety, unless a
rough-estimation can be made.
g. that asset is useless; it should be given away to the garbage collection guy.
h. the recoverable amount of that asset should be determined in relation to the
cash-generating unit to which it belongs.
15. The reversal of an impairment loss results to

e. a gain, but no adjustment to the depreciation charges in subsequent periods.
f. a gain and an adjustment to the depreciation charges in subsequent periods.
g. a loss and an adjustment to the depreciation charges in subsequent periods.
h. a loss, but no adjustment to the depreciation charges in subsequent periods.

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16. Measuring recoverable amount

a. However, if there is no reason to believe that an asset’s value in use materially
exceeds its fair value less costs of disposal, the asset’s fair value less costs of
disposal may be used as its recoverable amount. this will often be the case for an
asset that is held for disposal.
b. Recoverable amount is the higher of the asset’s fair value less costs of disposal
and value in use.
c. A only
d. Both a and b
17. Essential criteria in the definition of intangible assets except one

a. materiality
b. identifiability
c. future economic benefits
d. control
CHAPTER 8 PRE-TEST
1. An entity that presents its first PFRS financial statements is referred to under PFRS 1
as a
a. first-timer.
b. first-time adopter.
c. PFRS novice.
d. first-time PFRSer.
2. PFRS 1 requires an entity to prepare and present an

a. opening PFRS financial statements.
b. opening PFRS statement of financial position.
c. opening PFRS statement of profit or loss and other comprehensive income.
d. opening notes to the financial statements.
3. The date to transition to PFRSs is

a. the beginning of the earliest period for which an entity presents full
comparative information under PFRSs in its first PFRS financial statements.
b. the end of the earliest period for which an entity presents full comparative
information under PFRSs in its first PFRS financial statements.
c. the beginning of the first PFRS reporting period.
d. the end of the first PFRS reporting period.
4. The statement of financial position of ABC Co. as of January 1, 20x4 included an

allowance for bad debts computed using the “aging of accounts receivable” method.
The “over 120 days” category in the aging schedule included a ₱200,000 receivable

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which was actually written off on January 5, 20x4 (the 20x3 financial statements were
authorized for issue on March 1, 20x4). ABC Co. could not have foreseen this event
on December 31, 20x3. Does ABC Co. need to revise its previous estimate of bad
debts as of January 1, 20x4 (date of transition) on December 31, 20x5 (end of first
PFRS reporting period)?
a. No. The receipt of the information on January 5, 20x4 is accounted for
prospectively as a non-adjusting event after the reporting period.
b. Yes. The receipt of the information on January 5, 20x4 is accounted for
retrospectively as an adjusting event after the reporting period.
c. No. The event should be ignored because it is within the scope of the previous
GAAP and not the PFRSs.
d. Yes. Although, PFRS 1 does not require the adjustment, other PFRSs do.
5. Under PFRS 1, the early application of PFRSs that have not yet become effective as
of the current reporting period
a. is required.
b. is permitted, but not required.
c. is required, but not permitted.
d. is prohibited.
6. PFRS 1 requires a first time adopter to do which of the following in the opening PFRS
a. Recognize all assets and liabilities whose recognition is required by PFRSs.
b. Not recognize items as assets or liabilities if PFRSs do not permit such recognition.
c. Reclassify items that it recognized in accordance with previous GAAP as one type
of asset, liability or component of equity, but are a different type of asset, liability
or component of equity in accordance with PFRSs.
d. Apply PFRSs in measuring all recognized assets and liabilities.
e. All of these
7. Retrospective application of accounting policies means

a. as if PFRSs have been used all along.
b. as if PFRSs are used only in prior periods.
c. as if PFRSs are used only in the current period.
d. restating the financial statements in order to correct all errors.
8. The “excess of the acquirer’s interest in the net fair value of acquiree’s identifiable
assets, liabilities, and contingent liabilities over cost” (formerly known as negative
goodwill) should be
a. Amortized over the life of the assets acquired.
b. Reassessed as to the accuracy of its measurement and then recognized
immediately in profit or loss.
c. Reassessed as to the accuracy of its measurement and then recognized in
retained earnings.

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d. Carried as a capital reserve indefinitely
9. Many shares and most share options are not traded in an active market. Therefore, it
is often difficult to arrive at a fair value of the equity instruments being issued. Which
of the following option valuation techniques should not be used as a measure of fair
value in the first instance?
a. Black-Scholes model.
b. Binomial model.
c. Monte-Carlo model.
d. Intrinsic value.
10. Elizabeth, a public limited company, has granted 100 share appreciation rights to each
of its 1,000 employees in January 20X4. The management feels that as of December
31, 20X4, 90% of the awards will vest on December 31, 20X6. The fair value of each
share appreciation right on December 31, 20X4, is P10. What is the fair value of the
liability to be recorded in the financial statements for the year ended December 31,
20X4?
a. P300,000
b. P10 million
c. P100,000
d. P90,000
CHAPTER 8 POST TEST – CBACTG

1. The “excess of the acquirer’s interest in the net fair value of acquiree’s identifiable
assets, liabilities, and contingent liabilities over cost” (formerly known as negative
goodwill) should be
a. Amortized over the life of the assets acquired.
b. Reassessed as to the accuracy of its measurement and then recognized
immediately in profit or loss.
c. Reassessed as to the accuracy of its measurement and then recognized in
retained earnings.
d. Carried as a capital reserve indefinitely.
2. The acquisition date is

a. the date on which the acquirer obtains control of the acquiree.
b. the opening date.
c. the date the acquirer transfers to the acquiree the consideration in a business
combination.
d. any of these
3. On January 1, 20x1, ABC Co. acquired 60% interest in XYZ, Inc. for ₱2,000,000 cash.
ABC Co. incurred transaction costs of ₱100,000 in the business combination. ABC

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Co. elected to measure NCI at the NCI’s proportionate share in XYZ, Inc.’s identifiable
net assets. The fair values of XYZ’s identifiable assets and liabilities at the acquisition
date were ₱6,000,000 and ₱3,500,000, respectively. How much is the goodwill (gain
on a bargain purchase)?
a. 500,000
b. 478,000
c. (500,000)
d. (478,000)
4. Many shares and most share options are not traded in an active market. Therefore, it
is often difficult to arrive at a fair value of the equity instruments being issued. Which
of the following option valuation techniques should not be used as a measure of fair
value in the first instance?
a. Black-Scholes model.
b. Binomial model.
c. Monte-Carlo model.
d. Intrinsic value.
5. Elizabeth, a public limited company, has granted 100 share appreciation rights to each
of its 1,000 employees in January 20X4. The management feels that as of December
31, 20X4, 90% of the awards will vest on December 31, 20X6. The fair value of each
share appreciation right on December 31, 20X4, is P10. What is the fair value of the
liability to be recorded in the financial statements for the year ended December 31,
20X4?
a. P300,000
b. P10 million
c. P100,000
d. P90,000

d. restating the financial statements in order to correct all errors
7. PFRS 1 requires an entity to prepare and present an

a. opening PFRS financial statements.
b. opening PFRS statement of financial position.
c. opening PFRS statement of profit or loss and other comprehensive income.
d. opening notes to the financial statements.

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8. The date to transition to PFRSs is

a. the beginning of the earliest period for which an entity presents full
comparative information under PFRSs in its first PFRS financial
statements.
b. the end of the earliest period for which an entity presents full comparative
information under PFRSs in its first PFRS financial statements.
c. the beginning of the first PFRS reporting period.
d. the end of the first PFRS reporting period

d. restating the financial statements in order to correct all errors
10. Under PFRS 1, the early application of PFRSs that have not yet become effective as
of the current reporting period
a.is required.
b.is permitted, but not required.
c.is required, but not permitted.
d.is prohibited
11. PFRS 1 requires an entity to do the following in its opening PFRS statement of
financial position.
a. The cost of compliance exceeds the expected benefits.
b. Not recognize items assets or liabilities if PFRSs do not permit such
recognition.
c. Reclassify items recognized under previews GAAP that have different
classifications under PSRSs.
d. apply PFRSs in measuring all recognized assets and liabilities.
12. An entity that represents its first PFRS financial statements is referred to under PFRS
1 is a.
a. First-timer
b. PFRS novice
c. First-timer adopter
d. First-time PFRSs

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13. The statement of financial position of ABC Co. as of January 1, 20x4 included an
allowance for bad debts computed using the “aging of accounts receivable” method.
The “over 120 days” category in the aging schedule included a ₱200,000 receivable
which was actually written off on January 5, 20x4 (the 20x3 financial statements were
authorized for issue in March 1, 20x4). ABC Co. goodnight have foreseen this event
on December 31, 20x3. does ABC Co. need to revise its previous estimate of bad
debts as of January 1, 20X4 (date of translation) on December 31, 20X5 (end of 1st
PFRS reporting period)?
a. Yes. although, PFRS 1 does not require the adjustment, other PFRSs do.
b. no. The event should be ignored because it is within the scope of the previous
GAAP and not the PFRSs.
c. yes. the receipt of the information on January 5, 20X4 is accounted for
retrospectively as an adjusting event after the reporting period.
d. No. The receipt of the information in January 5, 20X4 is accounted for
prospectively as a non-adjusting event after the reporting period.
14. The following are the common features of agricultural activity except one.
a. Capability to change
b. capacity to change
c. management of change
d. measurement of change
15. PFRS 1 requires a first time adopter to do which of the following in the opening PFRS
f. Recognize all assets and liabilities whose recognition is required by PFRSs.
g. Not recognize items as assets or liabilities if PFRSs do not permit such recognition.
h. Reclassify items that it recognized in accordance with previous GAAP as one type
of asset, liability or component of equity, but are a different type of asset, liability
or component of equity in accordance with PFRSs.
i. Apply PFRSs in measuring all recognized assets and liabilities.
j. All of these
16. Scope of PFRS 2 except one.

a. Equity-settled share-based payment transaction - is a transaction whereby an
entity acquires goods or services and instead of paying in cash the entity issues
its own shares of stocks or share options.
b. Cash-settled share-based payment transaction - is a transaction whereby an
entity acquires goods or services and incurs an obligation to pay cash at an
amount that is based on the fair value of equity instruments.
c. An entity shall recognize in profit or loss and financial position the effects
of share-based payment transactions, including expenses associated
with transactions in which share options are granted to employees.
d. Choice between equity-settled and cash-settled

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17. Share option is

a. the difference between the fair value of the shares to which the counterparty
has the conditional or unconditional right the subscribe or the right to receive
and the subscription price (if any) that the counterparty is required to pay for
those shares.
b. contract that gives the Holder is there right, but not the obligation, the
subscribe do the entity’s shares at a fixed or the determinable price for a
specified period of time. Some share options given to employees may not
require any subscription price, meaning shares will be issued to the
employees in consideration merely for services rendered.
c. The goods or services acquired and the liability incurred on cash-settled share-
based payment transactions are measured at the fair value of the liability.
d. form of compensation given to an employee whereby the employee is ……..
18. Control may exist even if the acquirer holds less than 50% interest in the voting rights
of acquiree, such as in the following cases.
a. The acquirer is the entity that obtains control of the acquiree. The
acquiree is the business that the acquirer obtains control of in a business
communication.
b. The acquirer has the power to appoint or remove the majority of the board of
directors of the acquire.
c. the acquirer has the power to cast the majority of votes at board meetings or
equivalent bodies within the acquire.
d. The acquirer has power over more than half of the voting rights of the acquiree
because of an agreement with other investors.
CHAPTER 9 - PRETEST
1. The statement of profit or loss includes which of the following?
a. Revenue, cost of goods sold, distribution costs, general and administrative
expenses and extraordinary items.
b. Discontinued operations.
c. Gains and losses arising from treasury share transactions.
d. Other comprehensive income.
2. Assets that are classified as held for sale under PFRS 5 are
a. required under PAS 36 to be tested for impairment annually.
b. amortized over a period not exceeding 5 years.
c. depreciated.
d. not depreciated.
3. According to PFRS 5, gains and losses on remeasurement of assets held for sale are
a. recognized in profit or loss.

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b. recognized in other comprehensive income.

c. recognized only for impairment losses.
d. not recognized.
4. Which of the following statements is true regarding the accounting treatment of costs
to sell under PFRS 5?
a. Costs to sell are added to the fair value when determining the measurement basis
for an asset held for sale.
b. Costs to sell are never discounted because held for sale assets should be
sold within one year.
c. Costs to sell are discounted if it is expected that the sale will be made beyond one
year.
d. a and c
5. According to PFRS 5, the assets and liabilities of a disposal group are presented
a. as one line item in either current assets or current liabilities.
b. as one line item in either noncurrent assets or noncurrent liabilities.
c. separately on the face of the statement of financial position.
d. a or b
6. Exploration and evaluation assets are initially measured at

a. cost. c. fair value
b. revalued amount. d. a or b
7. Exploration and evaluation assets are exploration and evaluation expenditures

recognized as
a. assets in accordance with the entity’s accounting policy.
b. expenses in accordance with applicable PFRSs.
c. assets in accordance with (a) above, subject to the limitations provided under PAS
8 Accounting Policies, Changes in Accounting Estimates and Errors.
d. any of these
8. Mark Ngina’s Sari-sari Store has a sign that reads “Your credit is good but I need
cash.” What type of risk is Mr. Mark trying to avoid by putting up that sign?
a. credit risk
b. market risk
c. liquidity risk
d. store risk
9. How does PFRS 7 define “liquidity risk”?

a. The risk that an entity will encounter difficulty in meeting obligations
associated with financial liabilities.

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b. The risk that an entity will encounter difficulty in disposing a financial asset due to
lack of market liquidity.
c. The risk that an entity will encounter difficulty in meeting cash flow needs due to
cash flow problems.
d. The risk that an entity’s cash inflows will not be sufficient to meet the entity’s
cash outflows
10. According to PFRS 8, a reportable operating segment is one which

a. management uses in making decisions about operating matters.
b. results from aggregation of two or more segments and qualify under any of
the quantitative thresholds.
c. a and b
d. none of these
CHAPTER 10 - PRETEST
1. PFRS 12 applies to
a. contracts relating to post-employment benefit plans.
b. interest in joint arrangements that does not give the entity joint control or
significant influence over the arrangement.
c. investments measured at fair value through other comprehensive income.
d. investments accounted for under the equity method.
2. According to PFRS 12, interest in another entity refers to

a. only contractual involvement that exposes an entity to variability of returns from
the performance of another entity.
b. only non-contractual involvement that exposes an entity to variability of returns
from the performance of another entity.
c. contractual and non-contractual involvement that exposes an entity to
variability of returns from the performance of another entity.
d. a typical customer-supplier relationship
3. Which of the following are not considered transaction costs or costs to sell?
a. commissions to brokers
b. levies by regulatory agencies and commodity exchanges
c. transfer taxes and duties
d. transport costs
4. There are multiple active markets for a financial asset with different observable market
prices:
Market Quoted Price Transaction Costs
A ₱76 ₱5

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B ₱74 ₱2
There is no principal market for the financial asset. What is the fair value of the asset?
a. 71 b. 72 c. 74 d. 76
5. According to PFRS 14, an entity presents regulatory deferral accounts in the

statement of financial position
a. showing those with debit balances separately from those with credit
balances.
b. showing only the net debit or the net credit balance of the accounts.
c. a or b, as a matter of accounting policy choice
d. An entity shall not present regulatory deferral accounts in the statement of financial
position, but only disclose them in the notes.
6. Arrange the following steps of revenue recognition in accordance with PFRS 15.
I. Identify the performance obligations in the contract
II. Recognize revenue when (or as) the entity satisfies a performance obligation
III. Determine the transaction price
IV. Identify the contract with the customer
V. Allocate the transaction price to the performance obligations in the contract
a. IV, I, V, III, II c. III, IV, I, V, II
b. IV, I, III, V, II d. IV, III, I, V, II
7. Certain criteria must be met before a contract with a customer is accounted for under
PFRS 15. Which of the following precludes a contract from being accounted for under
PFRS 15?
a. The consideration is collected in advanced.
b. The contract is made orally.
c. The contract does not result to a change in the risk, timing or amount of the
entity’s future cash flows.
d. The contract is neither oral nor written but rather implied by the entity’s business
practices.
8. How does Entity B account for the insurance contract with Entity A?
a. General model
b. Premium Allocation Approach
c. a or b
d. Not accounted for under PFRS 17
9. How does Entity C account for the insurance contract ceded by Entity B?
a. General model

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c. a or b
d. Modification to general model for reinsurance contracts held
10. How does Entity B account for the insurance contract ceded to Entity C?
a. General model
c. a or b

1. According to PFRS 9, it is the amount at which a financial asset or a financial liability is
measured at initial recognition minus principal repayments, plus or minus the cumulative
amortization using the effective interest method of any difference between that initial
amount and the maturity amount and, for financial assets adjusted for any loss allowance.
a. cost b. carrying amount c. amortized cost d. fair value
2. Which of the following is measured at fair value with fair value changes recognized in profit
or loss?
a. Held to maturity investments
b. Financial assets designated at FVPL
c. FVOCI
d. All of these
3. If the entity’s business model’s objective is to hold assets in order to collect contractual cash
flows and cash flows are solely payments of principal and interest on the principal amount
outstanding, the financial asset is classified
a. according to management’s intention of holding the securities.
b. as financial asset measured at amortized cost.
c. as financial asset measured at fair value through other comprehensive income.
d. any of these
4. Tech Co. and Robotics Co. are joint venturers of Mecha Co., a producer of high tech
machinery. Tech and Robotics, each have a 50% interest in the net assets of Mecha Co. During
the year, Tech Co. earns revenue of ₱1,000,000 from its own operations while Mecha Co.
reports revenue of ₱400,000. How much total revenue shall be reported in Tech Co.’s
statement of profit or loss for the year?
a. ₱1,000,000
b. ₱1,200,000
c. ₱1,400,000
d. Either a or b

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5. Entity A acquires 50% interest in a joint venture for ₱1M and appropriately records the
transaction under an investment account. At the end of the period, the joint venture reports
profit of ₱1M and makes a total distribution of ₱600,000 to the owners. How much is the net
effect of the transaction in Entity A’s profit or loss for the current year?
a. ₱.5M
b. ₱.3M
c. ₱.2M
d. 0
6. ABC Co. has identified the following five operating segments: “Credit,” “Hotel,”
“Transportation,” “Grocery,” and “Events planning.” ABC Co. treats the “Hotel” and “Events
planning” as a single segment for internal reporting purposes. Each of the “Events planning”
and “Transportation” segments does not qualify under any of the quantitative thresholds of
PFRS 8. How should ABC Co. disclose its reportable segments?
a. ABC Co. shall treat each of the “Hotel,” “Credit,” and “Grocery” as reportable segments.
The other segments should not be disclosed.
b. ABC Co. shall treat each of the “Hotel,” “Credit,” and “Grocery” as reportable segments.
The other segments should be combined and disclosed in the “All other segments”
category.
c. ABC Co. shall treat the “Hotel” and “Events planning” as a single reportable segment and
each of the “Credit” and “Grocery” segments also as reportable segments. The
“Transportation” segment shall be included in the “All other segments” category.
d. ABC Co. shall treat the “Hotel” and “Events planning” as a single reportable segment and
combine all the other segments and report them under the “All other segments”
category.
7. An entity recently has acquired a new brand from a competitor company. The brand qualifies
as a component of an entity and represents a major line of business for which discrete
financial information is available. This operating segment does not meet any of the threshold
criteria for a reportable segment. Furthermore, this segment is unique and does not share
similar characteristics with the other operating segments of the entity. Which of the following
statements is correct?
a. The entity can disclose this new segment separately if it is a distinguishable component
and is used by management in internal reporting even though it does not meet the PFRS
criteria.
b. The entity cannot voluntarily disclose this new segment separately because PFRS 8
discourages voluntary disclosure of operating segments. Operating segments are
reportable only if they either result from aggregation or qualify under any of the
quantitative thresholds.
c. The entity can disclose this new segment separately only if it can be aggregated with
another operating segment and the combined segment qualifies in all of the quantitative
thresholds.

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d. The entity can disclose this new segment separately only if it can be aggregated with
another operating segment and the combined segment qualifies in any of the quantitative
thresholds.
8. According to PFRS 8, a reportable operating segment is one which

a. management uses in making decisions about operating matters.
b. results from aggregation of two or more segments and qualify under any of the
quantitative thresholds.
c. a and b
d. none of these
9. Which of the following is not among the quantitative thresholds under PFRS 8?
a. at least 10% of total revenues (external and internal).
b. at least 10% of the higher of total profits of segments reporting profits and total losses of
segments reporting losses, in absolute amount.
c. at least 10% of total assets (inclusive of intersegment receivables).
d. at least 10% of total revenues (external only) not sure
10. According to PFRS 8, disclosures for major customer shall be provided if revenues from
transactions with a single external customer amount to
a. at least 75% of the entity’s external and internal revenues.
b. at least 75% of the entity’s external revenues.
c. 10% or more of the entity’s external revenues.
d. less than 10% of the entity’s external revenues
11. According to PFRS 5, gains and losses on remeasurement of assets held for sale are
e. not recognized.
f. recognized only for impairment losses.
g. recognized in profit or loss.
h. recognized in other comprehensive income.
12. According to PFRS 5, the assets and liabilities of a disposal group are presented
e. as one line item in either current assets or current liabilities.
f. separately on the face of the statement of financial position.
g. as one line item in either noncurrent assets or noncurrent liabilities.
h. a or c
13. Mark Ngina’s Sari-sari Store has a sign that reads “Your credit is good but I need cash.” What
type of risk is Mr. Mark trying to avoid by putting up that sign?
e. market risk
f. liquidity risk
g. store risk
h. credit risk
14. How does PFRS 7 define “liquidity risk”?

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e. The risk that an entity will encounter difficulty in meeting cash flow needs due to
cash flow problems.
f. The risk that an entity’s cash inflows will not be sufficient to meet the entity’s
cash outflows
g. The risk that an entity will encounter difficulty in meeting obligations
associated with financial liabilities.
h. The risk that an entity will encounter difficulty in disposing a financial asset due to
lack of market liquidity.
15. Assets that are classified as held for sale under PFRS 5 are
e. required under PAS 36 to be tested for impairment annually.
f. amortized over a period not exceeding 5 years.
g. depreciated.
h. not depreciated.
16. Exploration and evaluation assets are exploration and evaluation expenditures recognized as
e. assets in accordance with the entity’s accounting policy.
f. expenses in accordance with applicable PFRSs.
g. assets in accordance with (a) above, subject to the limitations provided under PAS
8 Accounting Policies, Changes in Accounting Estimates and Errors.
h. any of these
17. Which of the following statements is true regarding the accounting treatment of costs to sell
under PFRS 5?
e. Costs to sell are discounted if it is expected that the sale will be made beyond one
year.
f. Costs to sell are never discounted because held for sale assets should be
sold within one year.
g. Costs to sell are added to the fair value when determining the measurement basis
for an asset held for sale.
h. a and c
18. The statement of profit or loss includes which of the following?
e. Discontinued operations.
f. Revenue, cost of goods sold, distribution costs, general and administrative
expenses and extraordinary items.
g. Other comprehensive income.
h. Gains and losses arising from treasury share transactions.

1.On January 1, 20x1, Entity X enters into a 3-year lease of equipment for an annual rent of
₱100,000 payable at the end of each year. The equipment has a remaining useful life of 10 years.
The interest rate implicit in the lease is 10% while the lessee’s incremental borrowing rate is 12%.
Entity X uses the straight-line method of depreciation. The relevant present value factors are as
follows:
- PV of an ordinary annuity of ₱1 @10%, n=3………… 2.48685

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- PV of an ordinary annuity of ₱1 @12%, n=3………… 2.40183
How much is the lease liability to be recognized by Entity X on initial recognition?

a. 240,183 c. 252,314
b. 248,685 d. 0
2.Assume the lease in problem #1 above qualifies for accounting under the recognition
exemption under PFRS 16. Which of the following statements is correct?
a. Entity X recognizes annual depreciation of ₱80,061 on the right-of-use asset.
b. Entity X recognizes a lease liability of ₱252,314 at the lease commencement date.
c. Entity X recognizes a lease liability of ₱200,000 at the lease commencement date.
d. Entity X recognizes lease expense of ₱100,000 in the first year of the lease.
3.Use the information in problem #1 above. Assume the lease is a finance lease. The lessor will
recognize a net investment in the lease at the lease commencement equal to
a. 240,183. c. 252,314.
b. 248,685 . d. 0.
4.Use the information in problem #1 above. Assume the lease is an operating lease. The lessor
will recognize a net investment in the lease at the lease commencement equal to
a.240,183. c. 200,000.
b.248,685 . d. 0..
5.How does Entity B account for the insurance contract with Entity A?
a. General model
c. a or b
d. Not accounted for under PFRS 17
6.How does Entity C account for the insurance contract ceded by Entity B?
a. General model
c. a or b
7.How does Entity B account for the insurance contract ceded to Entity C?

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a. General model
c. a or b
8.The "premium allocation approach" cannot be applied to which of the following insurance
contracts?
a. insurance contracts issued
b. reinsurance contracts issued
c. reinsurance contacts held
d. insurance contracts with significant variability in their fulfillment cash flows.
9.The unearned profit from a group of insurance contracts is referred to under PFRS 17 as
a. fulfillment cash flows.
b. contractual service margin.
c. onerous contracts.
d. discretionary participation feature.
10.According to PFRS 14, rate-regulation is

a. a framework for establishing the prices that can be charged to customers for goods or
services and that framework is subject to oversight and/or approval by a rate regulator.
b. the balance of any expense (or income) account that would not be recognized as an asset
or a liability in accordance with other Standards, but that qualifies for deferral because it
is included, or is expected to be included, by the rate regulator in establishing the rate(s)
that can be charged to customers.
c. an authorized body that is empowered by statute or regulation to establish the rate or a
range of rates that bind an entity. The rate regulator may be a third-party body or a
related party of the entity, including the entity’s own governing board, if that body is
required by statute or regulation to set rates both in the interest of the customers and to
ensure the overall financial viability of the entity.
d. all of these
11. According to PFRS 14, an entity presents regulatory deferral accounts in the statement of
financial position
e. showing only the net debit or the net credit balance of the accounts.
f. An entity shall not present regulatory deferral accounts in the statement of financial
position, but only disclose them in the notes.
g. showing those with debit balances separately from those with credit
balances.

lOMoARcPSD|31819120
h. a or c
12. Which of the following are not considered transaction costs or costs to sell?
e. transport costs
f. transfer taxes and duties
g. levies by regulatory agencies and commodity exchanges
h. commissions to brokers
13. PFRS 12 applies to
e. investments measured at fair value through other comprehensive income.
f. investments accounted for under the equity method.
g. contracts relating to post-employment benefit plans.
h. interest in joint arrangements that does not give the entity joint control or
significant influence over the arrangement.
14. Certain criteria must be met before a contract with a customer is accounted for under
PFRS 15. Which of the following precludes a contract from being accounted for under
PFRS 15?
e. The consideration is collected in advanced.
f. The contract is neither oral nor written but rather implied by the entity’s business
practices.
g. The contract is made orally.
h. The contract does not result to a change in the risk, timing or amount of the
entity’s future cash flows.
15. There are multiple active markets for a financial asset with different observable market
prices:
Market Quoted Price Transaction Costs
A ₱76 ₱5
B ₱74 ₱2
There is no principal market for the financial asset. What is the fair value of the asset?
b. 71 b. 72 c. 74 d. 76

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CHAPTER 1 PRE-TEST – CBACT01

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CHAPTER 2 PRE-TEST – CBACT01

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CHAPTER 3 PRE-TEST – CBACT01

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a. A specific transitional provision of a PFRS

1. Which of the following is considered a government grant under PAS 20?

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3. The main concept used in recognizing income from government grants is

4. In 20x1, Entity A proposes an environmental clean-up project for a river. The

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CHAPTER 1 POST TEST – CBACT01

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a. Increase financial statement users’ understanding of and confidence in financial

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a. Fair presentation and compliance with PFRSs

CHAPTER 2 POST TEST – CBACT01

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b. Change of accounting policy

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8. Which of the following is most likely to be a non-adjusting event?

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d. Issuance of share capital through cash

CHAPTER 3 - POST TEST

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Profit for the year ₱8,000,000

Use the following information for the next six questions:

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FVPA – Jan.1, 20x1 1,440,000

8. How much is the total defined benefit cost for 20x1?

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Use the following information for the next six questions:

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CHAPTER 4 POST TEST – CBACT01

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b. The primary economic environment in which an entity operates is normally the

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CHAPTER 5 PRE-TEST – CBACT01

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b. A statement of net assets available for benefits

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These are those presented in addition to consolidated financial statements or the

CHAPTER 5 – POST TEST

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b. Entity A is presumed to have signification influence over Entity B because it holds

5. These are those presented in addition to consolidated financial statements or the

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7. The amount of benefits to be received by employees enrolled in a defined benefit plan

8. Which of the following statements is correct?

9. PAS 24 requires the disclosure of key management personnel compensation. Which

11. Equity method

12. Is the contractually agreed sharing of control over an economic activity.

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